U.S. retail sales flat, Macy’s (M) drops forecast and Amazon (AMZN) debuted mobile payment app

Bourbon & Bayonets / Wednesday, August 13th, 2014

Markets were heading slightly higher on Wednesday morning after retail sales came in flat last month. The Commerce Department reported that U.S. retail sales came in a mere $161 million, statistically insignificant, higher in July from June’s $439.6 billion reading. There were declines in sales at auto dealerships and department stores, but gains were recorded at grocery stores, gas stations, restaurants and building supply stores. With the data coming in it leads some analysts to believe that despite the job market growing, Americans are still not willing to spend as much. Retail sales are a close figure watched by analyst as it accounts for nearly 70% of economic activity. Over the past year, retail sales have climbed 3.7%. Ian Shepherdson, chief analyst at Pantheon Macroeconomics, said, “Consumers just don’t have the cash flow to finance sustained gains above 4%.”

Shares of Macy’s, Inc. (M) were falling down over 4% after the company cut same-store sales projection. The company lowered their forecast for same-store sales growth to come in between 1.5% to 2% from previous forecast of 2.5% to 3%. This was adjusted after the retail giant reported quarterly earnings that missed analysts’ expectations. Same-store sales were up 3.4% for the second-quarter. Net income was up 3.3% to $6.27 billion and was the first gain in two-quarters. Chief Executive of Macy’s, Terry Lundgren, said, “Many customers still are not feeling comfortable about spending more in an uncertain economic environment.”

Shares of Amazon Inc. (AMZN) were on the rise after the company debuted a their new mobile payment app and card reader. The app is called Amazon Local Register, which is a credit card processing system like Square. This is a step for the company to take aim at helping small businesses take payments from their smart phones and tablets. Matt Swann, vice president of local commerce for Amazon, said, “Payments are hard and that’s one of the things that gets in the way of serving customers, especially for small businesses. Payment tools need to be inexpensive, simple and trusted to get the job done.”

That’s all for today,

Warren Gates, Normandy Research

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