Retail's strong first quarter masked by tax refunds and BNPL; Q2 to reveal true consumer health
By
Gabrielle Fonrouge
Crackling crust, pillowy middle. The kind of bagel that earns a second cup of coffee.
Summary
The retail industry had a strong first quarter, but this was partly driven by higher-than-usual tax refunds and increased use of buy now, pay later services, masking underlying consumer weakness. As tax refunds dry up in the second quarter, the retail sector faces a clearer test of consumer health amid high gas prices, persistent inflation, and strained household budgets. Early months of Q2 have already shown choppier performance, suggesting potential headwinds ahead for retailers.
Key quotes
· 2 pulledThe retail industry emerged from a choppy first quarter relatively unscathed, but higher than usual tax refunds and an uptick in buy now, pay later use likely helped to buoy spending.
Once you got through April and May, you're really not seeing the impact of tax refunds anymore, and those months were a little bit choppier, so there's a lot of moving piece
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