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November is known for bringing the SADs, and that carried over to the consumer mood this month.
In a preliminary data release for November, consumer sentiment was down sharply from October in the first weeks of November, according to the University of Michigan Survey of Consumers.
Sentiment to stat November fell 9% below October, to 54.7. That erases half of the gains that were made since the index hit an all-time low in June as inflation peaked, according to Survey director Joanne Hsu.
The prospects for buying durables, which are goods designed to last more than three years, have especially dimmed. Buying conditions in this category fell 21%, as rising interest rates from the Federal Reserve’s recent rate hikes compounded the impact of high prices during this period of 40-year-high inflation.
The flagging sentiment was observed across demographics, "regardless of age, education, income, geography or political affiliation," according to the Survey.
While sentiment has been near historic lows this year, there were some signs of optimism emerging in recent months. During that period, consumer spending held relatively stable in the face of rising prices. However, the Fed’s campaign of interest rate hikes are designed to cool demand, which could add to further dampen the spending mood.
The consumer sentiment report follows a separate consumer confidence reading from the Conference Board for October that showed a more pessimistic mood heading into the holidays. The UMich survey had ticked up in October, but only slightly. Yet it was notable that buying conditions for durables rose 23% in that report, where they fell nearly the same amount here.
Survey of Consumers Director Joanne Hsu wrote that this latest dip in sentiment suggests that the gains made in recent months were “tentative.”
“Instability in sentiment is likely to continue, a reflection of uncertainty over both global factors and the eventual outcomes of the election,” Hsu said.
When it comes to consumers’ outlook for inflation, there is more stability, even at a time when prices continue to be elevated. Little changed from the prior month in November so far. The median expected year-ahead inflation rate was 5.1%, up from 5% last month. Long-term expectations are currently at 3%. This measure is watched by the Federal Reserve for signs that consumers are viewing inflation as a feature of the economy for the near future, rather than a bug. If they expect high prices, they may ask for raises, which would in turn continue to drive prices up, and lead inflation to become more entrenched.
These expectations have been “elevated,” but have remained in a narrow 2.9-3.1% range for 15 of the last 16 months, indicating that expectations aren’t changing. Fed Chair Jerome Powell has indicated during this period that inflation expectations remain “well anchored," but he stressed that the central bank does not want to see inflation last long enough to become entrenched.
There’s one caveat: This measure came before the October reading of the Consumer Price Index showed inflation had cooled to 7.7% for the month. But inflation is still very high, and the index makes clear that inflation isn’t the only thing shaping feelings. Politics and war are there. Recession worries for 2023 and beyond loom. Now monetary policy is a factor, too. As the Fed’s rate hikes work their way through the economy and begin to show up in mortgages, car loans and other interest rates, the index suggests they could become the next reason that people pull back on discretionary spending.
Trending in Economy
On the Move has the latest from Amazon, Lovesac and more.
This week, leadership is changing at GameStop, Sorel and Beautycounter. Meanwhile, key executives are departing at Amazon, Wayfair and Lovesac.
Here’s a look at the latest shuffles:
GameStop CEO fired
GameStop announced the termination of Matthew Furlong as CEO on Wednesday. A brief statement did not provide a reason for the firing.
With the move, Chewy founder and activist investor Ryan Cohen was named executive chairman of the video game retailer. Cohen will be responsible for capital allocation and overseeing management.
It came as the company reported a 10% year-over-year decline in net sales for the first quarter. Meanwhile, the company’s net loss improved by 62%.
In an SEC filing, GameStop further added this “We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders.”
Cohen was revealed as GameStop's largest shareholder when he disclosed a 10% stake in the retailer in 2020. GameStop went on to become a leading name in the meme stock rise of 2021.
Sorel president steps down
Mark Nenow is stepping down as president of the Sorel brand in order to focus on his health.
After rising to the role in 2015, Nenow spearheaded a transformation of Columbia Sportswear-owned Sorel from a men’s workwear brand to a fashion-focused brand that led with a women’s offering of boots, sandals and sneakers.
“Mark led the brand to sales of $347 million in net sales in 2022,” said Columbia Sportswear CEO Tim Boyle, in a statement. “His leadership has been invaluable to this company, and we wish him the very best.”
Columbia will conduct a search for Nenow’s replacement. Craig Zanon, the company’s SVP of emerging brands, will lead Sorel in the interim.
Beautycounter appoints interim CEO
Beautycounter appointed board member Mindy Mackenzie as interim CEO, succeeding Marc Rey. According to the brand, Rey and the board “mutually decided to transition to a new phase of leadership for Beautycounter.”
McKenzie, a former executive at Carlyle, McKinsey and Jim Beam, will lead the company as it conducts a search for a permanent CEO. Additionally, former Natura & Co CEO Roberto Marques will join Beautycounter’s board as chair.
As part of the transition, Nicole Malozi is also joining the company as chief financial officer. She brings experience from Tatcha, Nike, and DFS Group Limited.
Amazon’s North America fulfillment chief departs
Melissa Nick, a VP of customer fulfillment for North America at Amazon, will leave the company, effective June 16, CNBC reported. Nick joined the company in 2014, and oversaw a region that included nearly 300 fulfillment centers. After doubling its supply chain footprint during the pandemic, Amazon recently reorganized its fulfillment operations to take a regional approach, as opposed to a national model that often resulted in items shipping across the country.
Wayfair’s chief commercial officer to retire
Jon Blotner (Courtesy photo)
Steve Oblak will retire from the role of chief commercial officer at home goods marketplace Wayfair. With the move, Jon Blotner will be promoted to chief commercial officer.
"Steve has served as a critical part of our leadership team and played a pivotal role in Wayfair's growth, helping us grow from a $250 million business when he joined to $12 billion in net revenue today,” said Wayfair CEO Niraj Shah, in a statement. “He oversaw countless milestones, from helping to launch the Wayfair brand as we brought together hundreds of sites into a single platform, to launching new categories, business lines, and geographies while overseeing our North American and European businesses, to leading our debut into physical retail.”
Blotner previously oversaw exclusive and specialty retail brands, as well as digital media at Wayfair. Before joining the company, he served as president of Gemvara.com prior to its 2016 acquisition by Berkshire Hathaway.
Lovesac announces CFO transition
Furniture retailer Lovesac said Donna Dellomo will retire as EVP and CFO, and move to an advisory role, effective June 30. Dellomo was with Lovesac for six years.
Keith Siegner was appointed as the next EVP and CFO. He brings experience as CFO of esports company Vindex, as well as executive roles at Yum! Brands, UBS Securities and Credit Suisse.
Additionally, Jack Krause will retire from the role of chief strategy officer, effective June 30. His responsibilities will be divided between CEO Shawn Nelson and president Mary Fox.
“Since joining Lovesac, Jack has played an instrumental role in transforming the Company into a true omni channel retailer by helping expand our physical touchpoints and digital platform as we continue to disrupt the industry,” said Nelson, in a statement.
NRF adds board members
The National Retail Federation announced the addition of five new board members. They include:
- Marguerite Adzick, founder and CEO, Addison Bay
- Harley Finkelstein, president, Shopify
- Ian Kahn, partner, PwC
- Sharon Leite, CEO, Ideal Image
- Carrie Tharp, VP, strategic industries, Google Cloud