Retail Sales
Just a quick note here. I won't be posting my follow up to the last post till this weekend or early next week. But, I have a few moments and I want to make a quick comment. It seems each time new data points come out which don't suit the "global synchronized bull" advocates, it is dismissed for some reason or another.
I have worked with retail clients for a long time. I'm very familiar with the inner workings and strategies of many leading retailers and the retail segment in general. I can tell you that I have never seen comps or same store sales numbers like the ones being reported. They are likely the worst numbers since the 1970s or the Great Depression without any data points to validate data that far back. Wal-mart's same store sales may be the worst in its history as a publicly traded company. I've talked about Wal-mart's doomed strategy to move upscale and compete with the likes of Target and if this were contained to Wal-mart, I might give less credence to the data as macro in nature. But, Target's same store sales were even worse.
The headlines are that this was unexpected or that it was against difficult comps or it was against weather related back drops or it was one month and one month does not make a trend. This is jaw boning at its finest. The trend in retail sales, however it is sliced, has been down for some time. That includes ex-autos. People react no differently than corporations. Expenses rise and the outlook becomes less clear so you start raising cash and cut back on discretionary spending. This doesn't mean the world is coming to an end but this data should not be overlooked as an anomaly. I am quite confident those in the retail segment are seeing this as a very, very worrisome sign. Discounts, cut backs in new orders and subsequent economic impacts of said actions should be expected in future months.
I have worked with retail clients for a long time. I'm very familiar with the inner workings and strategies of many leading retailers and the retail segment in general. I can tell you that I have never seen comps or same store sales numbers like the ones being reported. They are likely the worst numbers since the 1970s or the Great Depression without any data points to validate data that far back. Wal-mart's same store sales may be the worst in its history as a publicly traded company. I've talked about Wal-mart's doomed strategy to move upscale and compete with the likes of Target and if this were contained to Wal-mart, I might give less credence to the data as macro in nature. But, Target's same store sales were even worse.
The headlines are that this was unexpected or that it was against difficult comps or it was against weather related back drops or it was one month and one month does not make a trend. This is jaw boning at its finest. The trend in retail sales, however it is sliced, has been down for some time. That includes ex-autos. People react no differently than corporations. Expenses rise and the outlook becomes less clear so you start raising cash and cut back on discretionary spending. This doesn't mean the world is coming to an end but this data should not be overlooked as an anomaly. I am quite confident those in the retail segment are seeing this as a very, very worrisome sign. Discounts, cut backs in new orders and subsequent economic impacts of said actions should be expected in future months.
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