A slew of retail names make repeat warnings about 'cash-strapped' US consumers

In late August, Walmart ( WMT ) offered investors worried about the health of the US consumer a lifeline.

Its CFO, John David Rainey, told investors Walmart's customers were being "choiceful," and when asked about signs of a broader slowdown, added: "We're not seeing it."

Results last week from several big retail names make the situation with the US consumer appear much more uncertain.

Retailers ranging from Dollar General ( DG ) and Lululemon ( LULU ) to Abercrombie & Fitch ( ANF ) and Ulta Beauty ( ULTA ) received a mixed reaction to their cautious comments about the overall spending environment and the potential impacts on their business.

Dollar General stock was judged most harshly, falling 32%, the most on record , after the discount retailer cut its full-year outlook, blaming softer sales on a financially strapped core customer.

CEO Todd Vasos highlighted the last week of each month in the quarter as "the weakest by far," as customers lean into the 2,000 items still priced at $1 or below.

"All those points would indicate that this is a cash-strapped consumer, even more than we saw in Q1," Vasos told analysts during the company's earnings call on Thursday. Dollar General noted consumers gravitated more toward consumable goods, and less toward home goods and seasonal items.

The latest retail sales data showed a rise of 1% in July, beating Wall Street's expectations for 0.4% growth.

But a look under the hood reveals less-optimistic signs, according to Forrester Research retail analyst Sucharita Kodali.

"Consumer spending is essentially in line and in some categories below the rates of inflation. So that means that even though the numbers may be positive, the consumer is really, really softening," Kodali said in a recent interview with Yahoo Finance .

The data, which isn't inflation-adjusted, showed a 0.1% monthly drop in spending at clothing stores; department stores saw sales fall 0.2%.

Kodali, like other analysts, pointed to giant stores like Walmart that have increased market share across a variety of classes.

"Lower-income consumers are continuing to take out debt. They are the most stretched, and they are likely driving some of these Walmart numbers," Kodali said. "Walmart's growth, I would argue, is probably coming at the expense of other retailers."

However, even Ulta Beauty — which targets a higher-income consumer making discretionary purchases — pointed to a more money-conscious shopper as part of the reason for a miss on the company's top and bottom lines.

“Consumer behavior is starting to shift as consumers increasingly focus on value and become more cautious with their spending,” said CEO Dave Kimbell during the company earnings call.

Kimbell went on to call out greater competition within the high-margin makeup industry as an added challenge to the business.

"Today, there are significantly more places to buy beauty, especially prestige beauty, with more than 1,000 new points of distribution opened in the last three years. As a result, our market share continues to be challenged, particularly within prestige beauty,” said Kimbell.

A slew of retail names make repeat warnings about 'cash-strapped' US consumers
Shoppers line up outside of Ulta Beauty before the 6 a.m. opening on Black Friday. (Aimee Dilger/SOPA Images/LightRocket via Getty Images) (SOPA Images via Getty Images)

Between consumers being more choosy and increased competition, there's little room for error for retailers.

Lululemon noted its US women’s business slowed amid a lack of “newness,” or seasonal updates within styles typically expressed as color, print, and patterns.

“It's become clear to us that this reduced newness, which is below our historical levels and stems from earlier product decisions, has impacted conversion rates given the fewer new options available to our female guests,” CEO Calvin McDonald said during the company’s earnings call.

“The newness that we had performed well — we simply did not have enough to inspire her to purchase.” said McDonald.

Even following a strong quarter at Abercrombie and Fitch, its CEO Fran Horowitz warned of the economic backdrop during the company's earnings call.

"In addition to record second quarter sales, this is our seventh consecutive quarter of net sales growth in a dynamic, often uncertain, consumer environment which underlies the strength of our brands," said Horowitz.

Abercrombie's stock sold off 14% following the results, though the stock has been one of the S&P 500's best performers over the last year.

"We think investors might be a little bit scared that this could be peak growth for [Abercrombie]," CFRA analyst Zachary Warring told Yahoo Finance.

"It was a great quarter. We think they're the best-performing apparel brand in the US right now."

@ines_ferre .