Profit from the Fickle Consumer

So this morning we have confirmation the consumer is not opening his wallet or her purse and parting with cash, swiping that credit card or debit card. At least, not across the board. Confirmation of that can be found by comparing Restoration Hardware (RH)'s better-than-expected quarterly performance with that of Lululemon (LULU), which reported results this morning. Ahead of the open LULU shares are looking to open down more than 16% following a downward revision to its full year outlook. The company now sees adjusted earnings per share more in the range of $1.71-$1.76 vs. the prior $1.80 to $1.90 range. LuluLemon also trimmed the top side of its 2014 revenue forecast modestly.

As I have said for some time, consumers in 2014 are far choosier than in prior years. The reason is that they are seeing their disposable income under pressure. Now, I'm not going to once again bang the drum on rising protein prices, but I will say that we are now seeing dairy prices climb. We know gas prices are higher, and recent manufacturing reports from ISM and Markit reveal upward price creep is occurring there as well. I can also say that while the Energy Information Administration is forecasting summer gas prices to peak near $3.65 per gallon or so, I am already seeing gas prices at the pump well above that....369 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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