ICSC Weekly Same-Store Sales Sinking

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The Greek's Color on the Trend

For some time now, we've been forecasting consolidation in the restaurant/retail space, and a resulting downturn in commercial real estate. More recently, we've looked to the period post "back to school" and pre holiday discounting as a dead zone. It's a desert retailers must survive, and then as they reach the oasis, they'll find hoards of competitors as hungry as they are fighting for a consumer carcass that is light on sales meat.

In this past week's report, the International Council of Shopping Centers noted weekly same-store sales rose just 0.9% year-to-year in the period ended October 18. Sales decreased 1.6% when compared against the prior week, but the degree of change likely had something to do with the influence of several holidays. Nonetheless, the deceleration of year-to-year growth has been plainly apparent as the weeks have advanced through this month and last.

ICSC Sales Trends
Week Ended	Yr/Yr Growth	Wk/Wk Growth
Oct 18	+0.9%	-1.6%
Oct 11	+1.0%	+0.7%
Oct 4	+1.3%	+0.1%
Sep 27	+1.1%	-0.2%
Sep 20	+1.3%	-1.0%
Sep 13	+1.3%	-1.6%
Sep 6	+1.9%	-0.1%
Aug 30	+2.2%	+0.1%

Clearly, the great loss of wealth in real estate and in equity portfolios has deflated consumer confidence, not to mention leaving them high and dry as far as cash and credit are concerned. Last week, the University of Michigan confirmed that, as its measure of consumer sentiment fell 13 points, to 57.5. Today, the State Street Investor Confidence Index dropped 17.5 points to 58.2 (October).

When September Chain Store Sales were reported, the virus had spread from the more sensitive department stores, like Macy's (NYSE: M), Kohl's (NYSE: KSS), Nordstrom (NYSE: JWN) and J.C. Penney (NYSE: JCP), to as far as high-end luxury chains like Saks (NYSE: SKS) and Tiffany (NYSE: TIF). Even some discounters have had difficulty managing recently, but discount and specialty retail seem the places to hide for those who must have industry exposure.

Last week, Mervyn's, a regional retailer in California and the Southwest, announced plans to hold a going out of business sale at all of its remaining 149 locations, and to wind down its business. This week, Circuit City (NYSE: CC), which currently trades at $0.35, was rumored to be in the process of hiring lawyers in preparation for a bankruptcy filing. As many as 150 stores could close as a result, and thousands of employees could be left jobless. The casualties are mounting, and in my own Yorkville neighborhood I'm seeing unprecedented vacancies among commercial properties.

My Yorkville hood, which is close geographically but otherwise a world different from the creme de la creme of the Upper East Side and Madison Avenue, is a good vantage point to get an early read on retail health. Because of the high level of competition here and expensive rents, the retail sector of my hood is super sensitive. Yet, in my nine years here, I've never seen the level of vacant retail space I see today, and things should get worse. How are things where you are? We would like to know.


(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)

International Council of Shopping Centers' (ICSC) Index

As Defined by ICSC

"The ICSC-Goldman weekly U.S. retail chain store sales index measures nominal same-store or comparable-store sales excluding restaurant and vehicle demand. The weekly index is constructed using sales-weighted geometric average growth rates to preserve long-term consistency and is statistically benchmarked to a broad-based monthly retail industry sales aggregate that currently represents about 80 retail chain stores, which also is compiled by ICSC. A representative sample of those major retailers has been used as a control group to extrapolate the weekly sales index. As such, the weekly index statistically represents industry sales and is not just a sum of sales for a handful of retailers. The standard period used for the index is Sunday through Saturday, even though some retailers use a different weekly accounting period. The weekly sales index is presented on an adjusted basis to account for normal seasonality and to counter other data anomalies. Weekly seasonal adjustment is at best difficult for chain store sales given that retailers can and often do shift promotions to counter typical shifts in the calendar. Nonetheless, the approach to weekly seasonal adjustment used by the ICSC follows from the Piser Method, which was popular in the early 1930s and became the standard for weekly adjustment."

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