With rising gas prices and a declining house market, it would appear that the economy really wasn’t doing all too well. But the facts would dispute such a claim. Truth is, the struggling economy hasn’t prevented consumers from doing their thing…consuming!
The clothing industry is seeing sales soar above last year’s numbers and even past analysts’ projections. Kohl’s, Nordstrom, Sacks and J.C. Penny private lines are seeing significant increases in their sales number thus far in 2007.
However, low-end clothing stores, such as Wal-Mart and Macy’s are struggling. In fact, they are performing well below market expectations, and revenues are considerably down from last year’s first quarter of sales.
So basically, middle income to high-end clothes are selling and discounted clothing lines are not…?
J.C. Penny had a 13% increase in profits for their last quarter ending May 5th. Practically half of Penny’s clothing sales are attributed to its private label brands, which are geared towards a middle and upper income consumers.
Kohl’s, another department store merchandiser, had a 25% profit increase. Obvioulsy, their sales destroyed market projections, but they also plan to add more private label brands and luxury items to their inventory.
Nordstrom’s experienced a 19% growth rate in their profits. Their department store’s clothing lines rose revenue by over $160 million due to an increase in internet sales. Nordstrom will be adding more designer clothing lines to its stock to continue their growth in sales.
So while the low income consumer is struggling to buy gas, middle and upper income households are buying luxurious clothes and designer fashion wear.
Obviously, the economy is going just well for private label buying, high-end consumers, but it’s not going so well for those who can only afford discount clothing.
Wal-Mart, the biggest retailer since Fred Flinstone sold rocks, has experienced a huge hit in revenue sales in comparison to last year. Wal-mart saw its same-store sales drop 3.5% in April, and only a .6% increase for the past quarter, well below the market projections. The hit was said to be caused by a drop-off in clothing sales, where Wal-Mart’s discount clothing lines drastically under-performed. Federated Department Stores, Inc. (Macy’s) also has announced that their profit targets were not reached for this past quarter.
You know, when people cannot afford to buy $6 jeans from Wal-Mart, there is a real problem in society. Whereas the question was once “Which came first, the chicken or the egg?” The question now is, “Which one comes first, driving to the store naked, or leaving the store with a new shirt but no gas in the car?” That’s pretty much what the low-income individual is forced to decide between. And obviously he or she is choosing to drive naked, because you need gas to get to work, and even Wal-Mart’s prices can’t compete with that.
So while the upper and middle-income buyer continues to purchase high-end clothes and designer labels, the rest of the populace will continue to wear old clothes and struggle to sell their houses.
So why is the economy doing so well for everyone but Joe Schmo?
I don’t have the answer. Everything I read keeps feeding me bull about how the economy is struggling, but the middle income households aren’t having any problem buying designer fashion, while middle to low-income families can’t afford to shop at Wal-Mart anymore.
But this situation that we are in is just a microcosm of how our government is running this nation. Everything that gets passed in Congress in reference to “supporting American economy” is just another way to make the rich richer. Lowering the capital gains tax, lessening tax obligations on the sale of second houses, and tons of other “taxbreaks” and laws don’t serve the average American, just the one on verge of going on a shopping spree.