At the beginning of the year, I wrote a series of columns on the stocks of companies catering primarily to either women or men. I also looked at the probable divergence in their performances based on the immediate economic prospects for the companies in each sector, and at the longer-term demographic and structural challenges being faced by each gender.
Before getting to the economic and demographic issues, let's review the year-to-date performances of the stocks in the original columns for women and men, respectively.
Women's Stocks: Lululemon Athletica (LULU) down 23%; Coach (COH) down 26%; Macy's (M) up 6%; Nordstrom (JWN) up 9%; Williams-Sonoma (WSM) up 8%; Bed Bath & Beyond (BBBY) down 24%; and Starbucks (SBUX) down 9%.
Men's Stocks: Anheuser-Busch InBev (BUD) up 7%; Boston Beer Co. (SAM) down 1%; AutoZone (AZO) up 13%; Home Depot (HD) down 5%; Harley-Davidson (HOG) up 5%; Snap-on (SNA) up 6%; and Sturm Ruger (RGR) down 15%.
The difference in the performances of both groups is stark; the stocks of companies catering primarily to female consumers grossly underperformed those whose products primarily cater to men. This is not just an immediate phenomenon, it is in sync with the longer-term trajectory and performance of the two- and five-year returns for each company listed in part three of the original series of columns.
This is most obvious in the extraordinarily negative performance of the stocks of companies with the highest concentration of female vs. male consumers: LULU, COH and BBBY. This is even more extraordinary because of the fact that women account for 75% of all consumer spending.
There are two principal issues for investors to be aware of with respect to the secular, long-term trend for female consumption and the performance of stocks of companies catering to them: the collapse in household formations, and the nascent negative shift in job opportunities coupled with declining income prospects.
I last wrote about the importance of U.S. household formations as an indicator of future economic activity and the recent collapse in them last August, and I will briefly update that issue now. Household formation is tracked by the U.S. Census Bureau, but for our purposes, a better representation is provided by YCharts.
For the first time since World War II, which is when household formations began to be tracked, they have actually gone negative. This is unprecedented, and it indicates a profound shift in the ability of women to consume at the level they've become accustomed to and the requirement to shift spending to basic needs and to lower-tier retail stores.
The bigger and more problematic issue for women, though, is that the financial constraints that come with a single-income household are being compounded by the lack of employment and income potential for women, and compounded further by women's longer lifespans and more expensive health care requirements.
Occupations where female employment is the highest are in the fields of health care, education and government, at about 80%, 80% and 65%, respectively. All three areas have already exceeded their peak employment and income opportunities for both men and women and are now in the nascent stages of a long-term reversal of both. The negative impact of the loss of jobs and the reduction of income potential in these fields, however, will also be concentrated on women as Obamacare and other future health care mandates are incrementally instituted.
Health care represents the 10 highest-paid occupations and 16 of the top 20. Education and health care also represent the seventh and eighth highest concentration of jobs in the U.S. economy, with mean hourly wages of $25 and $35, respectively.
The cost of post-secondary education in the U.S. has grown at an exponential real rate twice that of GDP or CPI for a generation and is now already beyond the mathematical constraints requiring its reversal. Fiscal issues at the sovereign level and budgetary constraints at the state and municipal level will preclude government from picking up the slack in private sector employment, a process that has already begun.
One of the principal ways of getting all three areas in line with what can be sustained by the economy, from a net cost basis, will be the acceleration of the adoption of automated systems allowing for the reduction in human labor, thus, jobs and the income they provide. Although this trend will affect both men and women it will, and is already, having a greater effect on women than men and the potential for earnings, thus the price of stocks catering to them.