Ross Stores just called out increased activity across all income cohorts. TJX told us how incredible the inventory selection is. This booming business at off-price retailers is further evidence that shoppers are feeling increasingly strained. Investors need to pay attention, even if these companies aren’t in their portfolios, because consumer spending drives two-thirds of the American economy. Their buying behavior has implications for the Federal Reserve’s next move — and that matters to the whole market. After Thursday’s close, Ross Stores reported quarterly sales and earnings above expectations, with same-store sales surging 17%. CEO James Conroy said on the post-earnings call: “Comp increase was primarily driven by a growth in transactions, and we saw healthy increases in customer count on a comp store basis across income levels, ethnicities, and all age groups, including the young customer.” It’s no wonder the stock jumped more than 5.5% on Friday, pushing back toward record highs. For the week, the stock is up over 9%. Same story at TJX, our Club holding behind T.J. Maxx, Marshalls, and HomeGoods. On Wednesday’s call, CFO John Klinger said that first-quarter comp growth of 6% was “driven equally by a higher average basket and an increase in customer transactions. … Across all geographies, income, demographic bands, we’re very pleased with what we saw.” Shares surged on earnings day and are up more than 6% for the week. While shoppers seek out similar value at Walmart — and its earnings Thursday morning showed some of that — it was the retail giant’s warning about high gas prices that got all the attention because it dinged the company’s outlook. On the Walmart call, CFO John David Rainey said, “We have a large fuel business, and we see that in the most recent period, the number of gallons that customers fill up with when they come to our fuel stations fell below 10 for the first time since 2022. That’s an indication of stress.” He did try to blunt some of that worry, saying that “while there are certainly pressures on the consumer, let me reiterate: our business is strong.” Between what TJX and Ross are saying, coupled with Walmart’s challenges, it’s safe to say the consumer is getting more frugal. We got more evidence on Friday: The latest consumer sentiment survey hit a new record low. Next week, we’ll be looking at the last of the three major off-price retailers, Burlington . We already know the lower-income cohort was being stressed; the question is, is that upper part of the “K-shaped” economy we find ourselves starting to feel it now as well? On Thursday night, Deckers Outdoor , the parent company behind the Hoka running shoe and Ugg boot brands, indicated the consumer looked OK from their point of view. These are certainly more premium brands, so keep that in mind. “Consumers, even with everything going on, are still operating from a healthy position,” CFO Steven Fasching said on Deckers’ fiscal fourth-quarter call. “I…
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