Retail Crunch: Here's Why Consumers Are So Depressed

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Consumers are depressed, according to the findings of ASR Consumer Survey (link opens a PDF). There have been big, flashing lights of this trend for quite a while (dismal consumer confidence levels and staggering unemployment, among others), but it's good to have the facts down in black and white.

The 32-page report covers U.S. adults of working age and was conducted between July 26 and 31, 2011.

ASR breaks down the sources of consumer woes into five sections. Here's a quick look:

1. Financial security: Despite feeling more secure in the workplace (87% said thy were very/fairly secure), U.S. adults are feeling more financially insecure (a net 76% are worried), something ASR points out as odd since historically they have been closely correlated.

The number of optimists for fiscal improvement in coming years is giving way to pessimists. Higher inflation is found to be a bigger fear (39%) to the people than higher taxes (11%). Other greatest fears include a drop in income (14%) and unemployment (13%).

Only a net 5% think they will be better off financially in a year's time.

2. Attitudes toward saving: Good news: "The ability to save has improved over the past year, with a net 20% now spending less than they earn."

Bad news: "Around 70% still think they are saving too little." Americans also feel more averse to risk, and half of those surveyed say they are not prepared to take risks with their savings.

3. Borrowing and access to credit: Three out of four Americans have debt. ASR found that among them, "45% think that they have too much debt relative to their income. Of those with debt, 23% are having difficulties meeting the monthly payments on their borrowings."

4. Housing: Problems persist: "A third of all homeowners in our survey believe their house is worth less than they paid for it. A significant number of borrowers are facing negative equity. 27% of those with a mortgage believe their house is now worth less than the mortgage."

On the bright side, 64% of homeowners and 42% or renters think now's a good time to buy a house.

5. Retirement: The average expected retirement age is 64, but most think they aren't saving enough for retirement:

"[Adults] are less pessimistic about being able to maintain their current standard of living when they retire. But still 69% do not think that they are saving sufficiently for retirement. Only 36% think that investing in the stock market is a good way to save for their retirement. Most disturbing though is a sharp rise in the number of people that believe the children of their generation will have a lower standard of living when they reach that age."

So, which retail stocks are expected to see the biggest downside as a result of the depressed U.S. consumer?

For ideas, we looked at institutional money flows, and identified a list of retail stocks that have been dumped by institutional investors over the last quarter.

From this list, we identified stocks that have seen a sharp increase in shares shorted over the last month -- i.e., short-sellers think the prices of these stocks are about to fall.

Sophisticated investors, like short-sellers and big money managers, think these consumer stocks are in trouble -- do you agree? (Click here to access free, interactive tools to analyze these ideas.)

1. Timberland (NYS: TBL) : Engages in the design, development, marketing, and distribution of footwear, apparel, and accessories products for men, women, and children in North America, Europe, and Asia. Net institutional sales in the current quarter at -2.6M shares, which represents about 6.85% of the company's float of 37.98M shares. Shares shorted have increased from 1.05M to 1.46M over the last month, an increase which represents about 1.08% of the company's float of 37.98M shares.

2. True Religion Apparel (NAS: TRLG) : Designs, develops, manufactures, markets, distributes, and sells apparel in North America, Europe, Asia, Australia, Africa, and South America. Net institutional sales in the current quarter at -745.2K shares, which represents about 3.1% of the company's float of 24.07M shares. Shares shorted have increased from 1.64M to 2.09M over the last month, an increase which represents about 1.87% of the company's float of 24.07M shares.

3. Talbots (NYS: TLB) : Operates as a specialty retailer and direct marketer of women's apparel, accessories, and shoes in the United States and Canada. Net institutional sales in the current quarter at -3.8M shares, which represents about 6.15% of the company's float of 61.83M shares. Shares shorted have increased from 24.33M to 26.33M over the last month, an increase which represents about 3.23% of the company's float of 61.83M shares.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


 

Kapitall's Becca Lipman and Eben Esterhuizen do not own any of the shares mentioned above. Institutional data sourced from Fidelity. Short data from Yahoo! Finance.

At the time this article was published Motley Fool newsletter services have recommended buying shares of Timberland. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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