June same store sales tomorrow. The Container Store disaster notwithstanding, we should get strong numbers from the handful of retailers that sill report monthly sales.
Employment, housing and consumer confidence have all improved. Traffic levels appear to have improved. Weather has been good. Discounting is still strong, which will lure shoppers to stores, but could hurt margins.
RetailMetrics estimates same-store sales could jump 4.9 percent, which would be the biggest, non-Easter impacted gain since January 2013.
That would be nice! Despite all this talk about an improving economy, the retailers haven't seen any signs of it.
Wal-mart CEO Bill Simon came on our air yesterday and implied the lack of wage growth is the main problem. He's likely right; though, WMT is apparently having trouble fending off the likes of Family Dollar (FDO), which has been aggressively cutting prices. Wal-Mart has been out-Wal-Marted!
Which brings me to The Container Store (TCS), down 10 percent today to a new low on volume nearly 10 times normal.
What happened to this darling of retail analysts? Same-store sales down 0.8 percent? Traffic DOWN 2.3 percent?
CEO Kip Tindell's now famous comment, "Consistent with so many of our fellow retailers, we are experiencing a retail 'funk'" has analysts scratching their heads.
This stock was a favorite of analysts for several reasons: 1) We all have too much stuff and TCS was going to show us how to organize it, and 2) the demographic appeal is similar to Restoration Hardware (RH), i.e. on the higher end.
Morgan Stanley's analyst, Simeon Gutman, had it right: "...the 0.8% comp decline and negative traffic are disappointing for a business with such an under-penetrated growth opportunity."
So what is going on? It's unlikely that TCS' upper-end client is in a genuine funk.
Second, there is some evidence that a slower pace of household formations is hurting sales.
Third, these container products--we're talking everything from storage boxes to full closets--aren't bought very often. They are durables, not consumables, and a lot of analysts seem to have made that mistake, assuming there would be more repeat-traffic than has actually materialized.
But the big factor is TCS is being affected by the same trend to e-commerce sales all retailers are facing: Amazon is eating into everyone's business.
One thing's for sure: The company seems to be recognizing that its future lies in the upper-end consumer. TCS is planning to unveil a new line of luxury installed closets in the fall of 2014.
One thing that bugs me: Of seven analysts who cover TCS, six have a "Hold" rating, only one has a Buy rating, and NONE have changed their ratings today, even though ALL of them lowered their full-year earnings estimates, most of them by roughly 15 percent.
This, despite the fact the stock is now at a historic low of $24 and change, after going public in November at $18 a share, and OPENING at $35.