Panic is about to set in at America's retail head offices. Get ready for some great sales out there this holiday season - markdowns will likely be starting right about... NOW!
Just like homebuilders trying desperately to clear dead inventory, retailers seeing October numbers know they way overbought, and if the dead inventory doesn't start moving soon, they're screwed.
The over-leveraged, maxed-out American consumer is finally toast. And now so are the retailers. Don't be deceived by any good sales numbers that do funnel in in November or December either. It's profitability that's about to go out of the window as retailers go nuts with markdowns.
There should be no surprises HP'ers during this part of the post-bubble cycle. Everything is simply playing out according to script - just as it always does, just as it always will.
US retailers gloomy after weak housing market dents sales
Fears are mounting of a dismal Christmas for America's shopping malls after a slew of poor trading updates from leading retailers including Wal-Mart, the clothes chain Gap and the discount store Target.
Wal-Mart, the world's biggest retailer, told Wall Street yesterday that its like-for-like sales rose by a modest 0.3% last month and that it expected its November figures to be "approximately flat". It intends to cut the price of toys and electronics to stimulate festive sales.
Its downbeat tone was replicated by many of its rivals, fuelling concerns that consumers are feeling the pinch from a rapidly weakening housing market.
Richard Iley, senior US economist at BNP Paribas in New York, said: "This is an economy slowing down rapidly as the housing market loses pace." He said there could be some "short-term tailwinds" from falling petrol prices but further ahead, the outlook was dark: "The tectonic plates of the economy are shifting and that spells very gloomy news for the American consumer."
November 03, 2006
For the "I told you what was coming" file: US retailers gloomy after weak housing market dents sales
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34 comments:
You could have seen this coming. With the average saving rate at -1.5%! I heard an economist on CNBC today say that the average america was making 5% less than in 2000, taking in inflation. Now that they can't tap the equity bank any more, buying and purchases will fall. Consumer spending is about 70% of the GDP.
Sorry to be pedantic, but shouldn't that sign read: Going Out of Business Clearance.
Maybe that's one of the reasons why they are "going out of business".
you told us the stock market would crash in October. that is what you said.
I'm personally going to stop this thing in it's tracks. I hereby publicly undertake to spend an extra $100. - yes, a C-note - this Christmas to prevent the impending retail doom. I may even be able to shake an extra $10. out of the sofa cushions in loose change...
There, Can everybody calm down now and go back to inflating house prices like sensible folks.
Grande Banco d' Haggis
the sign reminded me of how Borat would have done it...
never said the market would crash in october. but yes, the market will crash.
Keith run hedge fund.
Keith say market crash in October. Keith hedge because Keith no say which October.
Celebrate great October revolution!
Boorat
keith never said market crash in october. nice try though.
Black Christmas dead ahead!
(YoY real dollar decline in sales)
Those Used Trucks are looking Better and Better everyday.
We have a new shopping mall here in Reno called Sierra Summit with Dillards as the anchor store. Two months ago, tables were set up down all the isles in the mens department for their 75% off sale.
They just had another 1/2 sale this past Wednesday.
Gotta move that dead inventory somehow...
Working many years in garment manufacturing has conditioned me to never buy clothes (or anything else for that matter) at full price - the markups are so much, it would make me sick if I told you.
pictures next to your username sure make an impact, eh?
I love em - I hope more people use 'em
Just find a picture on the internet, save it to your hard drive. then go to blogger profile, and upload the picture
easy
I'm getting ready for a new one
maybe a retail store on fire
Anonymous said...
Sorry to be pedantic, but shouldn't that sign read: Going Out of Business Clearance.
Maybe that's one of the reasons why they are "going out of business".
--------------------------------
Or this might be why.
Count every "F" in the following text:
FINISHED FILES ARE THE RE
SULT OF YEARS OF SCIENTI
FIC STUDY COMBINED WITH
THE EXPERIENCE OF YEARS...
(SEE BELOW)
HOW MANY ?
WRONG, THERE ARE 6 -- no joke.
READ IT AGAIN !
Really, go Back and Try to find the 6 F's before you scroll down.
The reasoning behind is further down.
The brain cannot process "OF".
Incredible or what? Go back and look again!!
Anyone who counts all 6 "F's" on the first go is a genius.
Three is normal, four is quite rare.
the markups are so much, it would make me sick if I told you.
+++++++++++++++++++++++
All industries are like this. As another example, a cup of coffee costs a restaurant about 4 to 6 cents wholesale, and they sell same for $1.00 retail.
As for gloomy retailers, the new Lord and Taylor’s went out of business here in Orlando Land about a month ago. There are 1 million people living here and 300,000
tourists here every day, and Lord and Taylor’s could not find consumers?
Anon pedantic: The wording of that sign wasn't done in error. The retailer wasn't going out of business, he was just trying to bring traffic into his store. If he said he was going out OF business, and still had the intention of staying open, he could have been cited for false advertising under consumer protection statutes.
In NYC, the camera/electronics stores on Fifth Ave and in other tourist haunts were perpetually in the business of going out of business, until city authorities cracked down on them. The wording "going out for business" is not misleading if you read it literally, so the storekeeper walks up to the line, but doesn't cross it. Lots of people still get fooled, maybe including Keith.
want to see further confirmation about the coming of a recession? go look at the interest rate inversion between short and long term treasuries at the Fed's website.
http://www.federalreserve.gov/releases/h15/current/
Smug Bastard
Yep, I'm short everything as of right now.
Confessions by the Fed
If ever a case could be made to abolish the Fed and to let the market set interest rates, that case was made today. Ironically enough the case against the Fed was made by Richard W. Fisher, a current Fed Governor. Please consider the following speech:
http://tinyurl.com/d8q6j
Great post by Mish good read as to where ??????????? we are headed!
The market is already crashing. The PPT has about run out of bullets.
Look at the airlines. Pee wee crammer called them a buy Monday night. If J6P listened to him and went long on CAL or AMR he lost almost 10% already. The 12,000 DOW, watch it slip slide away.
October was the peak IMO.
How about holding out until the ‘after-Christmas’ sales and then buying at ½-off the December sales prices?
Borrow and spend! Borrow and spend!
As long as the mechanism of the above can continue, i.e. revolving lines of credit, consumer spending won't end because most people aren't worried about ever paying it back.
My thanks to those who support this blog.
Borrow and spend! Borrow and spend!
As long as the mechanism of the above can continue, i.e. revolving lines of credit, consumer spending won't end because most people aren't worried about ever paying it back.
-------------------
100% right on, but? what happens to those that decide to walk away and not pay it back. It is not fair to the rest of us who choose not to fall for this scam..where are we left?..Oh that righ....left holding the bag..I get it....LAME!
The elections will have an impact on the market. The Dems will likely take control of the House and Senate. We will see a correction within 3 months.
Buy gold bork, and have some koolaide. You know you want some.
Wal-Mart's Weak Sales Performance, Outlook Raises Possibility of Price Wars for Holiday Season
NEW YORK (AP) -- A disappointing sales performance and outlook from Wal-Mart Stores Inc. Thursday raised the possibility of price wars this holiday season -- a boon to consumers but a troubling prospect for the entire retail industry
Americans stop spending? I'll believe it when I see it. We all know it SHOULD happen but everytime we say its going to happen it never does.
+++++++++++
As long as people have jobs, the Great Spending Spree will continue and the deeper in debt people will sink. If the economy tanks enough that unemployment rises significantly, then bye-bye consumer spending. (Just my two cents....)
I think the furniture industry will take a hard hit with the slowdown in housing.
I've been shorting RTH (Retail Holding index). I'm looking for the similiar type of index for furniture.
Does anyone know of any?
There is always 401k money to tap into as well as junior's college fund.
I recall the commercial where the father tells his son that he lost his college money day trading tech stocks. LOVE IT!
Can't wait for the greater depression!
Greed created the housing bubble? Fear pierced it? Bwahahahaha, yes, yes, it was those damned emotions again, bwahahahahaha, the little rascals have been creating all kinds of things lately huh?
It's true, 99% of Americans are brain dead.
Including you!
Well, since I never buy what I don't need, have no children, no car payments, plenty of savings to live several years without a job, and rarely even eat out let alone go to the mall or support Walmart (I'd rather go without or pay 25% more somewhere else than support Walmart), I guess my spending habits won't have any effect on the numbers since I can't withdraw any further from spending without ceasing to exist.
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