We can't write off the consumer. We can't decide the consumer's not spending judging by what Macy's (M) and Nordstrom (JWN) and Gap (GPS) have been telling us.
We just have to assume the consumer's not shopping for the same kinds of things, notably apparel, and it involves a big shift in attitude and direction.
First, it is totally understandable that no one has any idea what people are spending on. The clues are so various and hard to read that I can't blame anyone for confusion.
Consider the panoply of bizarre inputs that we've gotten. Macy's, for example, says it's been hurt by extremely warm weather and by a strong dollar. Nordstrom says it's been hurt by traffic declines but doesn't indicate why it is having traffic declines.
The natural inclination in both cases is to presume they are being hurt by Amazon (AMZN), and they have become showrooms for the online giant. Or one can assume that perhaps people aren't going to the mall as much as they used to, which would also explain the decline that we have seen in Gap stores as well as J Crew. (Amazon is part of TheStreet's Growth Seeker portfolio.)
Then we come in today and we learn Home Depot (HD), TJX (TJX) and Wal-Mart (WMT) all reported excellent quarters. Let's see, they all have one thing in common: They aren't at the mall. We have to presume, then, that Starbucks (SBUX) CEO Howard Schultz was dead right when he said the mall is going out of style, that people just don't like it as much as they used to and are increasingly shopping with their hand-held devices.
All three of the winners from today have a very good online presence, although not as strong as Amazon's. But each offers a different piece to the American consumer puzzle. We learned from Home Depot that appliances, tools, plumbing, décor, lighting, hardware, building materials and indoor garden all outperformed. That's a list of items that says people are fixing up their houses, either by themselves or by hiring contractors. Given that the company reported 7% same-store sales, a very strong number, we can only assume people are feeling better about spending on their homes than they feel about spending on apparel. That's a change, one we haven't been able to explain, but one that's certainly occurring. Home Depot's unbelievably brilliant CFO, Carol Tome, talks about an increase in household formation and the need to fix up older homes that one must presume might have been neglected during the great downturn.
Now, how about TJX? The company has excellent apparel and houseware sales. Here are still two more pieces of the puzzle: If the consumer is going to spend on apparel, she's going for the cheapest name-brand apparel she can find, which is from TJX. Plus, HomeGoods, where so many of us go for housewares, put up terrific numbers. The treasure-hunt and highly seasonal feel of HomeGoods is clearly winning people over. It's worth noting that Costco (COST), which was the first retailer to report, had strong sales in many of the overlapping areas of Home Depot and HomeGoods, another confirmation that the money's going into the home. (Starbucks and Costco are part of TheStreet's Action Alerts PLUS portfolio.)
So how do we factor in what's happening at Wal-Mart, where numbers didn't come down and the company talked about a robust back-to-school and Halloween season and seemed quite pumped for the upcoming holiday season? I think Wal-Mart may very well be signaling that many of the changes it has made in terms of personnel and online initiatives, as well as much more creative merchandising, particularly for the home, are working. In other words, Wal-Mart's better-than-expected earnings belong to management's efforts to fix the biggest retailer in the world. I know it's early, but you have to think there's a positive story brewing here, admittedly against lowered expectations, and that the fruits of CEO Doug McMillon's earnest efforts may have begun to pay off.