4th Quarter Retail Sales: Dismal

  • Posted: 28 December 2008 12:30 PM

    The 4th quarter preliminary retail sales estimates are coming in. It’s been a dismal holiday season and prospects for January are beginning to dim.

    What do these reports suggest for the 4th quarter profit picture for retailers and product manufacturers and distributors?

         
  • Posted: 28 December 2008 04:13 PM #1

    I think it’s another ridiculous spin by pundits and media to hammer the economy. The report calls a 2% decline dismal.  The car makers are down 30% plus—that is dismal, not 2%!!

    Does the media have ANY concept of balance?  With all that’s happened in the market and economy at large, a 2% decline should be heralded as a welcome surprise.  Sigh…

    I’m guiding EPS for Apple at $1.90 for Q1 2009.  The wild card, as always, is really the P/E ratio.

         
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    Posted: 28 December 2008 04:30 PM #2

    Mercel - 28 December 2008 08:13 PM

    I think it’s another ridiculous spin by pundits and media to hammer the economy. The report calls a 2% decline dismal.  The car makers are down 30% plus—that is dismal, not 2%!!

    Does the media have ANY concept of balance?  With all that’s happened in the market and economy at large, a 2% decline should be heralded as a welcome surprise.  Sigh…

    I’m guiding EPS for Apple at $1.90 for Q1 2009.  The wild card, as always, is really the P/E ratio.

    Mercel, you’ve missed the point: it was projected that the season would grow 2.2% but instead it was a loss.

    Take +2.2 projected and 3% loss actual and you have a sum of 5.2% lower than the already lowered expectations. That’s bad and not good.

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  • Posted: 28 December 2008 05:17 PM #3

    Additionally, an aggregate average includes retailers who saw even a slight increase and those which witnessed a sharp drop in sales. a 3% YOY contraction in Christmas season sales, following a conspicuous contraction in consumer spending in October doesn’t portend well for first quarter retail activity.

    Retailers will continue to liquidate inventory at distress prices and will be quite cautious with regard to the array of product purchased to replenish store shelves as as well as cautious about inventory levels.

    I suspect we will see many retailers close their doors for good and distress/liquidation pricing extending well into the new year.

    As retail margins are squeezed (or evaporate), wholesale prices will come under heavy pressure as manufacturers and distributors lose pricing control.

    We may be fast approaching a retail environment that consists of high-volume retail chains such as Wal-Mart and Target, large online distributors and small, specialty retailers existing in cyberspace only.

    There’s already a glut of retail space in this country and the glut will only worsen the commercial real estate environment.

         
  • Posted: 28 December 2008 05:54 PM #4

    The projection of 2% increase YoY wasn’t on the table after September, and I don’t think anyone believed it was.  I do agree that retail will suffer in 2009, and this is cause for concern. 

    But to characterize 3% or even 5% as “dismal” is hyperbole, in my opinion.  Now, if the media plays this up, people will act accordingly and will batten down the hatches and we’ll surely see Depression II.  I am more than a little frustrated that the media seizes upon modest %‘s (in statistical and historical terms), and make a loud sound bite to feed more of the negative psychology that will give us more of what we don’t want.

    Then again, I’ll get my chance to pick up more stock at sub-bargain basement prices.

         
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    Posted: 28 December 2008 06:28 PM #5

    Mercel - 28 December 2008 09:54 PM

    Then again, I’ll get my chance to pick up more stock at sub-bargain basement prices.

    Scaling in has had a continual theme song for the past six months.

    Version one.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
  • Posted: 28 December 2008 06:51 PM #6

    Mercel - 28 December 2008 09:54 PM

    The projection of 2% increase YoY wasn’t on the table after September, and I don’t think anyone believed it was.  I do agree that retail will suffer in 2009, and this is cause for concern. 

    But to characterize 3% or even 5% as “dismal” is hyperbole, in my opinion.  Now, if the media plays this up, people will act accordingly and will batten down the hatches and we’ll surely see Depression II.  I am more than a little frustrated that the media seizes upon modest %‘s (in statistical and historical terms), and make a loud sound bite to feed more of the negative psychology that will give us more of what we don’t want.

    Then again, I’ll get my chance to pick up more stock at sub-bargain basement prices.

    Here’s a look at a 3-month holiday sales performance chart going back to the early 90’s.

    Considering the growth in operating retail space and the continuing growth in population, a drop of 3% YOY will be catastrophic for many retailers. Again, many retailers might experience a slight sales gain this season, but the number of retail enterprises that will probably go under may be staggering. That means loss of rent revenue to mall and strip mall operators as well the loss of hundreds of thousands of full and part time jobs.

    In states such as California with high sales tax rates and state budgets that depend on strong sales tax revenue during the holiday season to meet budget forecasts, it only worsens the fiscal picture.

    The retailers that survive will most likely not be adding jobs in the first calendar quarter and quickly laying off seasonal sales help.

    [ Edited: 28 December 2008 06:54 PM by DawnTreader ]