What Ambercrombie & Fitch Is Telling Us About the Economy

Add retail to the pile of disappointing summer numbers.

Good deals and cheap prices to clear the aisles before the back-to-school push didn't improve sales, especially at stores for teenagers. There is also some evidence suggesting that high-end and low-end stores are faring better than their middlebrow competition, as richer consumers are opening their fat wallets and middle-class families search for basement prices. This isn't a new development. The New Yorker's James Surowiecki wrote a great piece on the "soft middle" a few months ago.

Luxury retailer Neiman Marcus was the same-store sales leader in the Thomson Reuters survey. Ambercrombie & Fitch led in overall sales increase. Here's more evidence that the center cannot hold:

The high-end Banana Republic chain and discount Old Navy stores both posted same-store sales increases, rising 2% and 6%, respectively. Flagship Gap stores posted a 6% year-over-year dip.

Another interesting lesson: overseas sales were also key to A&F and Costco's numbers, suggesting that like the general economy, retailers can feel the tide rising faster outside our borders than in.