Target’s same-store sales have been trending in the wrong direction. Third quarter comps by month showed a 2.8 percent gain in August, followed by a 4.0 percent increase in September. But October proved challenging, with same-store sales declining 0.9 percent. This occurred despite the Target Deal Days promotion that ran between October 6 and 8.
Target CFO Michael Fiddelke, speaking in mid-November on the company’s earnings call, called it “notable” that there was a “dramatic change in the pace” of the chain’s sales in October.
“The month began with an initial round of holiday promotions from Target and some of our competitors. And in that week, we saw a high single-digit increase in comp sales compared with last year,” he said. “For the remainder of the month, we saw a low single-digit decline in comp sales over those last three weeks. Nearly all of the slowdown was driven by our discretionary categories, apparel, home and hardlines as our guests became increasingly cautious in their spending in those categories at both Target and throughout the industry more broadly.”
Mr. Fiddelke said that Target began November with sales “trends consistent” with what the retailer saw at the end of October.
Target reported a 24.7 percent gross margin during the third quarter, an improvement of over three points from the second quarter, but “far short” of its goal. Mr. Fiddelke put most of the blame on consumers waiting for sales deals before they make a purchase. The retailer saw this trend intensify in the back half of October.
Discussion Questions: Are Target’s October and early November sales trends consistent with what’s taking place across retail? Do you expect that profit margins will be significantly compressed during the fourth quarter as consumers wait for sales promotions before making purchases?
Comments from the RetailWire BrainTrust:
Target is a massive enterprise and adjustments take quarters to resolve, not months. Target is still managing down its excessive inventory and this will impact profitability, including in Q4. But let’s keep these results in perspective: same-store sales were still up 2.7 percent and they made meaningful progress on markdowns during the quarter. Notwithstanding these adjustments, I remain confident in the leadership and operators at Target.
Mark Ryski, Founder, CEO & Author, HeadCount Corporation
Consumers know the deals are coming. In this economic climate, they are going to hold out for every penny-off they can get. This is going to squeeze all of retail. Target is just an early indicator of what is coming; not just for this holiday season but in Q1’23. Retailers will need to reassess their strategies in the new year and that’s when things will get interesting.
Rachelle King, Retail Industry Thought Leader
It’s going to be difficult to generalize here. We just heard some pretty tough news from Target and some pretty good news from Macy’s. And it’s not just a sales conversation. Inventory management will often be the driver of both the sales and margin outcomes. An over-inventoried retailer sitting in an environment of tightening wallets is in a real pickle. And even if Target has taken all their lumps on clearing excess inventory, they are being pretty clear about discretionary spending. It’s softening.
It also looks like the big sale event didn’t provide incremental sales. It was announced and customers waited. Or they decided to buy early something they would have bought down the road. No incremental sales, but a margin giveaway. That’s the ugly lesson of one-day sales. Big, predictable sales are not the retailer’s friend.
Jeff Sward, Founding Partner, Merchandising Metrics
It’s all about inventory positions and categories. Target has higher inventories, while Macy’s did not. Walmart saw improvements in grocery and not so much in general merchandise. Target’s business is more skewed toward apparel and discretionary categories with higher inventories. As the company activates more and deeper promotions than initially planned, others will have to respond to protect their sales going into the holidays. Buckle up; Target’s woes will not stop at its doors.
Mohamed Amer, PhD, Independent Board Member, Investor and Startup Advisor
Apparel & Footwear
American Eagle Outfitters is the latest retailer bracing itself for an increasingly promotional holiday shopping season as it continues to manage inventory and changing consumer shopping patterns. The retailer — which includes the American Eagle, Aerie, Offline by Aerie, Unsubscribed and Todd Snyder brands — revealed quarterly earnings Tuesday morning before the market opened, falling short on both the top and bottom lines. But the company said it’s made progress in the last three months right-sizing the ship and bringing inventory levels more in line with demand. Shares of AEO surged during Tuesday’s session, as a result, ultimately closing up 18.2 percent to $15.36 apiece. “I’m pleased to deliver a third quarter that exceeded our expectations, with profit margins meaningfully improved from the first half of the year,” Jay Schottenstein, American Eagle Outfitters’ executive chairman of the board and chief executive officer, said in a statement. “Bold actions to rationalize inventory and reduce expenses are paying off. We are staying disciplined and focused on improving profitability and cash flow, while maintaining a healthy balance sheet.”
Luxury jacket maker Canada Goose is all in on its brick-and-mortar strategy, which it says is fueled by increasing consumer demand across US cities for the chance to engage more directly with the brand. The Toronto-based outerwear brand opened a permanent location in Las Vegas in early November, with plans for a Denver store to open in December. Pop-up locations in Aspen and Detroit are also set to open before the end of the year. “DTC channels, especially brick-and-mortar stores, serve as an unfiltered window into our brand and allow us to create meaningful relationships with our customers,” Canada Goose president Carrie Baker told Retail Brew via email. “Opening new doors was a natural step for the brand to engage with more people directly.”
Belgian fashion designer Raf Simons revealed on Instagram that he is shutting down his own label after “an extraordinary 27-year journey.” The spring 2023 show staged during Frieze London last month will be the designer’s last collection for his own brand. Simons launched his namesake label in 1995. The designer kept growing his brand while working for major fashion houses including Jil Sander, Dior and Calvin Klein. Pieces from Simons’ early years often fetch high prices on resale sites and during auctions. In 2020, he reissued some 100 pieces of his signature designs throughout the years, including the high-profile collaboration with Sterling Ruby.
There’s still a big split in Urban Outfitters Inc.’s business, with the more affluent Anthropologie and Free People customers continuing to spend in the third quarter while the younger crowd at Urban Outfitters pulled back. But Richard Hayne, chief executive officer, who acknowledged some pricing missteps at the Urban Outfitters unit, said the overall outlook is still good — if the economy doesn’t fall off a cliff. “Looking forward to Q1 next year, the health of the economy remains highly uncertain, but assuming we avoid a major recession, we believe there are several reasons for us to be optimistic,” Hayne told analysts on a conference call going over quarterly results. The CEO said supply chain costs have dropped sharply over the past six months, that the company is moving quicker and that it is focusing more on “alpha product,” while reducing the number of items it carries and eliminating many smaller inventory buys. Hayne also said the company remains “committed to entering the spring selling season with leaner inventories which would give us the opportunity to deliver low markdown rates, especially at the Urban Outfitters brand.”
Athletic & Sporting Goods
Sports Direct owner Frasers Group is buying Gieves & Hawkes, the historic Savile Row tailor, the BBC has learned. The Frasers Group’s chief executive said the move secured “a long-term future” for the 250-year-old firm. The retail giant, which was founded by Mike Ashley, emerged as a potential buyer of Gieves & Hawkes in September. Gieves & Hawkes is one of the oldest bespoke tailoring companies. But it has faced uncertainty ever since its Hong Kong-based owner collapsed into liquidation last year. Retail billionaire Mike Ashley has been one of the High Street’s most prominent and colourful figures since founding Sports Direct, which eventually became Frasers Group, 40 years ago.
Soccer Post, the largest chain of soccer specialty stores in the U.S., secured an investment from TZP Group, the private equity firm. Soccer Post also announced that Alex Morgan, the American professional soccer player, a brand ambassador, had become an investor. “We have experienced significant growth and have unprecedented opportunities to scale the business nationally through multiple channels. We needed to find a partner with expertise in omnichannel retailing and the capital to support our anticipated growth” said Sarah Jett, chief brand officer, Soccer Post. “We selected TZP for their track record with omnichannel retailers, portfolio of authentic brands and their confidence in our team and our vision for the future of soccer specialty retail.”
Cosmetics & Pharmacy
UK-based brand incubator DCB Lab has added clean personal care brand Type:A to its growing beauty portfolio. Type:A is a mission-driven personal care brand that aims to help people lead healthier lives. With high-performance deodorant and body care that have racked up over 8,000 5-star reviews, Type:A has made it easy to switch to better-for-you products. DCB Lab is a London based tech-enabled brand incubator with a deep focus on e-commerce and Amazon growth within the US and UK markets. DCB Lab believes Type:A has the whole package and is ready to scale quickly: strong brand affinity, amazing product loyalty, patented formula that really performs, and omnichannel distribution. DCB will leverage its global team and track record of success to continue scaling this cult-favorite personal care brand. In January 2020, Type:A raised $2.4 million in seed funding led by Fernbrook Capital Management. NBA All-Star Chris Paul and his wife Jada Paul made an investment in Type:A in November 2021.
India’s e-commerce platform D2C Ecommerce has acquired personal care D2C brand Luxura Sciences, expanding its reach in the beauty and personal care category. Luxura Sciences was founded in 2018 by entrepreneur Mohd. Suaid Ahmed. The brand’s range consists of 100 natural, herbal personal care products made using time-tested therapeutic methods of Ayurveda. The Luxura Sciences brand is sold across e-commerce platforms like Amazon, Flipkart, Meesho, and Nykaa. D2C Ecommerce was founded in April 2022 by Manish Gupta as India’s first multi-D2C brand online platform that sells its homegrown brands AccessHer, Luxura Sciences, Kasrat, Swarg Kitchen, and Endless Trendz, across multiple home and lifestyle categories including apparel, cosmetics, beauty, jewelry, accessories, fitness, sports, shoes, bags, books, kitchen, food, auto accessories, electronics, kids, and travel packages. Through the acquisition, D2C Ecommerce will expand in the personal care and beauty segment, strengthen Luxura Sciences’ product offerings by investing in newer categories, and foray into global markets including US, UK, Middle East, Southeast Asia, and Europe.
Discounters & Department Stores
Nordstrom beat expectations in the third quarter, reporting a 2.9% net sales decline to $3.4 billion, including a 300-basis point hit because its annual anniversary sale took place in the second quarter. That timing shift, plus reducing Rack store fulfillment and sunsetting Trunk Club, dragged e-commerce down 1,000 basis points, falling 16.4% in the period to 34% of sales. By banner, full-line Nordstrom sales fell 3.4% to $2.3 billion, as off-price Rack fell 1.8% to $1.2 billion. Ending inventory rose 0.6% this quarter, according to a company press release. Gross profit edged down to 33.2% from 35.1% a year ago, and the retailer swung to a $20 million loss from net income of $64 million last year.
Dollar Tree Inc.’s top-line sales rose 8.1% year over year to over $6.9 billion in the third quarter. By banner, Dollar Tree comp sales rose 8.6% and Family Dollar comps were up 4.1%. The retailer’s gross margin increased 240 basis points to 29.9% despite a larger share of lower-margin consumables in the mix along with rising costs, shrink and markdowns. Operating income rose 22.8% from last year. In a press release, CEO Mike Witynski attributed the sales lift to “the timely execution of merchandising initiatives to drive our consumables business” and said consumers were “responding to our new value proposition at Family Dollar and Dollar Tree.”
Macy’s is using space within 35 of its stores to function as mini distribution centers as the retailer positions its e-commerce network to handle an expected influx of shipments ahead of the holidays. Around 1 million square feet of store space has been converted to be used for fulfillment services, CFO Adrian Mitchell said on an earnings call Thursday. The move gives Macy’s distribution network a presence closer to customers, allowing the retailer to better service demand. The mini distribution centers are semi-automated and expected to save shipping costs, speed deliveries and reduce the need for split shipments. “They are relatively low-cost complements to our existing fulfillment network,” said Mitchell.
Leap, a company that helps DTC brands enter brick-and-mortar retail, is teaming up with mall owner Simon Property Group to open stores for digital-first brands at the company’s mall properties, according to a company press release. To start with, the companies will open four stores in California and Florida, including a True Classic Tees store in Los Angeles’ Del Amo Fashion Center, and stores for ThirdLove, Sugarfina and Goodlife in Florida’s Town Center at Boca Raton. Simon is an investor in Leap, which raised $50 million in January this year.
Emerging Consumer Companies
Speak, an English language learning platform with AI-powered features, announced that it raised $27 million in a Series B funding round led by the OpenAI Startup Fund, with participation from Lachy Groom, Josh Buckley, Justin Mateen, Gokul Rajaram and Founders Fund. Notably, Speak is the third startup in which OpenAI, the AI lab closely aligned with Microsoft, has publicly invested through its fund — the others being Descript and Mem. OpenAI Startup Fund participants receive early access to new OpenAI systems and Azure resources from Microsoft in addition to capital.
Mike Tyson and Evander Holyfield are joining forces ahead of this holiday season for a special line of cannabis edibles referencing the infamous 1997 heavyweight boxing bout when Iron Mike was disqualified for biting off a chunk of Holyfield’s ear. The ear-shaped, THC-infused “Holy Ears” snacks are released via the Tyson 2.0 Global company. Holyfield is set to launch his own line in 2023. “Mike and I have a long history of competition and respect for one another. And that night changed both of our lives. Back then, we didn’t realize that even as power athletes, we were also in a lot of pain. Now, nearly 20 years later, we have the opportunity to share the medicine we really needed throughout our careers,” Holyfield said. Priced at $30 USD per bag, the Delta 8 Holy Ears snacks are now available at the Tyson 2.0 Global website.
Food & Beverage
Molson Coors Beverage is winding down its joint venture with Hexo making CBD beverages in the U.S. and ending its partnership with the coffee company La Colombe, the beverage company said in a blog post. In ending its Truss USA joint venture with Hexo, Molson Coors cited “no near-term pathway to federal legalization” and “uncertainty” for cannabis products. Molson Coors’ distribution agreement with La Colombe ends March 31, 2023, and it was a “mutual decision” to part ways, Molson Coors’ president of emerging growth Pete Marino said in the blog.
Brian Sikes, Cargill’s chief operating officer, was named its next president and CEO. He will take the helm of the global protein and ingredients giant on Jan. 1. Current Cargill CEO Dave MacLennen, who served in the role for nine years, will transition to executive chairman of Cargill’s board of directors. According to The Wall Street Journal, MacLennen is 63, two years shy of Cargill’s customary retirement age. Sikes has been at Cargill for 31 years, and he became COO last year. Prior to that, he headed the company’s protein and salt business, which is its largest.
The U.S. Food and Drug Administration (FDA) appears to be cracking down on CBD food and beverage brands as the federal agency sent warning letters last week to five companies selling infused products. In a statement published online, the agency said letters were sent to Mood33 manufacturer 11-11-11 Brands; candy and coffee maker Naturally Infused, LLC; CBDfx parent company Newhere Inc.; gummy and candy brand Infusionz; and beverage, snack and pet treats producer CBD American Shaman. “These companies are selling CBD containing products that people may confuse for traditional foods or beverages which may result in unintentional consumption or overconsumption of CBD,” the FDA said in the release. “CBD-containing products in forms that are appealing to children, such as gummies, hard candies and cookies, are especially concerning.” The agency pointed to potential safety concerns around long term consumption of CBD, including harm to the male reproductive system and possible liver damage, as well as negative interactions with certain medications.
Grocery & Restaurants
Jacksonville-based Southeastern Grocers, the parent company of Winn-Dixie, Harveys and Fresco y Más, reportedly is exploring a sale, according to a Wall Street Journal report, which cited people familiar with the matter. In November 2021, Southeastern Grocers officially pulled the plug on plans to go public nine months after it announced it would delay an IPO launched in 2020. A Southeastern spokeswoman contacted by DSN said that the company does not comment on market rumors. “With that said, we are always reviewing ways to enhance shareholder value, and to the extent that credible strategic or other shareholder value enhancing transactions emerge, we have an obligation to consider them. While the potential for any such transaction remains ever present in our industry, we will remain focused upon advancing our transformational strategy, supporting our associates and delivering a world-class shopping experience for our customers,” she said. The company operates about 420 Southern grocery stores under three different brands and is one of the largest conventional supermarket companies in the United States.
Savory Fund-owned Swig — the drive-thru customized “dirty soda” concept based in Salt Lake City, Utah — announced Tuesday that real estate and entertainment investment company, the Larry H. Miller Company, has acquired a majority stake in the brand, though terms of the transaction were not disclosed. This news comes on the heels of the announcement that Swig named a new CEO, former See’s Candy executive, Rian McCartan, last month. Private equity firm, Savory Fund, Swig founder Nicole Tanner, and partners Chase Wardrop and Dylan Roeder will retain minority stakes in the business as Swig’s new owners hope to develop the concept in new regions nationally. Swig is slated to reach 46 locations by the end of 2022, with 25 corporate locations scheduled to open next year.
Home & Road
Williams-Sonoma, Inc. posted another strong quarter with gains in net revenues, income and earnings per share, led by its Pottery Barn and West Elm brands. The San Francisco-based group posted net revenues of $2.193 billion in the quarter ended Oct. 30, up 8.1% compared with $2.048 billion in the same timeframe in 2021. Among individual brands, Pottery Barn reported net revenues of $935 million, up 19.6% over $789 million a year ago, while West Elm was up 4.2%, taking in $600 million in revenue in Q3 of 2022 vs. $580 million in the same quarter of 2021. Net profits for the quarter came in at $251.7 million, up slightly from 2021’s $249.5 million. On a diluted per-share basis, Williams-Sonoma reported gains of $3.72, a jump of 13.07% from $3.29. “We are proud of another strong quarter generating an 8.1% comp, or a 25% two-year comp and an almost 50% three-year comp, with record EPS growth of 12% over last year to $3.72 per share,” said Laura Alber, president and CEO of Williams-Sonoma, Inc. “These results reflect the continuation of backlog order fulfillment, strong product margins and disciplined cost control.”
Another direct-to-consumer brand has made its physical store debut. Our Place opened its first-ever retail location, in its Los Angeles hometown. The store is located on Abbott Kinney, the main shopping street in the Venice Beach area. A second outpost is set to open in mid-December, on Melrose Ave. in Los Angeles. The brand plans to expand with stores in New York City in 2023. Designed by Our Place in partnership with creative agency Mythology and design firm Ringo Studio, the store interior features textures, patterns and colors that combine to create the feeling of inviting home. The space is lined with limewash plaster walls, and accented with smooth, recycled tiles in jewel tones and bright pastels throughout. A custom arched shelving display showcases Our Place’s signature colorways. The streamlined suite of products is artfully displayed throughout the store, all while keeping a cozy, home-like feel. (The brand is famous for its Always Pan, which is designed to replace eight different cookware items, including a steamer and fry pan.)
Jewelry & Luxury
Blue Nile is shutting down its Chinese division, according to a note on its Chinese website. “Blue Nile China will be officially closed on January 31st, 2023,” said the note. “If you have already ordered any product before closing, the product will be shipped to you [at] the time we promised.” The news originally appeared in Diamond Spectator, a Chinese publication. Blue Nile ships to more than 44 countries, but at the time of publication, the Chinese site is the only one JCK could find that was closing. In 2021, CEO Sean Kell told WWD that international sales comprise about 20% of Blue Nile’s revenue—with about half that coming from China.
Retailers and brands catering to wealthy customers aren’t entirely immune to the current macroeconomic challenges, which could get even tougher next year if recessionary fears are realized. Still, upper-income households are fairly well insulated from inflation and other financial difficulties, and that’s showing up in the sales figures at higher-end stores. This year so far, 95% of luxury brands in the U.S. and Europe generated positive growth, according to recent research from Bain & Co. Globally, the luxury market could grow 21% this year to reach €1.4 trillion ($1.45 trillion at press time).
Movado Group posted a decline in sales in the third quarter as inflation weighs weighed on shoppers in the United States and Europe. The New Jersey-based company also lowered its fiscal-year guidance, citing an uncertain retail environment. “As consumers in our key markets experience inflationary pressure, we are updating our annual outlook to reflect currency headwinds and a softer spending environment,” said CEO Efraim Grinberg. Movado’s portfolio includes Movado, Ebel, MVMT and Oliva Burton as well as licensed brands like Coach and Tommy Hilfiger.
The kids are the future — at least, that’s the case for London’s premier luxury brands at the moment. Despite the economic turndown across the UK that has seen the pound plummet, the country’s richest Gen Zers appear to be even hungrier for the luxe life. According to the Guardian, luxury goods sales and venerable labels are increasing thanks partly to its youngest shoppers. Luxury conglomerate LVMH saw sales increase by 28 percent, with Burberry reporting an 11 percent rise within the last month—mainly due to well-heeled youth, unburdened by crushing debt, who want to keep up with the latest social media trends.
Office & Leisure
Spin Master announced an agreement to acquire Canadian-based 4D Brands International (4D), a puzzle model construction brand. 4D has a signature line of 3D model construction kits, where puzzlers can create replicas of well-known historical landmarks, pop culture elements and movie memorabilia. The break-frame model kits include distinctive features and have become premium collectibles for fans of franchises including Star Wars, Disney, Harry Potter, Marvel Universe, DC Comics and many more licenses. The acquisition is expected to close in January 2023. Following the close, Shaun Sakdinan, founder, 4D Puzzles, will join Spin Master as senior director, design. The acquisition of 4D will bolster Spin Master’s position within the games and puzzles category, providing a platform for global growth.
Mattel launched its own digital collectibles (NFT) marketplace on Mattel Creations, the company’s collector and direct-to-consumer platform. Series 4 of the Hot Wheels NFT Garage, set for release on Dec. 15, will be the first offering of Mattel Digital Collectibles. The Mattel Creations Digital Collectibles Marketplace is built on the Flow blockchain. Made for mainstream consumers, the platform will not require users to own cryptocurrency to make purchases and will integrate peer-to-peer trading to allow collectors to trade their digital collectibles in early 2023. Series 4 artwork comprises 60 cars from McLaren, Chevrolet, Honda, Aston Martin, Oldsmobile, Pagani and Cadillac, as well as many Hot Wheels originals. “In launching our own marketplace, we’re able to translate iconic Mattel IP into digital art, engaging directly with our customers and providing a best-in-class user experience. This is the latest evolution of our digital endeavors, and we look forward to sharing more drops soon inspired by some of the world’s favorite Mattel brands.”
Simon & Schuster’s corporate parent has officially ended the agreement for Penguin Random House to purchase the publisher, a proposed sale a federal judge already had blocked last month. Paramount Global also announced Monday that it still plans to sell Simon & Schuster, a nearly century-old company where authors include Stephen King, Colleen Hoover and Bob Woodward. Simon & Schuster has had a strong 2022 so far, thanks in part to bestsellers by Hoover and King, who had opposed the merger and even testified on behalf of the government during last summer’s antitrust trial. “Simon & Schuster remains a non-core asset to Paramount, as was determined in early 2020 when Paramount conducted a strategic review of its assets,” Paramount announced. “Simon & Schuster is a highly valuable business with a recent record of strong performance, however it is not video-based and therefore does not fit strategically within Paramount’s broader portfolio.” Penguin Random House owes a $200 million termination fee to Paramount, according to the agreement’s original terms.
Technology & Internet
Cryptocurrency exchange Binance on Thursday announced new details about its industry recovery fund, which aims to prop up struggling players in the wake of FTX’s calamitous bankruptcy. In a blogpost, Binance said it will devote $1 billion in initial commitments to the recovery fund. It may increase that amount to $2 billion at a point in time in the future “if the need arises,” the company added. It has also received $50 million in commitments from crypto-native investment firms including Jump Crypto, Polygon Ventures, and Animoca Brands. Binance CEO Changpeng Zhao shared the public wallet address showing its initial commitment and said: “We do this transparently.” Public blockchain data reviewed by CNBC showed a balance of around $1 billion in Binance’s own BUSD stablecoin. BUSD is a stablecoin issued by blockchain infrastructure firm Paxos and is approved and regulated by the New York State Department of Financial Services, according to Paxos’ website. The fund is an attempt by Binance to keep the crypto industry afloat after controversial entrepreneur Sam Bankman-Fried’s exchange FTX filed for bankruptcy earlier this month. Zhao has emerged as a new savior-like figure for the ailing industry, filling a gap left by Bankman-Fried, whose firm had bought or invested in a number of beleaguered crypto firms — from Voyager Digital to BlockFi — prior to its collapse.
Best Buy’s third-quarter earnings soared past Wall Street’s expectations, but shares dropped Tuesday as the retailer warned of headwinds from higher shipping costs, inventory challenges and lower-margin holiday sales. The retailer declined to provide an outlook for the fourth quarter — a significant period for electronics and tech purchases during the holidays — due to the uncertainty created by the coronavirus pandemic. On a conference call, Chief Financial Officer Matt Bilunas said the company will have higher supply chain costs from parcel surcharges and sales of videogame consoles, a popular holiday gift that’s lower margin, will pressure profits. “We believe our Q4 sales growth will be positive, but we don’t expect sales trends to remain at the levels we experienced during Q3,” he said. Best Buy shares closed Tuesday down nearly 7% to $113.54. Its stock has gained about 29% so far this year, bringing the company’s market value to $29.4 billion.
Finance & Economy
Heading into the all-important holiday shopping season, American consumers still aren’t feeling very confident about the state of the US economy. The University of Michigan’s consumer sentiment index landed at 56.8 in November, up from the preliminary reading of 54.7 measured earlier this month but lower than the 59.9 recorded in October. Economists were expecting a reading of 55, according to consensus estimates on Refinitiv. The month-over-month decline in sentiment offset about one-third of the gains made since the index bottomed out in June, according to Joanne Hsu, director of the university’s Surveys of Consumers. Consumers surveyed highlighted the effects of rising interest rates on their desire to buy homes, cars and other big-ticket items. The Federal Reserve, in efforts to combat decades-high inflation, has enacted a series of steep interest rate hikes.
The number of Americans filing new claims for jobless benefits increased to a three-month high last week amid rising layoffs in the technology sector, but that likely does not suggest a material shift in labor market conditions, which remain tight. Economists urged against reading too much into the rise in weekly unemployment benefit claims reported by the Labor Department, noting the data tend to be volatile at the start of the holiday season as companies temporarily close or slow hiring. Claims remain in line with pre-pandemic levels. Initial claims for state unemployment benefits rose 17,000 to a seasonally adjusted 240,000 for the week ended Nov. 19, the highest level since mid-August. Economists polled by Reuters had forecast 225,000 claims for the latest week.