Toys `R' Us, Sears Try Sales in Christmas Salvage Bid

Bloomberg ^ | December 25, 2002 | Greg Wiles

[Sir Beowolf]

Very good couldn't said it better

[JNB]

Again, anecdotal eveidence is not a way to determine economic health. Big box stores and new malls gains have come at the expense of older malls and older shopping centers.

If sales trends hold up, and retail sale sonly gain 1.5%, that is a bad for retailers because they have allready been trying to lure consumers with the most agressive discounts in history. This is bad for retailers because there are many signs that the Re-fi/Home equity loan gravy train is coming to a end(simpily put, banks are reluctant to loan below 6%). The real proof of how bad things are or are not is in the profits for Q4, and projects for 03 that will come in January.

Sorry, but it is not all peaches and cream up there, the Clinton/Rubin/Greenspan bubble is not going out quietly.

[GailA]

Why should I spend $35 for a sweater made in China at Sears, when I can go to Wal-Mart and get almost the same sweater made in China for $20?

[Citizen of the Savage Nation]

Again, anecdotal eveidence is not a way to determine economic health

So is playing games like calling every yearly gain a bad sales season. I appreciate what you're saying but there is less people working this year as compared to last, right? Wage levels have been flat. This should translate to negative numbers, so a +1.5 is not bad to me, but then again I'm trying to be realistic.

[cajungirl]

I remember one bad season for sales when the malls were packed but if you looked no one was carrying alot of shoppiing bags and the lines were not there. My daughters tell me the liines at Body Works and shops like that were very long which means people are buying small comfort items rather than big ticket ones. I think the malls here in Louisiana were very crowded and sales were up from what the local paper said.

[JNB]

The difference is two things. One, a record number of home re fis have given consumers about $200 billion extra to spend this year, and again, a record amount of pre Christmas discounting. The 1.5% sales gain is all relative. Would there be a 1.5% gain is people were not re-financing their homes? Would there be a 1.5% sales gain if there was not such a high level of discounts? I am being realistic, the problem is many others are not.

The bottom line is this. The economy has gone about as far as it can possibly go based on Greenspans intrest rate minipulations, home loan rates do not look to be going any lower, the 0% auto financeing has lost its luster, and with that, consumers are going to be hard pressed to get the extra spending dollars that the Re-fianceings have given them the past two years.

[kitkat]

***If
sales do not hit inflated expectations, then it's a bad season even
if the revenue is better than last year.***

I'm so glad that you said that. I've been wondering for the past five years at least how they figure they're in such bad shape when each and every one of those years, they made a larger profit than the year before.

[AntiScumbag]

but there is less people working this year as compared to last, right?
Wage levels have been flat

jnb is exactly right, anecdotal evidence is useless, and i will add bad economic assumptions to the useless list

total u.s. employment in 11-02 was 130.875 million vs 131.087 million in 11-01 (from bls.gov)

that is a tiny decrease of 16/100ths of 1%

the u.s. employment cost index was up 3.7% year over year for the 3rd quarter of '02 (from bls.gov)

certainly not flat at all, in fact, up rather sharply

the consumer price index is up 1.02% year over year as of 11-02 (181.3 vs 177.4, from bls.gov)

This should translate to negative numbers, so a +1.5 is not bad

actually, it should translate to some positive number between at least 1% (inflation) and about 3.5%

even november retail sales were up 2.1%, year over year

from economicindicators.gov -

"retail and food services sales for November, adjusted for seasonal, holiday, and trading-day differences, but not for price changes [emphasis mine], were $302.5 billion, up 0.4 percent (±1.0%) from the previous month and up 2.1 percent (±1.1%) from November 2001"

so, no, plus 1.5% isn't "not bad", it is below trend, the worst year over year increase in 30 years, and it would represent only a .5% real increase after 1% inflation is backed out of the number

assuming they don't make the 1.5% number, and they probably won't, the results can justifiably be classified as a disaster for retailers as a whole

regardless of how much whining they normally do, this time they're not kidding

the consumer is finally tapping out, things are slowing down markedly, and all of the anecdotal evidence and bad economic assumptions in the world ain't gonna change the facts

[AntiScumbag]

your bottom line is exactly right, and there are way too many people who refuse to take off their rose-colored glasses

[lewislynn]

what does it matter from the retailer point of view if they spend $450 this year on items bought at a discount of 30% vs. $500 a paice last year on items bought discounted 20%. That will ding the retailers eranings.

You're right, what does it matter from the retailer point of view when the differnce is the $450 item cost 90% less to make in China this year than the same item made in Mexico last year?

[AntiScumbag]

they made a larger profit than the year before

you're confusing profit with gross revenues

this year's overall retail results may be a tiny nominal revenue increase, an inflation-adjusted revenue decrease (see #28), and a general disaster for profits

including large losses for some retailers, and bankruptcy for a few

[Joe Hadenuf]

That may be true to some extent.

But I can tell you, I would rather juggle chain saws than deal with credit cards or the stock market. I am holding onto my cash, and old cars etc. And so are a lot of other people.

Now is not the time to spend, borrow, go into more debt etc.

In my opinion.

[Joe Hadenuf]

Good Point.