NEW YORK (TheStreet) -- A full week removed from a stronger-than-anticipated employment report for June and ahead of the pivotal back-to-school selling season, there are signs the U.S. consumer is struggling more than believed.
The Consumer Discretionary Select Sector SPDR ETF (XLY) has outperformed the Dow Jones Industrial Average by almost a full percentage point in the last month, while trading relatively in line with the S&P 500 and Nasdaq, suggesting investor portfolios aren't properly adjusting for new information on the state of the U.S. consumer.
Hain Celestial's BluePrintCleanse Takes Cold-Pressed Juice Battle to Starbucks
Watch: How Dig Inn is Doing Business Differently than McDonald's
Walmart's U.S. president sounds the alarm: "It's really hard to see in our business today ... that it's gotten any better," said Walmart (WMT - Get Report) U.S. president Bill Simon said on July 7 when asked by Reuters about the improving labor market. Simon added: "We've reached a point where it's not getting any better, but it's not getting any worse, at least for the middle class and down."
The comments from Simon run contrary to what he said company's May 15 first-quarter earnings call. Simon said in May that Walmart has "solid business fundamentals and anticipate our recently launched initiatives and continued price investment will resonate with the customer."
Same-store sales, more than meets the eye: Of the eight retailers that reported June same-store sales, only teen apparel retailer Zumiez (ZUMZ) raised its second-quarter earnings guidance. Gap (GPS) fell short of Wall Street expectations with a decline of 2% in June same-store sales, compared with the consensus forecast for an increase of 0.7%.
Container Store coins the investor catchphrase of the summer: "Consistent with so many of our fellow retailers, we are experiencing a retail funk," said Container Store (TCS) Chairman and CEO Kip Tindell in the company's first-quarter earnings report. Tindell also said the company continues" to experience slight traffic declines in this surprisingly tepid retail environment."
Shares of Container Store have declined this week by about 18%.
Lumber Liquidators drops the hammer on investors: The second-quarter business update on hardwood flooring supplier Lumber Liquidators (LL) was so dreary that Wall Street moved quickly to reduce its sales and earnings estimates on comparable companies Home Depot (HD) and Lowe's (LOW).
Robert Lynch, president and CEO of Lumber Liquidators, said "customer traffic to our stores was significantly weaker than we expected" and "the improvement in customer demand we experienced beginning in mid-March did not carry into May, and June weakened further." Lumber Liquidators guided the market to two things one never wants to see at a retailer: declining same-store sales and contraction in gross profit margins.
According to Lumber Liquidators, gross margin "contracted due to adverse net shifts in sales mix and greater discounting at point of sale." Same-store sales for the company's second quarter are projected to fall 7.1%, in stark contrast to the 14.9% increase a year earlier.
Family Dollar fumbles: About 45% of Family Dollar's (FDO) store base is in urban markets, which CEO Howard Levine characterized as "struggling" on the company's third-quarter earnings conference call on Thursday. Levine added that economic conditions in inner cities have worsened during the recovery in the jobs market.
Family Dollar disclosed in its press release that it "lowered prices on nearly 1,000 basic items to deliver more compelling values to customers." But Family Dollar hasn't reaped the benefits, noting that same-store sales fell 1.8% in its fiscal third quarter.
As seen in this self-produced Vine video, Family Dollar is now using more $1 signs, as well as a stronger emphasis on the wording "low price" in its aisles to tempt the consumer.