For most Americans, the beginning of the COVID-19 pandemic happened abruptly. In just a couple of weeks in the middle of March 2020, schools sent home their students, all sports were halted, and many stores, restaurants, and theaters closed their doors. The start of the pandemic was neatly demarcated by these events, but now, years later, how and when do we know when the pandemic is over?
For investors and operators, it is important to try to envision what a post-pandemic economy will look like. During the first few weeks of the pandemic the economy essentially came to a standstill, but by the summer of 2020, many parts of the economy began to rekindle. Many consumer companies, especially those that had a robust ecommerce presence, performed well during the second half of 2020 and into 2021. Most entities selling home fitness equipment, casual apparel, hobby/enthusiast items, or housewares thrived during the pandemic as consumers spent less time at work and commuting, and more time in and around the house. But how long lasting would these trends be?
On aggregate, across 130 publicly traded retailers, revenue growth in 2020 was down 2% from 2019. Not bad considering that many stores were closed for weeks during the early stages of the pandemic, and that when stores did open, many consumers were avoiding public spaces. In 2021, with the help of vaccines, American consumers resumed shopping in earnest, but with restaurants, travel and entertainment still curtailed, consumers spent more of their discretionary income on things rather than experiences. With less competition for the consumer’s wallet, retailers generally benefitted from these COVID-influenced shopping patterns and during 2021 the average public retailer saw revenue spike 27% over 2020.
The challenge now comes with gauging 2022. 2022 has seen consumers return to meaningful spending on travel, sporting events, concerts and restaurants. So, in many ways, the consumer environment in 2022 is more similar to 2019 than 2020 or 2021. However, unlike 2019, consumers in 2022 are dealing with inflation rates not seen since the early 1980s.
For the 70 or so public retailers that have reported first half results, the median revenue for 1H 2022 was 4.9% higher than 1H 2021. While that level of growth may not look too impressive at face value, it must be noted that it is being compared to a COVID-fueled 2021. Comparing the first half of 2022 to the first half of 2019, retailers’ sales have increased nearly 30%.
In its earnings release last week, Dick’s Sporting Goods announced that Q2 revenue had dropped 5% in 2022 compared to the same period in 2021, but Executive Chairman Ed Stack was quick to note that the Q2 2022 results were meaningfully higher than Q2 2019 (the last pre-COVID year). While retailers realize that 2020 and 2021’s results were buoyed by COVID, they point to the significant growth in revenue of 2022 compared to 2019 as evidence that many of the new customers acquired during the pandemic are converting into long-term patrons. Dick’s Sporting Goods is not alone; a number of retailers are suggesting that 2022 results should be judged against 2019 performance. In doing so, they are hopeful that their results will convince analysts that their businesses have successfully navigated the pandemic and are carrying a meaningful part of the COVID-fueled momentum into the post-COVID economy.
While many public health officials continue to warn us that the virus is still among us and we should not let our guard down, the consumer economy and the way we look at businesses’ sales and earnings imply something else. Maybe we will look back at this earnings season as a milestone: at least economically, the quarter the pandemic ended.
Apparel & Footwear
Macro headwinds pushed Abercrombie & Fitch Co. into the red for the second quarter, triggering the company to reduce its outlook for the third quarter and 2022 overall. The New Albany, Ohio-based specialty retailer reported a net loss of $16.8 million, or $0.33 cents a share, for the quarter ended July 30, compared to a profit of $110.5 million, or $1.77 a share, in the year-ago period. The retailer also reported an operating loss of $2 million compared to operating income of $115 million last year. Net sales of $805 million were down 7 percent compared to last year on a reported basis and down 4 percent on a constant currency basis. The company joined the growing list of U.S. retailers lowering forecasts and experiencing headwinds from inflation, reduced consumer demand and supply chain issues, including Macy’s, Kohl’s and Target.
Urban Outfitters Inc. continues to feel the effects of inflation as it manages rising costs along the supply chain and excess inventory. The group — which counts Urban Outfitters, the Anthropologie Group, Free People, Terrain and Bhldn, among its brands, in addition to rental subscription service Nuuly and a food and beverage business under the greater company umbrella — revealed quarterly earnings results Tuesday afternoon, improving on top-line sales across all channels, but fell short on profits thanks to continued price hikes along the supply chain. The biggest headwinds came from increased transportation costs and pricey fuel charges in the three months ending July 31. Inventory also grew during the quarter by more than $214 million, or 44.4 percent, year-over-year. By segment, retail inventory rose 42 percent, while wholesale inventory surged 64 percent, year-over-year. The company said it planned earlier receipts to “protect against the volatility of the supply chain,” which also drove up costs. In addition, SG&A expense was up for the quarter by 7.2 percent, or $19.3 million, driven by increased store payroll costs.
Victoria’s Secret & Co reported a second-quarter sales decline of 5.7% year-over-year to $1.52 billion, missing the consensus of $1.56 billion. Total comparable sales decreased 8% compared to 2Q21. The gross margin contracted by 630 bps to 35.2%. The operating income fell by 51.9% Y/Y to $97.51 million, and the margin was 6.4%, down 615 bps. Adjusted EPS was $1.09, beating the consensus of $0.95. The company invested $62 million during the quarter to repurchase 1.7 million shares. Chief Executive Officer Martin Waters commented, “We expect customers will continue to be challenged by inflationary and other financial pressures for the balance of 2022, and we have adjusted our inventory position and cost structure accordingly while allowing for continued investment in growth initiatives,”
American Eagle’s logistics arm Quiet Platforms announced Tuesday that it was expanding its partnership with sports retailer Fanatics by adding same-day and next-day delivery to more markets. Quiet will add service capabilities for Fanatics in cities such as Houston, New York, Phoenix, San Francisco and Seattle next year, according to the release. Same-day and next-day delivery options became available in May for Atlanta, Boston, Chicago, Dallas and St. Louis. Quiet said it prioritized certain markets to help Fanatics prepare for the peak season. The extended partnership paves the way for Quiet to offer same-day and next-day national delivery service to other customers using the logistics company’s connected network, said Shekar Natarajan American Eagle chief supply chain officer and head of Quiet Platforms, in the release. Quiet counts Peloton, Steve Madden, Li & Fung among the more than 60 customers in its network.
Athletic & Sporting Goods
Seawall Capital has attained a majority stake in Sports Endeavors, Inc., the owner of online retailer soccer.com, worldsoccershop.com and 431sports.com. The founding Moylan family of Sports Endeavors remains a minority investor and will continue to lead the North Carolina company. Sports Endeavors was founded over 35 years ago as a DTC retailer by brothers Mike and Brendan Moylan. While still in high school, the Moylan’s produced their first Eurosport soccer catalog in 1984, which developed a cult following among the growing U.S. soccer community. Sports Endeavors then registered the Soccer.com domain in 1994 and began building what has become a destination for soccer apparel, gear, customized team jerseys, and content. Seawell said the investment aligns with its strategy to partner with businesses in the outdoor, fitness and recreation sectors. Other related Seawall holdings include Kent Outdoors and Movement Climbing Yoga + Fitness.
Blackbaud, the world’s leading cloud software company powering social good, today announced that it has acquired Kilter. The acquisition will allow Blackbaud to expand activity-based peer-to-peer fundraising engagement, to support activity-based health and wellness initiatives for socially responsible companies, and to grow the ways individuals can connect with the causes they care about most through the activities they love. Kilter is an intuitive, gamified, activity-based engagement app boasting virtually limitless activity type choices. Kilter expands activity-based engagement beyond the familiar options of running, walking and cycling, enabling users to track new, popular and personally relevant activities, from pickleball to meditation to motorcycling and more.
Peloton has struck a partnership with Amazon in a bid to broaden its customer base and win back investors’ confidence, as revenue growth slows from pandemic highs and its stock price plunges. In its first foray outside of its core direct-to-consumer business, Peloton will be hawking a selection of its connected-fitness equipment and accessories on Amazon’s website in the U.S. That will include its original Bike, which retails for $1,445. It will also be selling its strength product known as Peloton Guide, which costs $295. Excluded from the tie-up are its more expensive Bike+ and Tread treadmill machine. This will mark Peloton’s first partnership with another retailer to sell its merchandise. Until now, the company has relied on its website and physical showrooms, selling directly to consumers.
Cosmetics & Pharmacy
Net sales for Ulta Beauty increased 16.8% to $2.3 billion compared to $2.0 billion in the second quarter of fiscal 2021. “Strong consumer demand and broad-based momentum across our business continued as our teams executed our plans with excellence,” said CEO Dave Kimbell. “For the quarter, we delivered double-digit comparable sales growth across all major categories and increased profitability, demonstrating the strength of our model and the commitment of our teams.” Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 14.4% compared to an increase of 56.3% in the second quarter of fiscal 2021, driven by an 8.3% increase in transactions and a 5.6% increase in average ticket.
Revolution Beauty has received a strategic investment from UK-based fashion retailer Boohoo. The investment marks a step change in the relationship between the two retailers, as Boohoo already stocks Revolution Beauty products on both its direct-to-consumer websites including Boohoo and PrettyLittleThing, as well as in its online department store Debenhams. Co-founded in 2014 by Adam Minto and Tom Allsworth, Revolution Beauty is a global mass beauty and personal care business that operates via a multi-brand, multi-category strategy, selling its products both direct to consumer via its e-commerce operations and in physical and digital retailers through wholesale relationships. Its products are sold in 11,000 stores in 45 countries. Manchester-based Boohoo was founded by Carol Kane and Mahmud Kamani in 2006, growing from three employees to a business with sales of more than £1.2 billion last year. Boohoo has been expanding into beauty through its own retail brands and through acquisitions such as Debenhams.
Discounters & Department Stores
Joining other retailers in seeking up-and-coming beauty brands, Walmart has selected five new beauty companies to participate in the first cohort of Walmart Start, a beauty accelerator program that provides participating brands the chance to launch their products at Walmart, according to an announcement emailed to Retail Dive. The brands in the first class of Walmart Start participating companies are: the perfume brand Dossier, the skincare and wellness company Undefined Beauty, the nail brand PaintLab, the hair care brand Pardon My Fro and the customized hair care brand The Hair Lab By Strands. The Hair Lab plans to launch its hair analysis technology in Walmart stores, and Pardon My Fro Will introduce its first line of beauty products exclusively with Walmart, according to the company website.
Walmart has launched Walmart Rewards as a new benefit to its Walmart+ membership, Chris Cracchiolo, senior vice president and general manager of Walmart+, wrote in a company blog. Shoppers can earn and redeem rewards both in-store and online. For online shoppers, customers can tap the “add reward” option under eligible items on Walmart’s site or app to claim the savings and then apply their rewards balance to their purchase at checkout. The item-specific rewards, powered by Ibotta Performance Network, come at a time when Walmart is bolstering the perks tied to Walmart+.
Thanks to relatively tight inventory control, Macy’s fared better than feared in the second quarter. Inventory was up 7% year over year and down 8% versus 2019. Net sales were essentially flat, down 0.8%, with store comps (including licensed spaces) down 1.6% year over year and up 4.4% compared to 2019, per a company press release. Gross margin contracted to 38.9%, from 40.6% a year ago, with merchandise margin degradation driven by permanent markdowns at Macy’s, largely on pandemic-related goods, seasonal goods and private brands. Net income fell 20.3% to $275 million. Noting that results have deteriorated since Father’s Day as consumers grow more financially stressed, the company lowered its outlook for the year. Macy’s now expects net sales to reach $24.3 billion to $24.6 billion, down from previous guidance for $24.5 billion to $24.7 billion.
Macy’s last week named Casper CEO Emilie Arel to its board of directors, effective Aug. 15. The department store praised Arel’s two decades worth of experience in retail, including at companies like Target, Gap, Quidsi and Fullbeauty Brands. Macy’s CEO Jeff Gennette highlighted Arel’s digital chops, including leading the “digital transformation” of Fullbeauty and her pursuit of an omnichannel strategy at Casper. “Emilie’s experience putting customers at the center of the shopping experience will benefit our board and the broader organization as we continue to provide Macy’s, Inc. shoppers with a more personalized and immersive brand experience,” Gennette said in a statement.
Emerging Consumer Companies
Perform, a San Francisco-based sports training startup, raised $1.2 million in pre-seed funding led by Defy.vc. The round was joined by Techstars and other angels. Founded in 2021, Perform offers an intelligent training app and personal running coaching to help users reach their running goals. Since the beta introduction of Perform earlier this year, the app has received high praise from the running community, particularly because, unlike traditional personal trainers that are expensive and charge per session, Perform offers three monthly subscription options with daily access to coaching. Perform is making coaching accessible for everyone, from new runners looking to incorporate running into a healthy lifestyle to experienced runners preparing for marathons.
Oliver Space, a technology-enabled furniture startup, raised its $36 million Series B round. The round was led by Union Grove Venture Partners, with participation from Mayfield Fund, USVP, Expa Capital, Abstract Ventures, LG Technology Ventures, and Avenue Capital Group. “For decades, the furnishing experience has been excruciating for consumers, and it starts with the broken cycle of furniture,” says Chan Park, CEO and co-founder of Oliver Space. “Consumers wait months for expensive furniture to arrive, and are faced with a laborious used furniture resale experience that leads many to throw pieces out on the street. Furniture is America’s largest imported consumer product category, yet at the same time it is the second largest source of urban waste, with 20 billion pounds of furniture going to landfills every year.” Since launching in 2019, Oliver Space has created a solution to the urban furniture problem: a fully circular consumer furnishing platform, which enables its customers to have a seamless experience from purchase to trade-in. The company intends to use the proceeds from the round to expand operations and its business reach.
Happy Health, an Austin-based tech startup, has $60 million in Series A funding led by ARCH Venture Partners. Launched in 2019, Happy Health has designed the first wearable ring that measures stress levels, mood, sleep, and other health parameters in real-time. Unlike other wearable health sensors in the market, the Happy Ring uses custom-designed biometric sensors and proprietary adaptive AI, to capture brain signals from the peripheral nervous system and translate those into real-time objective measures of mood state. The company’s AI technology, backed by decades of neurocognitive research, enables users to have a personal health guide at their fingertips. The company intends to use the funds to accelerate growth and expand operations.
Food & Beverage
Canned alcoholic beverages are infiltrating the market from upstart companies and large CPGs aiming to capture a slice of the fast-growing category. Increasingly, a trick to standing out is offering something unique, and Collins thinks Casa Azul does just that.
The brand differentiates itself from many traditional canned drinks by having a simple ingredient list that includes sparkling water, tequila, natural fruit flavors and agave nectar. It also contains only 100 calories per can and 1 gram or fewer of carbs. In a statement, Collins said that other canned cocktails made with real spirits have more than twice the alcohol and three times the carbs and sugar. Similarly, the market is saturated with low-calorie, low-alcohol-by-volume hard seltzers that while convenient, are made with malt liquor. Coca-Cola, which is selling an alcoholic line of its Topo Chico with partner Molson Coors, was recently sued by a customer who said its margarita products are misleading because the seltzers don’t contain tequila.
In the latest move to diversify its beverage portfolio, PepsiCo earlier this month invested $550 million into Celsius Holdings, the maker of the eponymous energy drink. The deal, which includes a long-term distribution agreement, gives the Pepsi owner an 8.5% stake in the company and director’s seat on its board. It is intended to boost Celsius’ growth agenda, eventually driving efficiencies and consolidating efforts in other areas like marketing. A closer relationship with Celsius should help PepsiCo tap into the surging energy drink market, which is being driven by better-for-you products. Celsius ranked fifth behind Red Bull, Monster, VPX and PepsiCo-owned Rockstar in a recent IRI report, with over $500 million in sales — a mammoth 220% change over the prior year. Celsius CEO John Fieldly said the upward trajectory is part of a “mega-trend of health and wellness” across CPG.
Campari Group has closed an agreement with Catalyst Spirits to acquire an initial 15% interest in Howler Head Bourbon, with a medium-term route to total ownership and exclusive global distribution rights. As part of the deal, Campari will pay $15 million in cash in the first stage of path to total ownership, according to a press release. It can then acquire 100% of Howler Head through customary call options based on future brand results achievements, which can be exercised beginning in 2025. Launched nationwide in the U.S. in 2021, Howler Head produces an 80 proof, banana-flavored super-premium Kentucky Straight Bourbon Whiskey. The label is owned by whiskey entrepreneur Steve Lipp and Wooler Brands, Inc. CEO Jason Wooler.
Grocery & Restaurants
New York City-based frozen yogurt chain 16 Handles has been acquired by company franchisee Neil Hershman and YouTube star Danny Duncan for an undisclosed amount, the company announced Tuesday. Hershman and Duncan — who will become CEO and chief creative officer, respectively, effective immediately — plan to expand the 30-unit brand aggressively beyond the TriState area surrounding New York. Hershman currently owns five 16 Handles locations, including a brand-new Times Square location, and recently opened Dippin’ Dots’ first-ever ice cream store in New York City’s Flatiron District, and has since opened more locations in Manhattan and Brooklyn. Hershman also recently opened Captain Cookie & the Milkman, a Washington, D.C.-based cookie and ice cream company. Duncan is planning to open his first 16 Handles location in his hometown of Englewood, Fla. and the duo is looking for franchisees to take the brand national.
Smashburger, the better burger fast-casual restaurant, will add 15 new locations in and near Tampa, Florida, under a recently signed Development Agreement with one of its franchisees. The agreement was reached with Jiandong “Peter” Xu of TLC Gourmet Food International, now operates two Smashburger locations in Tampa. Xu plans to open the new locations in the west Florida counties of Charlotte, Hillsborough, Manatee, Pasco, Pinellas, and Sarasota. Xu is one of Smashburger’s most prolific franchisees. Besides the two existing Tampa locations, he also owns five Smashburgers in the Philadelphia-area, and recently signed a Development Agreement for three more in Pennsylvania’s Lehigh Valley.
Home & Road
La-Z-Boy Inc., a global residential furniture manufacturer and retailer, set a record with its first-quarter 2023 results for the period ended July 30. The company’s consolidated sales increased 15% to $604 million, a first-quarter record. “We delivered excellent results for the quarter, amidst challenging trends for the global economy and the furniture industry,” said Melinda D. Whittington, president and CEO. “We are focused on navigating the near-term volatile environment with agility while strengthening our business for the long term with our Century Vision strategy. This quarter, we further built our iconic La-Z-Boy brand with the acquisition of five La-Z-Boy Furniture Galleries stores in the Denver market, and our Joybird brand with the opening of two new Joybird retail stores.”
Flexsteel Inds., a manufacturer, importer and marketer of residential furniture products, noted a net sales decline of 8.6% in the fourth quarter, and although meeting estimates for sales which topped $124 million for the quarter, there are troubling signs for the upcoming year. Net sales for the quarter decreased by 8.6% to $124.5 million compared with $136.2 million in the prior year’s quarter. For the year, net sales increased 13.6% to $544.3 million compared with $478.9 million in the prior year. Gross margin decreased to 14.2% for the fourth quarter and 13.4% for the year compared with 19.4% in the prior year quarter and 20.2% for the prior year. “While our long-term growth outlook remains promising, there are a few market headwinds which we are navigating in the short-term that may create pressure on our first half profit results for fiscal 2023, “ said Jerry Dittmer, president and CEO of Flexsteel.
CSC Generation submitted a proposal to acquire Flexsteel Inds. for $20.80 per share in cash, an approximately 22% premium for shareholders. CSC is a technology company that acquires what it deems are overlooked store and catalog-based companies and transforms them into high-performance, “digital first” brands, according to CSC. Since CSC’s founding in 2016, it has acquired and successfully integrated a number of well-known brands, such as Sur La Table and One Kings Lane. In just two years, it has evolved Sur La Table into a digitally centric business, according to the company. CSC believes transformation is needed at Flexsteel and that a successful outcome can only be executed as a private business with the additional resources of a digitally native owner like CSC.
Jewelry & Luxury
It’s not just jewelry e-tailers that are consolidating. High-end luxury e-tailers are doing it too—and the jewelry and watch business will likely be affected. Richemont has sold part of its stake in Yoox Net-a-Porter (YNAP) to Farfetch, the online luxury marketplace that went public in 2018. The deal calls for Farfetch to purchase all of longtime rival YNAP within three to five years, subject to certain conditions. It also means that nearly all of Richemont’s celebrated brands—including noted watch and jewelry names Cartier, IWC Schaffhausen, Jaeger-LeCoultre, Montblanc, Piaget, Vacheron Constantin, and Van Cleef & Arpels—will have e-concessions on Farfetch. The overall goal is to create a “neutral industry-wide platform” that will attract a wide variety of luxury brands, a statement said.
Alex and Ani has received a $17.5 million senior secured credit facility, nearly a year after the charm brand left Chapter 11. The asset-based loan will provide working capital for the newly restructured company so it can further develop its business, says Michael Sullivan, managing director of Second Avenue Capital Partners, the Boston-based company that provided the facility. “Alex and Ani have cleaned the company up and put it back in the right direction,” Sullivan says. “This will allow the business to further invest and get back on the right path and facilitate their continued turnaround.”
Gen Z is leading the trend of “shopping to sell” designer fashions, according to The RealReal Inc.’s 2022 Luxury Resale Report. Consumers 25-years-old-and-younger see resale shopping as something of a sport, buying used luxury goods with the goal of selling them later at higher prices. The trend has become particularly popular as inflationary woes mount, the report said. The RealReal, an online consignment platform, saw a 50% jump in the first half of this year in the reselling of items bought on the site by Gen Z customers, according to Sasha Skoda, senior director of women’s merchandising at the company.
Brand loyalty is a powerful force in the auto trade. Automakers plow billions into ads that provide no information whatsoever about their vehicles, but are designed to make their brands look classy and cool. They also spend (some would say squander) substantial sums keeping ancient brands alive, because they (and even more so, their dealers) fear that letting any brand die a natural death could result in a loss of market share. So, a new report from S&P Global Mobility, which found that brand loyalty has been falling across the luxury segment, must be causing some serious concern in corner offices around the world. We’re not talking about Buicks, Opels or Vauxhalls here—some of the auto world’s strongest brands (Porsche, Audi, Mercedes, Lincoln, Cadillac) have seen their rates of return buyers decline substantially over the last couple of years. Meanwhile, Tesla, the only major automaker that sells only electric vehicles, has logged an increase in brand loyalty.
Office & Leisure
Cineworld, the owner of Regal Cinemas, confirmed it is considering filing for Chapter 11 bankruptcy in the U.S. and “associated ancillary proceedings in other jurisdictions” amid an ongoing evaluation of strategic options. “Any such filing would be expected to allow the Group to access near-term liquidity and support the orderly implementation of a fully funded deleveraging transaction,” the movie theater chain said. “Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees.” The update comes after The Wall Street Journal reported on Friday that a possible bankruptcy filing could come “within weeks” and that Kirkland & Ellis LLP and AlixPartners have been tapped as advisors on the process. Cineworld is the second-largest movie theater chain in the world behind AMC Theatres.
Hasbro is considering restructuring or selling off assets in its eOne entertainment studio, which Hasbro acquired in 2019 for $4 billion, according to Bloomberg’s Lucas Shaw, who cited anonymous sources. Hasbro “can take the existing staff and redirect it to make branded entertainment (think ‘Peppa Pig’ movies), and shut down work on projects like ‘Yellowjackets’ and ‘Designated Survivor,’” Shaw wrote in Bloomberg’s Screentime newsletter, describing the options under consideration. “Or it can sell everything it doesn’t want.” Last week, Hasbro announced that eOne CEO Darren Throop plans to step down at the end of the year when his contract expires. The company has not announced a replacement yet but indicated it would share transition details closer to Throop’s departure. When Hasbro bought eOne under former CEO and Chairman Brian Goldner, the company was getting both valuable new intellectual properties — including PJ Masks and Peppa Pig — of benefit to its toy business, as well as knowhow in producing entertainment, giving the company a direct channel to cashing in from media made out of its own properties.
Technology & Internet
JD.com beat top and bottom line expectations in the second quarter, but posted its slowest year-on-year revenue growth on record, becoming the latest victim of a Covid-induced economic slowdown in China. But the company got a boost from better profitability in its main retail business and logistics division, helped by the annual “618” shopping festival that takes place in China in June. During the April to June quarter, China saw a resurgence of Covid-19 that led to lockdowns of major cities across the country, including the financial powerhouse of Shanghai, as authorities tried to contain the worst outbreak of the virus since the initial spread in 2020. China’s economy grew just 0.4% year-on-year in the second quarter. Investment banks have cut their full-year growth outlooks for the world’s second-largest economy. JD.com is not the only Chinese technology company suffering a fallout from the economic slowdown. This month, e-commerce rival Alibaba reported flat June quarter revenue for the first time while gaming and social media giant Tencent reported its first revenue decline on record.
Finance & Economy
Home prices declined 0.77% from June to July, the first monthly fall in nearly three years, according to Black Knight, a mortgage software, data and analytics firm. While the drop may seem small, it is the largest single-month decline in prices since January 2011. It is also the second-worst July performance dating back to 1991, behind the 0.9% decline in July 2010, during the Great Recession. The sharp and fast rise in mortgage rates this year caused an already pricey housing market to become even less affordable. Home prices rose sharply during the first years of the Covid pandemic because demand was incredibly strong, supply historically weak and mortgage rates set more than a dozen record lows.
The rush back to in-person activities and events hasn’t meant a total collapse in retail sales. In some ways, the reopening has actually been a driver. Some of the most wanted products from Macy’s and Dick’s Sporting Goods during the spring months, for example, reflect demand for things that people need as they rushed out of their homes. Luggage and beauty sales were a bright spot for Macy’s during the second quarter, the company reported. At Dick’s, consumers who have stuck with their pandemic health habits are helping to drive sales, CEO Lauren Hobart noted on an analyst call.