Surprise! Surprise? Retail Sales Demise

Was anybody really surprised to learn that retail sales stalled in August? Apparently economists were, given their consensus forecast for growth of 0.2%, based on Bloomberg’s survey. Census Bureau data reported Wednesday showed retail sales actually stuck around the same mark set in July. Considering the damage DC and S&P brought to the stock market and consumer confidence through the summer, there should be no surprise about August retail sales dribble. The job now ahead of our government is how to restore confidence before an economic death spiral gains momentum.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relevant Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Surprise! Surprise? Retail Sales Demise

Back to school or back to broke? The back to school shopping season tends to heat ahead of Labor Day, but this data is adjusted for seasonal variation, and so should not be seen as worse for it. And how bad is it really? On a year-over-year basis, sales were 7.2% higher. Even after adjusting for inflation, that’s not shabby growth. However, gasoline station sales increased 20.8% on a year-over-year basis, thus reflecting the rise in gasoline prices through the period. This leads one to wonder if gas padded the numbers. However, if we measure retail health excluding gasoline, it still doesn’t look that bad. Most of the categories listed in the report show better than inflation rates of growth on an annual basis. That said, and like I’ve often stated in the past, we slow before we stop and we stop before we reverse course.

The month-to-month 0.0% growth rate proved harder to digest because July’s growth was revised downward to +0.3%, from the initially reported 0.5% rise. The July data was reassuring to investors when reported, so this is like a rug has been pulled out from under us. Still, the stock market was higher through early afternoon trading Wednesday on the appeasement of investors by an Italian vote of confidence for its government and on the reassurances of Angela Merkel and other European leaders regarding a feared Greek default.

Surprising motor vehicle sales weakness cost the overall growth performance, as the rate excluding auto sales was a better +0.1%. Motor vehicle and parts dealers’ sales were reported down by 0.3% through the month. This was consistent with data reported at the start of September, with domestic auto sales estimated running at a 9.4 million annual rate, down from 9.5 million in July. Total auto sales were down to a rate of 12.1 million, from 12.2 million in July.

Significant softness was also seen in apparel sales (clothing & clothing accessories), which was reported down 0.7% month-to-month. And the August drop was preceded by a decline of 0.3% in July. Clothing is perhaps one of the more discretionary spends made by consumers. Department stores did especially poorly, with those sales down 0.3% month-to-month. That news has not hurt the stocks of the big boxes today, with shares of J.C. Penney (NYSE: JCP) up 4.1%, Macy’s (NYSE: M) up 2.8%, Kohl’s (NYSE: KSS) up 2.2% and Nordstrom up 0.3% at the hour of publishing here. Grocery store sales, an area of necessity, rose 0.5%; though food sales, like gasoline, may reflect rising pricing as well (Kroger NYSE: KR up 0.3%). Spending at restaurants and bars (food services and drinking places), which are certainly discretionary for most of us, declined by 0.3% in August; and that followed the 0.4% decline in July. Shares of Brinker International (NYSE: EAT) and Darden Restaurants (NYSE: DRI) are up 5.3% and 2.4%, respectively, nonetheless. This discretionary spending drop-off should make DC and S&P feel a little guilty, if either has a conscience, but it looks like investors in these companies expected worse news today.

Nonstore retailers, which is basically online business now (once dominated by catalog), saw a sales increase of 0.5% in August and a strong 10.4% increase year-over-year. This continues to be a market share story, as the web keeps grabbing business from the street. Perhaps a sign of renewing decline in housing, furniture and home furnishing stores saw a sales drop of 0.2% in August, and have only modest growth of 0.2% to report on a yearly basis.

Sporting goods and other hobby stores posted strong growth of 2.4% in August, and I continue to believe this is due to a little understood phenomenon among the tally takers. Heading into the school year, student athletes and musicians must restock on equipment and supplies for their game and music playing efforts. It’s my view that the seasonal adjustment has not been accounted for here, as I recall this happening in years past as well.

In conclusion, the decline in August, following a moderated growth rate in July, can be directly attributed to Washington D.C. and to Standard & Poor’s in my opinion. The two perhaps equally responsible entities managed to scare the consumer, both employed and unemployed, into their bunkers. The capital destruction that occurred in the stock market on dire debt ceiling debate and the prospective economic collapse threatened by a downgraded sovereignty kept Americans focused on preservation of capital, and perhaps food as well. Hopefully, American confidence can be restored as quickly as it was damaged, but it appears a self-feeding down spiral is more likely.

Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Talbot's (NYSE: TLB) – Fool Me Twice, Shame on Me!

Remember Talbot’s, the company that was one of the first retailers to struggle in the economic downturn, later followed and surpassed by Circuit City, Blockbuster and a few others? Yeah, well, she’s back to stinking up the joint again, the joint being the NYSE (NYSE: NYX) and the stinking being a 39% market capitalization shredding.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relevant Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Talbot's (NYSE: TLB) – Fool Me Twice, Shame on Me!

Talbot’s (NYSE: TLB) shares are light 39%, trading at just $2.75 through midday Tuesday after the company disappointed investors with a still soft outlook. It’s a shame too, as its first quarter results exceeded analysts’ consensus EPS expectations for $0.03; the company earned $0.08 in adjusted EPS excluding special items.

Revenue was a bit light in Q1, at $301.3 million, short of last year’s $320.7 million and analysts’ expectations for $306 million, based on FactSet (NYSE: FDS) data. Same-store sales, including internet and catalog sales but excluding stores scheduled to close, fell 8.2% in Q1. The company’s CEO, Trudy Sullivan, said sales were uneven throughout the quarter, with a stronger March than February and April. She blamed an "inconsistent customer response to our merchandise assortments, a challenging competitive environment and high levels of promotional activity." February weather no doubt played a role, but April should have benefited from Easter.

The company’s margins were squeezed, with its cost of sales rising 800 basis points on the retailer’s need to markdown items and on what’s seems like aimless promotional activity. Talbots saved 60 basis points on its SG&A line, but at what cost. It garnered the margin on a reduction to performance based manager incentive compensation. Thanks to weaker than expected quarterly sales, Talbots ended the quarter with 13.1% higher inventory than the prior year, and now it’s got to move that load.

What greatly troubled investors Tuesday was that sales through Q2 were down low-teens against the prior year, so far. Margins are expected to tighten significantly, with gross margin looking to squeeze 1000 basis points. The company indicated that turbulence was to be expected in this transition year, but perhaps its lack of execution in fashion identification and its strategic vision as to its target market were not on par either.

Talbots is going to close 110 stores over the next three fiscal years, with 83 coming this year. It’s trying to further identify itself with Americans as a high end destination that’s also fashion conscious, something that’s been apparently lacking. Yet, maybe the problem is that there’s just no room for The Talbots, and it should close a few hundred more stores. I’ve speculated in the past that the bland brand may have been tarnished beyond repair and should have been left for dead the first time. At the high end, Talbots competes against the stronger brands at Saks (NYSE: SKS), Bloomingdales and Nordstrom (NYSE: JWN). The value conscience high-end shopper is likely spending carefully at the nifty T.J. Maxx (NYSE: TJX), Syms or Filene’s Basement (Nasdaq: SYMS).

The company fumbled once last decade, and is currently looking like it might outdo itself this decade. An analyst at Miller Tabak certainly seems to think so, cutting his recommendation to sell from neutral Tuesday. There’s an old adage that reads, “Fool me once, shame on you; fool me twice, shame on me.” Unfortunately, it seems as though more than a few investors are feeling shame today.



Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Consumers Express Buyers' Remorse

Consumer Mood Sours

Some of the latest data around consumers seems to show that they are perhaps experiencing buyer's remorse after overspending through the holidays. That said, hope still seems to exist in their hearts as well, and so there remains the possibility of a future let down there too. Oh happy joy!

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relevant Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC

Consumers Express Buyers' Remorse

You might have missed the negative perspective expressed here with regard to the consumer related economic data released in mid-January, given that many publishers were writing about the strongest annual rate of retail sales growth in more than a decade. Lucky you have cheery old Greek to remind you that the last few years' joyous journey have not exactly set a high bar for consumer spending to climb over. With that in mind, the 6.7% growth in retail sales (excluding autos) through 2010, the fastest since 1999, is not so special. Mathematics tells us the biggest growth rates should come after the softest of periods. And the latest days have been especially lacking.

Furthermore, Retail Sales grew just 0.6% in December, short of November's 0.8% increase and under the 0.8% bar set by the economists' consensus for the more important month. We saw a similar disappointment in the month's chain store sales data, and we theorized that the let-down might perhaps have occurred due to weather, or more likely due to pulled forward purchases on early sales promotions. That said, at least sales were growing versus the other possibility. However, another data point, also released last week, reinforced worries about the mood of Americans, which is something that might have them now reconsidering their silly spending of November and December.

The University of Michigan, in concert with Reuters, reported on January Consumer Sentiment last week. The latest take on the consumer mood offered a Consumer Sentiment Index reading of 72.7, down from 74.5 in December. Could the American consumer be expressing remorse, after perhaps spending beyond his means over the holidays? Economists had forecast this preliminary reading for January would hit at 75.0.

The state of consumer affairs has not improved much for the unemployed, and they were just put through the wringer too when Congress considered not renewing unemployment insurance extensions. While credit may be available to those of you with jobs, people scraping by on government assistance aren't having such a good go at the bank. So we suggest all of the gains of 2010 have come on a crippled consumer, and his crutch has been in use for so long now that it's getting rusty. Meanwhile, the doctor is lacking the political will to continue prescribing replacement crutches.

I Digress

Thus, I'm not as psyched as some of Wall Street's highly paid (and out of touch with Main Street) strategists living up there in the Park Avenue clouds of their own special reality. A few were heard early this year raising their GDP estimates and consumer spending forecasts for Q4 and 2011. Rather, I'm in tune with the tone of Park Ridge (also in NY), where most of those guys wouldn't venture during the daylight. That daylight shines on the truth of our struggles though. There are no Saks (NYSE: SKS) stores up in that cement jungle; heck there's not even a Kmart (Nasdaq: SHLD). These poor people can barely afford to even come into the city anymore, given the hikes in subway fares they are being burdened with to keep the second avenue tunnel drill running.

Those with cars have neither missed the fact retail gasoline prices have sped well above the $3 mark. The Reuters/Michigan metric shows inflation is in fact one of the main worries of the American consumers surveyed. The guys up on Park Avenue wouldn't know about that though, since the company takes care of the car service. The survey's one-year inflation forecast jumped to 3.3%, from 3.0% when measured in December; and guess what, I think the regular folk have a better bead on inflation that most of Wall Street. Tunisians do too.

The Consumer Price Index (CPI) for December, published Friday, was consistent with the Producer Price Index (PPI) published Thursday. Both reports showed raw prices lifted above economists' expectations on higher commodity costs, including food and fuel prices. The Headline CPI showed a December increase of 0.5%, though it was only up by 1.5% for the full year; that's not inflationary. Core CPI, which leaves out the volatile and lately lofty food and fuel prices, only increased by 0.1%, the same as the prior month and in line with expectations. However, if strain remains on scarce resource commodities that fire the global economy, which includes sectors of the world which are in growth mode, then we continue to posit, they threaten to infect the prices of goods ranging all the way to the finished segment… aka inflation. And that does not even include the impact of diluted dollars, dinero, and euro…

The Europeans are apparently already worried about that possibility, perhaps a bit early for them, given the burdens they've allowed to be weighed on Portugal, Ireland, Italy, Greece and Spain (the affectionately labeled PIIGS). The ECB Chief, Jean-Claude Trichet, spent a good deal of time talking about price stability and the evidence for and threat of rising energy prices, which he said warranted close monitoring.

That said, and despite our struggles, optimism continues in abundance in America, with the Reuters/Michigan index that measures the 12-month economic outlook up at 87 – that's a positive outlook. Well, if buyers could express remorse after spending like drunks on borrowed money for Christmas, then they certainly could have their hopes quelled by an economic recovery that looks to be a slow go at best. Our hopes continue to be bet on a country run by antagonists, who allow criminals to purge our intellectual property; who invite our companies to break ground on their land so that they can copy and contain their wisdom; and who threaten us on an ideological level. Yeah, that sounds like the road to prosperity to me…



Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Rotation Out of Retail Stocks Near-Term

Sector Rotation

Individual retailers reported chain store sales results Thursday for December, and the mixed bag of data decidedly disappointed the market. Even as December disappoints, the full holiday shopping period proved positive. Still, stocks had priced in those early gains as they came, and the old adage now begs to question, "What have you done for me lately?" Thus, baring a magnificent Employment Situation Report, I expect a near-term rotation out of retail sector stocks.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC)

Rotation Out of Retail Stocks Near-Term

The general sales tally for stores open a year or more fell short of economists' and analysts' views for December. Retail Metrics Inc. reported sales increased 3.2% in aggregate in December, against a 3.5% expectation. Retail sector shares had gained over recent months on favorable reports leading up to today, but a late season fizzle is taking some steam out of them now. The SPDR S&P Retail ETF (NYSE: XRT) dropped off 1.4% today on the news, but is still up near 9% since the close of October.

Seeking answers, the pull-forward theme is garnering most of the darts. After all, Retail Metrics notes November sales had increased a sturdy 5.5%, and MasterCard Advisors SpendingPulse (NYSE: MA) indicated that the full holiday season saw 5.5% growth as well. That was the best reported gain in five years time. Maybe this year, folks spent some money in November and regretted it afterwards, keeping them inside for snowy December.

As for the blizzard, Goldman Sachs' (NYSE: GS) Senior Retail Analyst Adrianne Shapira reminded us that there was a snow storm on Super Saturday in 2009, and one on the day after Christmas this past year. Net, net, she says, it's always going to snow in the Northeast during the holiday shopping season, so that effect is a wash. These types of anomalies are going to be especially meaningless as we look at periods covering more than a month.

Prices generally got squeezed this year on sales to lure in early shoppers, as retailers smartly sought to steal some market share. At the same time, breakthrough, technologically advanced goods got a whole lot cheaper this year, as I can attest, with my Toshiba Satellite (OTC: TOSBF.PK) going for about $300 less than it went for as recently as May! High-definition big screen TVs, electronic book readers, netbooks and i-everythings priced lower, and so Best Buy (NYSE: BBY) and other retailers of electronics faced a tough challenge and missed. 3D technology apparently flopped as a pull, and I suspect will not be successful until you can watch it without the special glasses. BBY shares fell 1.3% Thursday as a result. Several discounters who deal in electronics, among other goods, also blamed the segment today on weak same-store sales. That list included Target (NYSE: TGT), as its shares were off 6.8% on a soft 0.9% December same-store sales gain.

Results were mixed in this fickle marketplace, and so it is a stock-picker's dream arena today. The apparel, department store, discount and teen retailers that did relatively well included Abercrombie & Fitch (NYSE: ANF) +15%; Zumiez (Nasdaq: ZUMZ) +9.2%; Nordstrom (NYSE: JWN) +8.4%; Saks (NYSE: SKS) +11.8%; The Buckle (NYSE: BKE) +6.1%; TJX Cos. (NYSE: TJX) +6.0%; Costco (Nasdaq: COST) +6.0%; Dillard's (NYSE: DDS) +7.0%; BJ Wholesale Club (NYSE: BJ) +3.8%; Ross Stores (Nasdaq: ROST) +4%; J.C. Penney (NYSE: JCP) +3.7%; Kohl's (NYSE: KSS) +3.9%; Macy's (NYSE: M) +3.9%; and Walgreen (NYSE: WAG) +2.8%. While the stores posted sales gains, some were short of expectations, like Macy's, with M shares falling 4% as a result. That said, if you compare November through December periods, sales were solid at Macy's.

December's relative losers on the sales front included:

American Eagle Outfitters (NYSE: AEO) -11%
Aeropostale (NYSE: ARO) -5%
The Gap (NYSE: GPS) -3%
Wet Seal (Nasdaq: WTSLA) -2.1%
Stein Mart (Nasdaq: SMRT) -1.9%
Hot Topic (Nasdaq: HOTT) -1.7%
Cato Corp. (Nasdaq: CATO) 0.0%
Bon-Ton Stores (Nasdaq: BONT) +0.1%
Fred's (Nasdaq: FRED) +0.2%
Rite Aid (NYSE: RAD) +0.6%
Destination Maternity (Nasdaq: DEST) +1.2%
Stage Stores (NYSE: SSI) +1.9%

Retail sales are expected to increase somewhere between 3-4% in 2011. Still, I expect capital to continue a sector rotation out of retail generally in the near-term, perhaps leaving a pool fit for stock-pickers alone. While it's harder to say where capital will go, it's easier to see it should come out of retail for now, with gasoline prices expected to rise and with unemployment still high. We may begin to see a dent taken out of unemployment in the coming quarter (perhaps even Friday - a factor that could stop rotation), but other threats stand poised against broad and sustained economic recovery. Those include inflation in waiting, a likely war in the Middle East, and fiat currency dilution spiked with a shot of civil unrest in Europe, Russia, and even China and beyond.



Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

After Christmas Sales Astound in 2010

There's Nothing Left!

Retailers got you figured out, as the latest same-store sales data covering the week after Christmas showed impressive growth, despite the massive blizzard that buried the Northeastern US. Learn about what happened last week, and what to look forward to in this report.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC)

After Christmas Sales Astound in 2010

Weekly same-store sales, as reported by the International Council of Shopping Centers (ICSC) in conjunction with Goldman Sachs (NYSE: GS), came in astoundingly well. The week after Christmas, after all, did include a blizzard that walloped the population-heavy Northeastern US.

The week after Christmas offers retailers their last chance to unload left-over inventory, and so post-Christmas sales are used to pull shoppers in and push sales to those who are using gift cards or returning unwanted items. Thus, it is a busy shopping period.

For the week ended January 1, sales increased 0.4% against the immediately preceding period. That's quite impressive against an especially challenging shopping period that included the national holiday of Christmas Eve.

Burdened by blizzard, crafty retailers again found ways to outsmart Americans and get them to spend money. It's official, retailers have figured you out, perhaps with teams of psychologists and marketers pouring over a vast database revealing your individual vulnerabilities and placing tailored advertisements on the websites you naively peruse.

The Christmas week, or the period before last, produced growth of 1.0%, and so any growth at all over that period is impressive; but with a blizzard in the mix, it's actually scary to me. I mean really, are you a robot programmed to spend on the broadcasting of keywords? Sales were higher than over Christmas? According to this report, they were. This is such a bizarre consequence that you would think there must be a seasonal adjustment. However, also boosting the period's sales, is the reporting of income tied to the use of gift cards in the week after Christmas. Gift certificate purchases do not count as sales on the retailer's end until that card is redeemed.

Year-to-year sales gained 3.6%, off last week's reported 4.8% growth, but were in line with expectations for the full month of December. The International Council of Shopping Centers did adjust its December expectations lower on this week's news, so the blizzard had a negative impact, though a stealth one. And despite the impact, we must agree that the Christmas shopping season appears to have been a wildly successful one. The ICSC will produce its holiday season sales figures on January 6; that's Thursday, which also includes the chain store sales reporting of individual retailers for the month of December.

It seems that a return to normalcy in the operating environment of the still employed has allowed their spending increases to lift us all over a prior year period that included tighter credit conditions and an overwhelming sense of fear. Certainly, the last minute passage of unemployment insurance extensions and tax breaks added confidence to the consumer mindset this season as well. But where we go from here without job creating economic growth is a troubling consequence to ponder.



Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Consumers Safekeep Holiday Spirit in 2010

Now for the Hangover

While it looks like Americans spent a bunch more money than many expected this year, we wonder if the sharp drop in consumer confidence reported for December 2010 is a result of their day-after realization of overspending and/or undergifting.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC)

Consumers Safekeep Holiday Spirit in 2010

The latest consumer spending data released today covering holiday shopping activity showed Americans may have lost their jobs in 2010, but they retained their holiday spirit - perhaps at their own cost. Last week, we expressed concern about the weekly sales results, based on the data's benefit from the inclusion of Super Saturday and its absence from the prior year comparable. We expressed concern that the absence of Super Saturday from this week's same-store sales data, versus an inclusive prior year comparable might drive equal and balancing disappointment this Tuesday.

However, ICSC reported that same-store sales for the week ended December 25, increased 4.8% year-to-year. Redbook concurred, noting a 4.6% sales increase. It's important to remember though just how bad last year was. While the stock market had already recovered from the pit, the economy was mired in the mud at the bottom of it. Thus, consumers were not as enthused as investors, though they had certainly benefited from wealth restoral in stocks; at least those who had not sworn off the fever forever. The problem is that many had.

A thoughtful reader of our article at a syndicate site last week offered his view that the day off on Friday might balance out the weakness caused by the absence of Super Saturday from the data. The Christmas weekend was a three-day holiday both years despite the date upon which Christmas fell. However, last year, Christmas Eve fell on Thursday, a full work day, and this year it occurred on Friday, an off-day allowing for last minute shopping for all Americans. So, we thank our reader for pointing out an important offset to our concerns. We witnessed with our own eyes streets full of holiday shoppers Friday on the Upper East Side of New York City. This certainly saved the week.

We also wondered whether the fact that a great deal of Americans had already finished their holiday shopping was good news or bad for retailers, considering they had likely paid less this year while chasing early deals. In the end though, it appears the creative marketing that thrives within the retail sector allowed it to adapt and survive 17% underemployment. Even the blizzard that struck the population dense Northeastern US could not stymie retail marketers, who are extending after Christmas sales to fit. It also certainly helped that the government passed unemployment insurance extensions, giving confidence to folks hanging on the edge.

Today, MasterCard (NYSE: MA) Advisors' SpendingPulse, which measures all retail sales (not just credit purchases), said for the period extending from November 5 through December 24, sales increased 5.5%. The rate of growth compared against 2009's 4.1% holiday pace, and it marked the fastest in five years. However, rates of growth are relative to the base they are measured upon. That said, and despite the easy bar setting, this is still good news.

It just so happens that Consumer Confidence was measured and published by the Conference Board today for the month of December. Putting a damper on things, confidence moved against the trend of the sales data noted today. December's confidence index slipped to 52.0, against the prior period's revised 54.3 and economists' consensus forecast for 57.4 this month, as compiled by Bloomberg. It is likely that this news had the S&P Retail ETF (NYSE: XRT) down fractionally through the hour of publishing. Negative housing price data out of S&P Case Shiller certainly did not help either. Shares of Wal-Mart (NYSE: WMT), J.C. Penney (NYSE: JCP), Best Buy (NYSE: BBY) and Aeropostale (NYSE: ARO) are trading with only fractional variance at the hour of publishing.

We have to wonder if consumer confidence didn't deteriorate due to the perhaps season-swayed spending of Americans that they now regret, realizing only afterwards that they really couldn't afford it. Or maybe they are just bummed about the lesser gifts given and received this year, and the friends and family they had to cut out. I would not read too positively into spirited holiday shopping, as consumers are likely to remain tight-fisted due to necessity moving forward.



Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Misunderstood Same-Store Sales Surge Offers Opportunity for Short Investors

Oversight Misled Retail Stocks Tuesday

An important calendar difference was missed by major media and expert analysts alike Tuesday. The oversight, and the later promotion of the wrong message by pundits, looks to have inflated same-store sales growth and provided a special opportunity for short investors over the near-term, especially in retail industry stocks.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC)

A Misunderstood Same-Store Sales Surge Offers Opportunity for Retail Stock Shorts

Loyal Wall Street Greek readers have gotten used to our regular debunking and uncovering of anomalies behind what can appear as strong economic data. Once again Tuesday, we uncovered an important and deflating detail that was overlooked and left out by every major business media outlet and even Wall Street's most respected retail sector stock analysts. This is a reminder of why you read the expert authored blog, Wall Street Greek.

When the International Council of Shopping Centers (ICSC) reported same-store sales Tuesday at a level that marked the best growth for the entire holiday shopping season, economists, strategists, analysts and portfolio managers alike got on television and radio and proclaimed the American consumer alive and well. Indeed, even I was left scratching my head, wondering why… for a second or two. After all, for the period ended December 18, same-store sales marked 1.7% growth, week-over-week, and 4.2% growth against the prior year comparable period. Redbook concurred, showing 3.8% year-to-year growth for the same period. The S&P Retail SPDR (NYSE: XRT) was up fractionally on the day, but Macy's (NYSE: M) moved 1.5% higher, while Target (NYSE: TGT) jumped 1.9% and Nordstrom (NYSE: JWN) gained 1.2%.

After researching the subject, I almost bought into the conclusion offered by some high-level industry folks. The big idea was that shoppers came out in force last week, packing in a good portion of their shopping during the period. The ICSC Index and report released Tuesday seemed to concur with this assumption, given that it showed 74% of consumers had finished their holiday shopping through December 18, which was up from 56.6% the week earlier. That surge in shopping activity could be behind some of the week's extraordinary growth. According to a Bloomberg article on the subject, Oppenheimer Analyst, Brian Nagle, seemed to agree. However, based on one important fact that most if not all of Wall Street and the business press missed, we have to disagree.

What Had Happened...

What the pundits and speak-easies missed was an important calendar difference between 2009 and 2010. Bloomberg Radio Host Kathleen Hays almost stumbled upon it when she asked an expert guest if the reason might be seasonal. He quickly and sternly stamped out that truth, saying it couldn't be seasonal, given that the growth was measured on a year-to-year basis. WRONG!!! Wrong! Wrong! Wrong! And shame on you Mr. Expert for leading Bloomberg's audience in the wrong direction by sounding like you knew what you were talking about. Kathleen, "The Greek" should have been your guest Tuesday. I know from my experience as an analyst, and from the advice given to analysts by a seasoned talking head back at my old firm, that it is widely believed that giving any answer to a television or radio interviewer is better than giving no answer. Wrong and unethical! Thus, many of the talking heads you see on TV answer confidently, when sometimes they are just regurgitating what they have read or heard somewhere else, or they are simply spewing out their best guess. In other words, sometimes the well articulated and seemingly sound advice of experts is completely baseless and hazardous for investors to buy into.

Super Saturday is the second most important shopping day of the year after Black Friday, with Cyber Monday and Christmas Eve likely on their heels. Super Saturday is the Saturday immediately preceding Christmas, but it does not always fall on the same calendar date each year, and this year a slight differential misled the entire market.

Christmas falls on Saturday this year, but it fell on Friday in 2009. Thus, Super Saturday fell on December 18th this year, and was measured in the latest week's same-store sales. However, last year, Super Saturday fell on December 19th, and so it was absent from this latest prior year comparable that the 4.2% growth climbed over; its impact will instead be seen in next week's report. Therefore, next week's same-store sales growth result has a good chance of falling short of expectations and disappointing investors, if our analysis does not restore market efficiency sooner than that. Given this week's message, or false message, investors who might have been misled into buying retail stocks Tuesday could regret their action shortly on market correction.

Other data and expert analysis seem to point toward trouble for the whole of the holiday shopping period. The National Retail Federation Survey released in the middle of the month noted that 62% of adults surveyed said they would spend the same amount of money or more this year than in 2009. This fact also seemed to enthuse a few fools Tuesday, especially while complementing the 4.2% inflated period growth. However, those of us who have a bit of math proficiency remind readers that if this is true, then 38% of shoppers will be spending less this year. That second bit of information, characterizing a large number of people who usually spend about the same amount every year, likely plays more importantly for retail revenues and profits… but not for headlines.

Retail guru, Jay Margolis, pointed out that consumers were following deals this year, and staying home if there were none. He noted desperate retailers' broad store-wide discounting late in the season but well ahead of Christmas, as shop managers seek to ensure the movement of inventory. Otherwise, retailers would be faced with excess, and need to discount even further post Christmas. This is a bad sign, and it means shop-keeps will be turning inventory, but at a lower ticket. That little ditty should keep revenues soft and profit margins tight come quarter end. Therefore, assuming the week's 4.2% growth doesn't coincidentally correlate with the direction and state of the sales season, then this potentially mistaken surge in retail shares could offer opportunity for short investors of retail sector stocks.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: MS, NYSE: C, NYSE: PNC, NYSE: WFC.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Stocks Rally for All the Wrong Reasons

Hype and Profiteering Driving Stocks!

Stocks have been on an upswing of late, but for all the wrong reasons. As signs pointed toward the passing of unemployment insurance extensions and the renewal of tax breaks for the rich, investors grew enthused and sent shares higher. Then this week offered a better than expected retail sales report, and traders feigned excitement. But, dear readers, be careful who you listen to, because this information is not as inspiring as the hyped up media and temptation toting traders make it sound.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: C, NYSE: WMT, NYSE: GE, NYSE: F, NYSE: GM)

Stocks Rally for All the Wrong Reasons

Stocks are on the rise, but the chart for the Dow is deceiving. It illustrates rally through midday each day this week, but late day moves lower, including today (12/15). Thus, it depicts a market short on confidence, but looking for profits. The Dow is only up about a percentage point in reality since the December announcement of the Obama Administration, through which it declared a dastardly agreement with the GOP. The secret meeting would renew tax breaks for all Americans, including those making more than $250K, who the Democrats wanted to leave out this time around. The deal would also speed the extension of unemployment insurance, and offer the Republicans the subliminal coercive idea that a cooperative relationship might be possible between the White House and Congress over the next two years.

So, the market grew enthused, not because of robust economic growth or an improving labor market, but rather because politicians would avoid making the disastrous mistake of cutting off 2 million Americans from their sustaining government supports (unemployment checks). Also, the Dow was determined, not because of a budget balancing endeavor, but because of a budget breaking continuation of tax cuts to the rich, who are notorious for keeping the winnings to themselves. Now, one might argue that the rich reinvest and make capital available to American enterprise, but let's face it, there's no tangible reason for the rise in stocks. We all know there's no way the GOP was going to go down in history, especially ahead of Christmas, as a holdout on unemployment insurance extensions.

Tuesday's Retail Sales Report for the month of November showed activity increased 0.8%, which was a slower rate of growth than October's pace. However, the market was overjoyed that October's data was revised up to 1.7%, from the 1.2% initially reported. The popular press also focused on the fact that the result exceeded the economists' consensus view, which was set at 0.6%, even after the prior month revision (which raised the bar). Also enthusing, were the sales when excluding autos, as those figures increased 1.2% in November, against economists' expectations for 0.7%.

However, wise readers, you will recall why there has been such robust early sales activity from your reading of recent scribbling on these pages. It is because there are a ton more desperate bargain seekers out there this tired year trying to get the best bang for their Christmas buck. So, early sales activity might not offer the great news for the full season that stock investors seem to imply they expect. As this becomes apparent, expect those tricky traders to pull the rug out and run, and then the press will remember that Black Friday does not a holiday shopping season make. Investors should also be reminded that discounted goods make for a lower dollar sales tally and tighter profit margin at Macy's (NYSE: M) and friends.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

October's Retail Sales Simplified

They Simply Weren't That Good

This week's Retail Sales Report offered an upward surprise, but as is often the case, looks can be deceiving.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

October's Retail Sales Simplified

Retail sales are a critical concern of American businessmen, investors and politicians as we enter the key holiday shopping season. So when October's data was reported this week, offering what seemed like a super result, the market cheered. However, by the end of the day economists and strategists had conveyed deeper discoveries to their followings, and the major indexes closed lower then they opened. Wal-Mart shares (NYSE: WMT), perhaps the simplest and best barometer of retail, marked a chart that matched that of the broader market.

October's Retail Sales increased 1.2%, significantly more than the economists surveyed by Bloomberg expected. The economists' consensus was set for a gain of just 0.7%. October's growth also represented a boost above September's revised rate of increase, at +0.7% (from 0.6%). That's super! Right?

Wrong… Excluding automobiles, which are a big ticket item and can skew the data, retail sales rose just 0.4%, matching expectations and easing from a 0.5% advance in September. The 0.4% month-to-month gain was actually the slowest in three months. While it is clear that a 5.0% gain in Motor Vehicle and Parts Dealers' sales skewed the numbers, another factor played a role as well.

Gasoline Station Sales, which are affected by shifts in gasoline prices and can have a big impact on the retail tally, increased 0.8% this month. This followed September's 1.2% contribution. If we look at Core Retail Sales, which exclude autos, gasoline and building materials, the increase drops to a significantly less impressive 0.2%.

Further, other contributors to the gain seem suspect and temporary. Building Materials & Garden Equipment and Supplies Dealers' sales increased 1.9%. Hailing from a contractor's family, it seems clear this is being driven by the weather proofing of homes for winter. There is a lot of window and door replacement that occurs at this time of year, as nest guardians prepare the property for the hard season.

Sporting Goods, Hobby, Book and Music Stores saw a 1.0% increase in October. We would not look to book stores for the reason, but perhaps the start of hockey, football, soccer and basketball season has folks buying new gear for junior around this time of year. September's gain marked 0.9% for this segment. Nonstore Retailers (web and catalog) marked a 0.8% gain last month, but this segment continues to benefit from market share gain, and cannot yet be utilized as a barometer for the economy.

I see trouble in the sales of Department Stores, found in the report within the General Merchandise Stores category. These icons of American consumption saw a 0.2% gain overall, likely aided by the discount shops; department stores posted a 0.7% sales drop in October. The "trade down" play is definitely still hot, with General Merchandise up 2.0% year-to-year, but Department Stores down 2.2% during that same span.

Finally, electronics (and appliance), which is what everyone is supposedly buying these days, marked a 0.7% sales decline in October. If this barometer for American consumption shows red, then how healthy can retail really be?



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Same-Store Sales Are Fading Away

In the beginning of this year, we said investors should expect same-store sales growth rates to deteriorate as the year progressed, which would seem counter intuitive. However, even while the economy finds some traction, sales are increasingly matching against more normalized comparables and finding a higher bar to surpass.

"Same-store sales" is a term coined to describe retailers' sales from stores that have been opened for a year or more. This tracks organic sales, versus the sales contribution from the addition of new retail locations. It is a useful tool to measure the true health of a franchise, as it captures its popularity and success in garnering store traffic and sales in a competitive marketplace.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

Same-Store Sales Are Fading Away

We say "more normalized comparables" above because early year comps were marked against perhaps some of the weakest per capita consumer activity in generations. As you'll recall, March of 2009 marked the bottom point for stocks, and inspired serious panic in the hearts of investors and consumers alike. Only a few brave souls were able to hold their noses, cover their eyes, and buy stocks that spring, and they benefited greatly from that courage. This spring's store sales were compared against that historically soft span, which made for a low bar to leap over this year. Thus, when yearly comparisons of same-store sales ran up to a rate of 3% to 4% earlier this year, we warned investors to temper their enthusiasm and wait for later days to get a true reading of consumer spending.

The International Council of Shopping Centers (ICSC) reported this week that same-store sales for the week ended October 16 fell 0.7%. That might seem bad enough, but weekly sales can track up or down against the prior week on noisy factors like large storms or broad cold spells. Instead, what is troubling retailers and investors now is the year-over-year comparisons they have seen of late.

In the latest period, year-over-year sales increased 1.7%, the slowest rate of growth seen in five months. The latest measure compares against a 3.6% rate reported as recent as this September 25th. Redbook, another consumer group, also measures year-over-year growth, and while it marked a faster pace of 2.7% in the latest period, its data trend line matches the downward slope of ICSC and reinforces concerns. We have noted a streak of slower sales over the last few weeks in particular.

Some may want to point toward auto sales and last year's Cash for Clunkers program as a reason for variation. However, ICSC excludes vehicle sales from its data. In any event, the Clunkers program concluded last August, and so would not play a role in October comparisons. September might be a different story, since the program likely pulled sales forward.

The current period marks a lull in shopping activity, falling in between the back-to-school stimulant and Black Friday, the start of the holiday season. Still, we are marking data against last year, and so seasonal patterns carry the same impact to each year's particular period, except when small calendar variation exists. That said, we may see higher Black Friday sales than last year, given the depth and length of this recession.

With 17% of the American workforce under-employed and near 10% unemployed, about half of which have been that way for more than 27 weeks, you can expect a greater number of Americans will be bargain hunting this year, if they shop at all. Perhaps there will be a shopping moratorium? Here is a nice idea: Let's give kisses, hugs and good deeds this year, to mark the merry season with the spirit of love that birthed it, versus the spirit of commercialism that has since overtaken it.

If holiday shopping is hotter on Black Friday and the Monday that follows, known as Cyber Monday, investors might be wise to again wait and see before banking on retail gains. Cyber Monday marks the first day back to work after Thanksgiving, and it has produced a promotional blitz for web retailers over the last decade. Apparently, many of you are still digesting your turkey that Monday and feeling a little lazy; thus, there is an extraordinary amount of online shopping and general perusing that occurs that day. There are also a ton of online sales to take advantage of, and so Cyber Monday has become a staple of American culture. More shopping now occurs on Cyber Monday than on Black Friday, or this year will mark the takeover. We hope you will also visit us on that lazy day.

In any event, consumers and investors will likely stick with discounters and retailers with creative deals and marketing schemes this year. Keep your eye out for those, and let us know; maybe we will find a stock to splurge on together. I think we will finally get a real feel for how bad things are this year. In the past, folks shouldered the season with savings and spirit, but Americans are hurting even worse this year and are not sure when they will be on solid footing again. Thus, I suspect this will mark the low point for consumer spending for this cycle on a per capita basis, at least until Iran, nuclear terrorism and general chaos rule the day. Hold up your eggnog and let's toast to: May that day never come.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.