Margins look good today, so order more stuff to sell tomorrow.
Almost every retailer will admit that consumer prices for apparel and footwear have finally broken back up through zero barrier. As we’ve been noting, their margin outlook for 2H is uniformly positive. But check out container traffic at the port of Long Beach… As the Revenue/cost spread (CPI less Import Costs – the inverted yellow line in this chart) improves, we’re seeing container traffic – a very good proxy for retail import activity – is setting higher highs and higher lows. Translation = margins look good today, so order more stuff to sell tomorrow.