Editor's Note: The excerpt below is from a research note written yesterday by our Retail Sector Head Brian McGough. If you'd like to learn more about how Hedgeye can help you click here.
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Retail Sales Slowing
Expectations were definitely out of whack headed into this Retail Sales print given the big headline miss.
Two things:
- The level of sales growth relative to last year is absolutely positively decelerating. In January we saw 5.4% growth, and we've steadily decelerated to 1.9% in the following five months.
- We're scratching our heads as to why this is a big 'surprise'. Commentary from large and small retailers alike have supported a decelerating growth rate. In addition, while the 2-year run rate in the real discretionary categories is below what we witnessed in 2H14 (4%) it is consistent with what we've seen over the past 3-months.
The bottom line? Yes, growth is slowing. Yes, we expected it. Compares throughout the rest of the summer, and fall, AND holiday, don't get any better.
