On Friday, the Reuters/University of Michigan’s consumer sentiment index dropped to 63.2 from 66 in July. This is the lowest reading since March, and is significantly worse than an increase to 69 reading that was expected by economists.
Obviously, consumers are not in a good mood as the town meetings across the country have demonstrated. Despite economists’ miscalculations on consumer sentiment, consumers continue to face several challenges, including large job losses, weak income growth, falling home prices, rising energy prices and too much debt.
We saw another example of consumers being in grumpy mood this morning when Lowe’s (LOW) reported poor earnings:
No. 2 home-improvement retailer Lowe’s Cos. said Monday poor weather and cautious consumer spending caused sales to fall below expectations and earnings to fall 19 percent in the second quarter.
The company also plans to scale back new store openings in its next fiscal year in response to the poor economy and consumer pullback.
The weak earnings combined with a weak full-year profit outlook to knock shares down $2.61, or 11.4 percent, to $20.22 in premarket trading.
“Wavering consumer confidence, unseasonable weather in core markets, and restrained customer spending compared to last year’s fiscal stimulus-aided results led to lower than expected sales in the second quarter,” Robert A. Niblock, Lowe’s chairman and CEO said in a statement.
The No. 2 home-improvement retailer says profit fell to $759 million, or 51 cents per share, from $938 million, or 64 cents per share last year.
Revenue fell 5 percent to $13.84 billion from $14.51 billion last year.
Analysts predicted a profit of 54 cents per share on revenue of $14.35 billion. Lowe’s had forecast earnings of 51 cents to 55 cents per share.