FT: US Retailers No Longer Think Roaring 20s

Financial Times headline: US retailers ditch talk of ‘Roaring Twenties’ boom amid consumer pinch

Sub-headline: Wealthier consumers splash out despite economic gloom while budget-conscious rein in spending

https://archive.ph/SMjwp

The “unmasking” of American shoppers as they shed pandemic precautions “could lead to a Roaring Twenties type of consumer exuberance,” $RH chief executive Gary Friedman predicted on his upmarket furniture company’s earnings call last June.

One year on, US companies have stopped predicting a repeat of Jazz Age excesses, according to an analysis of transcripts via Sentieo, the financial data group. On Thursday, Friedman announced that RH was cutting its financial forecasts because of “multiple macro headwinds”.

The strong housing market, record equity valuations and low interest rates that Friedman hailed in summer 2021 have been replaced by rising rates, a bear market and a 40-year peak in US inflation.

I have noticed “store brands” at Winn Dixie are taking on more shelf space from more expensive consumer brands. I asked a stocker about this observation of mine and she confirmed that shoppers are “down buying” items that are sometimes made by the very consumer giants with fancy names and packaging. She told me, “Buy a half-gallon of our store ice cream and then buy another half-gallon of Breyers. See if you can find any difference.” I did. The store brand was $3.49 (I think it has the name of “Prestige” IIRC) and Breyers was $6.99. The taste and consistency was identical, the only difference being the packaging for Breyers was fancier and better photographed. So, I just reduced this week’s grocery bill by at lest 30% by consciously “down buying” things like cereal, cleaning products, cheese, etc.

By the way, the Prestige Ice Cream used to be understocked with just two or three bottom shelves in the frozen goods refrigerator. Today it takes up 1 entire refrigerator. That’s what made me ask the stocker if I was imagining more store brands taking up ever more shelving space.

So in this past week I’ve learned another new term to go along with “sports washing” and that is “down buying.”

https://archive.ph/SMjwp

The strong housing market, record equity valuations and low interest rates that Friedman hailed in summer 2021 have been replaced by rising rates, a bear market and a 40-year peak in US inflation.

Instead of exuberance, consumer sentiment has hit its lowest level since the University of Michigan’s index began in 1952, stoking fears of a recession. Adjusted for inflation, consumer spending fell by 0.4 per cent in May, figures released on Friday showed.

Behind those headlines lies a more complicated story, however. Comments from retail and consumer industry executives in recent weeks suggest that the picture of consumer demand is being clouded by supply disruptions and by Americans’ changed priorities as they emerge from two years of pandemic restrictions.

From two days ago, this is a story replete with website links where you can save big bucks from “down buying” returned goods or refurbished goods. I nibbled on $LQDT shares today. Only a 1/6 position.

This is definitely not a boring video giving you insider knowledge about how consumer purchases are changing and how online “returns” are growing exponentially.

https://discussion.fool.com/tgt-wmt-inventory-glut-good-for-lqdt…

Daily chart for $LQDT

https://schrts.co/qxnQVehD

p.s. I set a very tight stop/loss for these first shares at $13.10 per share.