Retail Sales Were Pretty Darn Good in December

On January 14 the Census Bureau gave us the advance estimates of retail and food services sales for December and the full year 2009. The year ended better than most people expected.

The total for December (adjusted for seasonal variation, holiday and trading day differences) was $353.0 billion, up 5.4 percent from the year before. That was the third-best December ever. Click here to read the full post and comment (Insights subscribers) »

At Last, Much Better Employment Data

If you’re going to get a huge “upside surprise” only occasionally, it’s great to get it on what is at least politically the most important economic variable, mainly jobs. The BLS did just that for us yesterday when they reported that the drop in nonfarm payroll employment was 11,000 jobs. That was far below the consensus expectation of a loss of 125,000 such jobs. Click here to read the full post and comment (Insights subscribers) »

Good Inflation News and Fair Retail Sales Data

On October 15 the BLS gave us more good news on the inflation front. While the CPI for all urban consumers (CPI-U) rose 0.2 percent from August to September, that was only half the increase from July to August. Furthermore, the index was 1.3 percent below a year earlier.

The CPI-U excluding food and energy index rose 1.5 percent from September 2008. Energy prices were 21.6 percent below a year earlier and food prices declined by 0.2 percent over the same period. That’s the first year-over-year decline in food prices since April 1967. Click here to read the full post and comment (Insights subscribers) »

Quoted in Women’s Wear Daily

I was recently quoted in Women’s Wear Daily, but we didn’t get the link from the writer until today. It still has some relevance so I thought I’d post it.

Retail Shares Slide Amid Global Sell-Off
by EVAN CLARK
From WWD ISSUE 08/18/2009

Concerns over continued weakness at retail fermented over the weekend and whipped around the globe Monday, coming back to sour U.S. retail stocks and push the sector down 3.7 percent.
The S&P Retail Index retreated 13.23 points to 348.46, marking its steepest percentage drop since July 2. Home improvement chain Lowe’s Cos., which curtailed 2010 expansion plans Monday, weighed heavily on the sector. Retail’s declines outpaced those of the general market as the Dow Jones Industrial Average slid 2 percent to 9,135.34 and the S&P 500 was off 2.4 percent to 979.73.

Last week, retailers from Nordstrom Inc. to Urban Outfitters Inc. and Kohl’s Corp. turned in lower second-quarter earnings, consumer confidence was seen on the wane and the government said July retail sales fell 0.1 percent from June, even with the cash-for-clunkers auto incentives.

But economists said consumers need time to come back and cautioned against reading too much into any single day in the financial markets.

“People who invest in the stock market, and even worse the bond market, are not happy if they’re not worrying about something,” said James Smith, chief economist at Parsec Financial Management.

The most recent worry was the Reuters/University of Michigan report on its Consumer Confidence Index, which fell for the first two weeks of August to 63.2 from 66.

Despite the softening, Smith said retailers can’t be too tentative and need to keep stocking their shelves if business is ever to come back.

“It costs a retailer much less to have too much inventory,” said Smith. “The real merchants will make out like bandits and the bean counters will kill the people who listen to them. The rewards go to the bulls.”

Many retailers have been trumpeting their reduced inventory levels after they got burned last year, when spending suddenly ground to a near halt.

James Glassman, an economist at J.P. Morgan, said the job market is still too weak to support a consumer recovery. But that doesn’t mean stores shouldn’t be ready for one.

“The retailers who are least pessimistic are going to be grabbing the biggest share,” Glassman predicted. “Inventories are a necessary part of your business and if you don’t have the inventory you’re not going to make the sale….People who are giving up and don’t have anything or have limited offerings, you’re coming into a more difficult environment.”

Investors, however, are notoriously impatient and market dynamics can push stocks down on even a hint of trouble or uncertainty down the line.

Giving up ground in the retail world were The Talbots Inc., down 10 percent to $5.23; Coldwater Creek Inc., 9.3 percent to $6.32; Saks Inc., 8.4 percent to $5.35; Abercrombie & Fitch Co., 7.9 percent to $31.54 and Pacific Sunwear of California Inc., 7.2 percent to $3.98.

Vendors were also hit hard, with Liz Claiborne Inc. off 9.5 percent to $3.32; Kenneth Cole Productions Inc., 7.1 percent to $8.50; Jones Apparel Group Inc., 5.4 percent to $14.12, and G-III Apparel Group Ltd., 3.6 percent to $11.72. After the closing bell, Standard & Poor’s cut Claiborne’s corporate credit rating two notches to “B” from “BB-minus,” reflecting weak second-quarter operating results. The outlook on the rating is negative. Moody’s Investors Service made a similar reduction last week.

And shares of embattled CIT Group Inc., the fashion industry’s largest factor, fell 3.6 percent to $1.36 even though the company said its debt tender offer had succeeded.

CIT had $1 billion in bonds maturing Monday. Holders of 59.8 percent of that debt agreed to take 87.5 cents on the dollar, while the rest of the bonds will be paid off in full. Most of the debt exchanged in the tender offer was owned by a group of bondholders which last month threw CIT a $3 billion lifeline, giving it time to restructure its business outside of bankruptcy court.

Trading started off down in Asia and the inclination to sell followed the business day around the globe to Europe and the U.S.

The decliners in Tokyo, where the Nikkei 225 slid 3.1 percent, included Uniqlo-parent Fast Retailing Co., down 3.6 percent to 10,830 yen, or $114.15; and Shiseido Co., off 2.4 percent to 1,539 yen, or $16.22. In Hong Kong, the Hang Seng Index slid 3.6 percent as Li & Fung, a component of the index, fell 3.8 percent to 26.75 Hong Kong dollars, or $3.45.

European investors pushed Paris’s CAC 40 down 2.2 percent as the FTSE 100 slid 1.5 percent in London. Among those losing ground were Burberry Group, down 4.2 percent to 458.80 pence, or $7.59, and LVMH Moët Hennessy Louis Vuitton, 3.6 percent to 63.23 euros, or $89.83.

A measure of the depth of consumer discontent will come today when Saks Inc., Target Corp. and off-pricer TJX Cos. report their second-quarter results.

With shoppers zeroing in on value, analysts expect TJX to post better profits than a year ago, but even Target is projected to turn in reduced profits and Saks, catering to the high-end of the consumer spectrum, is expected to report wider losses.

Nonetheless, Charles Grom, an equity analyst at J.P. Morgan, said Saks’ stock represents an opportunity.

“With bankruptcy concerns largely in the rearview mirror, the next stop for the company will be to align inventory levels with sales trends and to demonstrate that…expenses are under control,” Grom said in a research note.

Grom said the elements that led Saks to shortfalls in comparable-store sales and gross margins last year — weakness in the stock market, Wall Street unemployment and a strong dollar — were all beginning to reverse and would lead the firm to improved comps later this year.

Uh Oh, Retail Sales Were Very Disappointing in April

On May 13 the Census Bureau reported that total retail and food services sales were a seasonally adjusted total of $337.7 billion in April. That was a drop of 0.4 percent from March and 10.1 percent below April 2008.

For the first four months of 2009, total retail and food services sales were 10.0 percent below the same period last year. The plunge was led by “auto and other motor vehicle dealers,” who saw sales off a huge 25.0 percent and “furniture and home furnishings stores,” which plummeted 14.3 percent. Of course, the “gasoline stations” category saw sales collapse by 34.6 percent, but that’s mostly good news because gasoline was much cheaper this year than last. Click here to read the full post and comment (Insights subscribers) »