366
Fashion Jobs
SHISEIDO
FP&A Manager (Korean Only)
Permanent · SEOUL
AESOP
Aesop Hanam Starfield - Retail Consultant
Permanent · HANAM-SI
ADIDAS
Senior Specialist, Buying & Trading, E-Commerce
Permanent · SEOUL
ADIDAS
Manager, Personalization & Apps, E-Commerce
Permanent · SEOUL
ADIDAS
Senior Manager, Legal Counsel, Legal
Permanent · SEOUL
HENKEL
Finance Business Controller For Shiseido Professional Brand
Permanent ·
L'OREAL GROUP
[l'Oreal Korea] Kiehl's - CRM & Trade Mkt sr. Specialist~Manager
Permanent · SEOUL
L'OREAL GROUP
[l'Oreal Korea] (jr.) Claim Substantiation Specialist - Corporate Regulatory Affairs
Permanent · SEOUL
L'OREAL GROUP
[l'Oreal Korea] (sr.) Product Manager - Kerastase Marketing Team, Ppd
Permanent · SEOUL
UNDER ARMOUR
Associate, HR Administration
Permanent · SEOUL
ARKET
Visual Merchandising Manager
Permanent · BUSAN
PUIG
Marketing Manager
Permanent · SEOUL
JAEGER
[Jaeger Lecoultre] Marketing & Communication Director
Permanent · SEOUL
ESTÉE LAUDER COMPANIES
Corporate Account Executive For Travel Retail Korea, Estee Lauder Companies
Permanent ·
ESTÉE LAUDER - BRAND
Assistant Education Manager, Estee Lauder
Permanent · SEOUL
L'OREAL GROUP
[l'Oreal Korea] Luxe Div. - Lancome E-Commerce Specialist
Permanent · SEOUL
COS
Instore Visual Merchandiser Manager_seoul/Gyeonggi
Permanent · SEOUL METROPOLITAN AREA
AESOP
Shinsegae Gwangju - Retail Consultant
Permanent · GWANGJU
COACH
Manager, Ecommerce
Permanent · SEOUL
ADIDAS
Manager, Business Planning & Analysis, Wholesales
Permanent · SEOUL
HENKEL
Adhesive Key Account Manager For Sports And Fashion Market
Permanent · BUSAN
HENKEL
Consumer Brands General Manager Assistant
Permanent ·
By
Reuters
Published
May 19, 2022
Reading time
3 minutes
Download
Download the article
Print
Text size

Investors jolted as U.S. retailers show inflation hitting consumers

By
Reuters
Published
May 19, 2022

Evidence of red-hot inflation seeping into the American economy is sending a chill through investors after major U.S. retailers reported people are cutting back on buying bigger-ticket items as they just try to get by.


Image: Shutterstock



Investors wiped almost 25% off Target shares on Wednesday after its profit halved, and it fell another 3.2% on Thursday morning. Walmart was down 1.3% Thursday after already falling more than 17% in the two sessions after it reported weak results early on Tuesday.

Target's earnings showed consumers spending more on food and household essentials instead of high-margin discretionary items, while Walmart showed shoppers had moved to buy lower-margin basics.

On Thursday, Kohl's was up 1.1% after falling 11% on Wednesday as the department store company cut its full-year earnings forecast, warning that red-hot inflation is starting to erode profit margins and consumer spending.

BJ's Wholesale Club, which fell 16% on Wednesday, was up 10.7% on Thursday after it beat Q1 financial expectations, saying membership rose as customers searched for value due to soaring prices.

On Tuesday, Federal Reserve Chair Jerome Powell pledged the U.S. central bank would raise interest rates as high as needed to kill the surge in inflation.

The S&P 500 was last down 0.2%, leaving it down 18% year-to-date and 18.6% below its Jan. 3 record close, after closing down 4% in Wednesday's broad sell-off.

"Retailers are starting to reveal the impact of eroding consumer purchasing power," Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, said on Wednesday after his firm forecast a mild recession around year-end into early 2023.

"The consumer's ability to spend is eroding at a faster pace than it was a month or two ago. We think that pace is going to accelerate further," he said.

The S&P 500's consumer discretionary index bounced back slightly, last up 0.9% after losing 6.6% on Wednesday in its deepest one-day sell-off since March 2020 and was still off more than 30% year-to-date, putting it on track for its weakest year since 2008.

Cantor Fitzgerald said it was unwinding its expectation for a short-term bounce in equities and that if there is a lift, it would likely be shallow and "not worth playing."

"The (Wal-Mart/Target) numbers are very concerning as they show the consumer is reducing discretionary purchases while company margins return to pre-pandemic levels," said Eric Johnston, head of equity derivatives and cross asset at Cantor Fitzgerald.

While investors have been worried for some time about inflation, the latest results pile on worries about the impact of inflation on the consumer, said Ryan Detrick, chief market strategist at LPL Financial.

However, the sell-off came the day after data showing U.S. retail sales rose strongly in April as consumers bought more motor vehicles amid supply improvements along with increased spending at restaurants despite high inflation, souring consumer sentiment and rising interest rates.

Cliff Hodge, chief investment officer at Cornerstone Wealth, said the narrative was "shifting from inflation scare to recession scare."

Chuck Carlson, chief executive officer at Horizon Investment Services, said retailer results appeared to be potentially "one more indication of perhaps a slowdown in the economy.”

“I just wonder if people are starting to really get pinched by fuel costs – both businesses as well as consumers. ... When you are paying north of $5 for a gallon of gas, that’s a hammer and that’s a hammer on everybody,” Carlson said.


 

© Thomson Reuters 2024 All rights reserved.