Originally Posted By RoadTrip <<Holiday sales seen worst in 38 years>> Wow. The headlines are shocking. WORST CHRISTMAS SEASON since 1970. And yes, I have no doubt it was. But just how much were sales down? Well, nationally housing prices are down about 18% over the past year. The DJIA is down 36%. Unemployment is up 44%. My God, with numbers like that I would guess sales would be off by at least 10%... maybe 15%. Well, what were they down? ONE FREAKING PERCENT! (or possibly more). Oh the pain. Oh the agony. Oh the gloom and doom!! <<The ICSC expects December sales at stores open at least a year to be down 1 percent or “possibly more.”>> Source: <a href="http://www.msnbc.msn.com/id/28434929/" target="_blank">http://www.msnbc.msn.com/id/28434929/</a>
Originally Posted By DouglasDubh I don't know, RT. Between inflation and population growth, I wouldn't be surprised if average Christmas retail sales have been going up 5% a year for the last 30 years. With the low margins of most retailers, a 1% drop instead of a 5% increase could be pretty bad.
Originally Posted By SuperDry Douglas is right, and especially so when you figure out what affect this could have on the share price. Sometimes underperformance in delivering sales or earnings can have dramatic effects on the share price.
Originally Posted By vbdad55 Total revenues were down 1% - but what was profit down ? They have been giving stuff away with many clothes stores at 50% off weeks before Christmas. And then adding additional discounts to that - So revenues may only be down a slight amount - but profits are likely waaaay down, as stores virtually dumped inventory Just like the auto industry did with rebates and employee price sales - no one expects to pay full price for a thing any more- and it will be a long time before people willever dothat again
Originally Posted By RoadTrip <<With the low margins of most retailers, a 1% drop instead of a 5% increase could be pretty bad.>> Don't you think that most retailers would have reacted to the poor economy over the past year by shedding jobs so that they could survive on lower sales? You can bet that the automakers would LOVE to be down only 1%. By the way... the inflation rate for 2008 is 1.1% and the population growth rate was .883%. Inflation: <a href="http://www.usinflationcalculator.com/inflation/current-inflation-rates/" target="_blank">http://www.usinflationcalculat...n-rates/</a> Population Growth: https://www.cia.gov/library/publications/the-world-factbook/print/us.html
Originally Posted By Kar2oonMan >>but profits are likely waaaay down, as stores virtually dumped inventory<< Exactly. Did anyone in America pay full retail price for anything this year? Doubtful. >>You can bet that the automakers would LOVE to be down only 1%.<< But that 1% drop is at a time when most retailers bring in 35% of their revenue FOR THE ENTIRE YEAR, so the impact is much greater.
Originally Posted By ecdc I still think Jim's thread nailed it. I'm fed up with being told that I'm irresponsible when I use a credit card and that I need to be saving more, only to turn around and be told that I'm ruining the economy because I didn't spend like a drunken sailor this Christmas. I've had it with inept businesses whining about their profit margins. There are businesses and companies that did just fine this Christmas - Amazon is one. These businesses think they can just continue the same trends and if they don't make money, then it's somehow everyone's fault but theirs.
Originally Posted By RoadTrip I know it is not a good environment for retailers, but when University departments are being told to prepare for a 10% budget cut, a 1% reduction doesn't seem like that big a deal.
Originally Posted By Kar2oonMan Yes, plus, it isn't exactly the thing that makes one want to go on a shopping spree when the news is all bad, all the time. Somewhere between "the beaches are open, everything's fine" and "it's the end of the world as we know it" exists reality.
Originally Posted By Sport Goofy Here's the deal with a lot of your big corporate retailers -- they all sell the idea of expansion and growing earnings to shareholders based on a projection of sales growth in their stores. They finance a lot of store expansion on the premise of a certain amount of sales growth each year. When the sales growth erodes, retailers can find themselves over-leveraged to the point where they can no longer keep the cash flow positive. This certainly doesn't apply to all retailers, but the ones that have been barfing up stores across the country wherever a suburban strip mall pops up are the most likely to feel the impact. Once the sales growth stops, the retailers can't finance any more growth in their stores, stockholders flee, and the business begins to disintegrate.
Originally Posted By barboy Last night I went to the local indoor mall in Pleasanton, California to prepay $3,500 worth of service/product since the outfit was running a blowout sale--- a very enticing sale indeed. I had no intention of wanting/needing the outfit's offering until early 2010 but I wanted to secure that price. I got into the main area of the mall and saw: 1) Whitehall jewelers all gated up and their display cases completely empty 2) KB Toys ransacked and locked up 3) Libby Lu in disarray and gearing up for closure 4) no more Bombay....... poor boys didn't even make to see the Christmas rush this year. 5) 4 to 6 unoccupied/unrented small open floor stalls that had renters throught the years and now suddenly gone. 6) The anchors were looking like a ghost town too.....Macy's, JC Penny, Nordstroms and especially Sears. Did I prepay the outfit after seeing that kind of retail carnage????? Hell no!! Mama raised no dummy.
Originally Posted By wonderingalice I've done about 90%+ of my Christmas shopping with Amazon for the last four years or so. With free shipping and prices that are lower than if I buy the stuff anywhere else, how can I not? How much is all that stuff marked-up, anyway? Ya gotta figure the manufacturer's making a profit when they sell to Amazon... Then Amazon offers it to the public at a deep discount... For example - This weekend I did some research on the Seagate FreeAgent Go portable hard drive (mainly to be used to back up my iTunes music library and all of our digital photos. At Seagate's site, the cost is $109.99 (though I just noticed they marked down the 250GB unit to $84.99 in colors other than silver and black. I bought it in black from Amazon for less than $82. Are we looking at an eventual future with just two shopping options for non-clothing items... WalMart and Amazon?
Originally Posted By charming husband as a former buyer for a major retailer I can tell you that at 50% markdowns, retailers are still making a nice profit.
Originally Posted By Dabob2 <With the low margins of most retailers, a 1% drop instead of a 5% increase could be pretty bad.> Douglas is right. (Ya'll can break out the smelling salts now if me saying that is giving you the vapors.) And SG made some good points in #10 also. Some retailers will do fine, others are in big trouble. Those who depend on constant growth as their business model would obviously be in the latter group. FWIW, I just bought a beautiful dark blue pinstriped suit at Jos. A Bank for $22.50. For a suit. Yes, it was an outlet store, but still. A suit. A nice one. $22.50. Dang.
Originally Posted By vbdad55 <I know it is not a good environment for retailers, but when University departments are being told to prepare for a 10% budget cut, a 1% reduction doesn't seem like that big a deal. < welcome to my world - be glad it's only 10% and again, apples -oranges. The 1% is total sales not profit margin. You could cut far less than 10% of your people if you let go the top few.....total expense may still be 10% but headcount may be 1%. See how easy that works...
Originally Posted By RoadTrip <<They have been giving stuff away with many clothes stores at 50% off weeks before Christmas. And then adding additional discounts to that - So revenues may only be down a slight amount - but profits are likely waaaay down, as stores virtually dumped inventory>> But wouldn't that be already reflected in the 1% decrease? The only way it would not be (that I see) is if retailers were actually selling MORE items, but selling each item with a lower profit. I doubt that is happening. I have a hard time believing anyone is selling more items than last year (with the possible exception of HD TV's).
Originally Posted By queenbee I don't doubt that retailers are selling more items. The sales at some stores are incredible. People may be spending less money overall but purchasing more items.
Originally Posted By Sport Goofy Stores really aren't selling more items because most of them didn't order as much for the holiday season when they started reading the economic tea leaves for the second half of the year.
