The fiscal year for retailers ended in January with nothing like what it was supposed to be. Still, as always, the suggestions remained that a rebound in consumerism would be before too long. If it wasn’t to be evident right away in February, the start of the 2016 fiscal year was at least supposed to be back in the plus column. Last week, Thomson Reuters noted the starting weakness and all the hoped for blizzard implications.

The American retail shopper still isn’t in a free-spending mood. The Thomson Reuters Same Store Sales (SSS) Index forecast for February 2016 indicates a small gain of 0.5%. Excluding the drug store sector, the SSS growth rate is expected to fall to an estimate 0.3%.

A year ago, the final February SSS index registered a much healthier gain of 1.2% and the ex-drug indicator was up 0.6%. However, a 3.0% increase is considered a sign of a robust retail economy. 

At least the SSS index is expected to be in positive territory, compared to January’s negative results, partly thanks to an improvement in winter weather. [emphasis added]

Among the many prominent victims of the “unexpected” weakness was Macy’s. Not only have same store comps declined four straight quarters, it has left the company with enormous inventory stocks – historically so.

Although the retailer beat its earnings estimate, the most worrisome metric from this iconic company is inventory days. During the fourth quarter ended Jan. 31, this key figure went from 172 to 192 days, its highest level since we started tracking this metric in 1991. It’s also much higher than the industry average median of 114.1, which means that a lot of Macy’s merchandise is sitting on the shelves. The retailer also reported a Q4 same store sales (SSS) result of -4.3% — the fourth straight quarter of negative SSS.

In other words, retailers are stuck at almost a contradiction. They want robust sales growth, and analysts are expecting that to come in relatively short order, but in order for the retail sector to get there it will need to clear inventory likely at significant (further) discounts in order to rebalance. And they need consumers to cooperate by being especially interested in all this discounted merchandise.