High Income Earners At Department Stores

With the inflation running hot we maybe seeing some cracks in the real economy. Times are changing and questions remains how bad can it get?

Latest Earnings From Kohl's and Walmart

Both big retailers posted their latest earnings where Walmart saw positive growth moving forward while Kohl's saw weakening sales and cutting future growth. All in all the two companies results appear to be opposite however something stood out in both the earnings reports that were quite similar. The fact that customers who were making over $100k were shopping at their stores more frequently than usual.

Khol's CEO - Michelle Gass

In our higher-income customers, we're actually seeing more customers and they're spending more

Walmart CEO - Doug McMilion

Families making more than $100,000 drove a lot of sales growth last quarter as they sought refuge from the highest US inflation in four decades.

A good summary of retail stores analyst from Jefferies Stephanie Wissink

Low and high appear to be holding up better than the middle.

How Many High Income Earners in USA

Its a small breed in itself. Based on data from webtribunal.net in 2021 there is about 9% of US population that earns $100k or more. If we look specifically at all people in the workforce that is close to 29 million people equating to close to 18% of the workforce are +$100k earners.

What is interesting is that 50% of the +$100k earners are living paycheck to paycheck. While only 1% of all US households have an annual income of +$500k or more. Then there is the real average of household income coming in at $115k in 2020. This equates to around 34% of all households in America taking in over $100k as of 2022.

There is around 130 million households so around 44.7 million are potential leaning on spending more time at department stores like Kohl's and Walmart.

Conclusions

This should raise a red flag on the current trajectory of the US economy. Consider high income earners having to spend more at retail stores rather than high end appears to be some signs of slowing growth. The higher earners are trying to spend less is my take on all this.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!

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