Retailers Concerned with Europe’s Problems
By Tom Ryan
While neither have stores in Europe nor source much product from
the region, Home Depot and Lowe’s are at least two retailers somewhat concerned
about how the current economic crisis in Europe may impact the U.S. consumer’s
psyche and possibly derail the retail recovery.
On the one hand, more events
such as the May 6 stock market plunge – when the Dow Jones Industrial Average
briefly plunged nearly 1,000 points – could possibly reverse the recent uptick
in U.S. consumer confidence.
“When the consumer sees those types of things happen and they don’t understand
why, I think it does raise some concern in their minds,” said Lowe’s chairman
and chief executive Robert Niblock in an interview last week with The Wall
Also, concerns that a financial crisis may reoccur in
the U.S. akin to Europe’s could “cause consumers to take pause,” he
said. Nonetheless, he added, “Assuming
we don’t have something like that take place, we feel good about the year.”
Depot chief financial officer Carol Tome said Home Depot’s concerns also revolve
around Europe unsettling U.S. financial markets.
“If the (European) situation would cause more financial turmoil here
in the U.S., and if that would impact consumers’ ability to get credit or just
the overall sentiment on the economy, it could be bad,” she told the Journal in
a separate interview.
But it’s too early to say there’s likely to be any effect,
she added. “We
think it’s had no effect” so far, Ms. Tome said.
Discussion Question: What effect, if any, do you think Europe’s debt crisis
will have on U.S. retail?