In reality, though, I care about what the companies are telling us, and I try to form a worldview, an outlook based on what real business people -- not politicians, bureaucrats, strategists or chartists -- tell me. That way I am more certain in my convictions and I feel grounded. I always say that you need to be confident in your choices, and I don't care how you make those choices. Chartists like to look at pictographs. That floats their boat. Big macro thinkers like all of that data. I like the conference calls, the earnings reports and the research, and, alas, I haven't liked what I have heard of late, particularly in retail.
Take last night. We got earnings reports from four retailers, and three were just plain disappointing: Vera Bradley (VRA), Francesca's (FRAN - Get Report) and Ascena Retail Group (ASNA). Now we have not been a fan of Vera Bradley, the women's accessory store, and we actually had put it in our "sell block" not all that long ago. We didn't like the fashion aspect, the hit-or-miss element of its business, particularly its handbag line.
Sure enough, the company talked about merchandise assortment challenges, which, to me, don't happen if you have the right assortment.
Francesca's, which aims for the 18-to-35 demographic, talked about a weak spring for its apparel and accessories.Ascena, which we have had on many times, just simply blew up, with every one of its store chains, Maurice's, Dress Barn, Justice and the newly acquired Charming Shoppes, well below plan. I mentioned on Friday's "Game Plan" that this could get hammered if it missed at all. I never expected it to be this bad, including down 7% for the core Dress Barn line and down 4% for Justice. That's plain terrible, and the company blamed weather, and more important, the weak middle-income consumer. You put these three together, and you get a pretty gloomy picture of what's out there, with pretty much all ages, shapes and sizes spending less. When you couple that with Dollar General's (DG) disappointment the other day, you get a sense that May was a very weak month in the U.S. economy.