With Covid in the rearview mirror, consumers are spending like it’s 2019 again—for retailers, that’s concerning.

On the back of shifting consumer preferences, household names like Foot Locker (FL) and Macy's (M) are all reporting declining sales, weak profits, and gloomy expectations.

The problem isn't so much that Americans don't have money; they simply aren't splurging it left and right anymore.

“Consumers still have good savings, but they are being more judicious in how they spend,” Macy’s CEO Jeff Gennette told the Wall Street Journal.

Americans have every reason to be “judicious.” Stimulus checks aren’t coming in the mail anymore. Wage growth has slowed. Tens of millions are feeling the pressure of crippling debt.

While experts aren’t crying about a retail apocalypse yet, big box retailers have every reason to be concerned.

What the numbers say

Macy’s reported net sales of $5.13 billion for its fiscal second quarter, down 8% compared to the year before. Adjusted earnings came in at $0.26 per share, above estimates but down 74% year-over-year.

Macy’s credit card business absolutely collapsed in Q2—credit card income was down 40%, driven by rising delinquencies.

Dick’s Sporting Goods saw its profits fall 23% during the quarter even as sales increased by 3.6% year-over-year. Shockingly, the sporting goods store blamed shoplifting for the decline in profitability.

Foot Locker experienced similar pain in Q2. Its total sales fell by nearly 10% and the company’s profit margin turned negative.

These companies are only a drop in the bucket of America’s retail woes.

Walgreens, Home Depot, Bath & Body Works, and even Walmart have posted mixed financial results. More than a dozen retailers plan to close a combined 2,373 stores in 2023.

And who can forget Bed Bath & Beyond? The company filed for bankruptcy and terminated its 896 locations this year.

The blame game

Retailers have blamed their collapsing profits on everything from organized crime to shoplifting and now shifting consumer preferences.

Macy’s CEO claims that consumers struggling with rising costs want to spend their money on “experiences” instead of the usual goods and services.

But Mr. Gennette failed to mention that his customers prefer to shop on Amazon instead.

Amazon’s net sales jumped by 11% last quarter to $134.4 billion. The online retailer reported $6.7 billion in profits and nearly $64 billion in cash on hand.

Amazon’s dominance isn’t just driven by the convenience of online shopping. The retailer negotiates volume discounts with suppliers, making products listed on its marketplace cheaper.

Cheaper is better when grocery inflation in the U.S. hovers near five-decade highs.

And cheaper is certainly better for people financing their homes with an 8% mortgage.

Aside from the economy going bust—something the White House tells us won’t happen—consumer debt is another threat to retailers.

Americans today face the highest debt levels ever recorded. And it’s not just long-term debt tied to mortgages, either.

Credit card balances now exceed $1 trillion, according to the New York Fed. That's on top of crippling student debt that will hit millions of Americans starting next month.

In fact, many of them looking at a minimum monthly payment of $1,000.