Friday, January 11, 2008

The truth starts to emerge, or at least something approximating the truth. All Christmas season I repeated the notion that no one knows what the real sales levels are. It was all guesses, within a rather large margin of error. It was just wanking off. Spin. Nonsense.

So today, it's reported that most the of the big mass market chains did pretty poorly. Now they tell us, when reports really can't affect anything. Even these figures are probably massaged and manipulated: either up or down, depending on what their motives are. But since the news is buried on the second page of the business section, 11 days into the new year, they are under the radar.

These figures should be front page news, folks. They're really rotten, and almost surely will result in a recession.

Only two stores on the chart were actually up; Costco, at 7.0% and Wal-Mart at a measly 2.7%. Down 7.5% at Penneys, 6% at the Gap, and 5% at Target, and just about every other store.

They blame the calendar and the weather. Well, screw that. That's lame. I never fall back on those excuses because THEY ARE ALWAYS THERE! in one way of another. You can ALWAYS blame the weather and the calendar, so why bother?

But the real news STILL hasn't come out. "....sales rose 2.7 percent at Wal-Mart, whose relentless price-cutting appeared to resonate with anxious shoppers."

"Relentless price-cutting...." I'm sure that did wonders to the bottom line. 2.7% won't even cover inflation. If you had to cut your margins to get even that much of a boost, you did pretty poorly.

For whatever reason, the chains have decided to lower everyone's expectation. After all, they can blame the housing crisis and the imminent recession. Time to cover all your bad decisions with lame excuses.

But it's all spin, as far as I'm concerned.

9 comments:

Anonymous said...

So do you think these big stores can't get the numbers right? Or that they know exactly what's going on, and hide certain facts to their advantage.

Speaking of the difficulty of getting good numbers, consider the following unusually candid statement by Fed Chairman Ben Bernanke regarding whether he things we're in a recession.

WSJ economics blog:

Asked if he expected the “R-word,” Mr. Bernanke said after a speech today:

“Let me tell you a story. Before I got this job, before I was even on the [Federal Reserve] board, I was a member of the NBER business cycle dating committee which is actually the official body that determines the dates of the R-word as you referred to it. And one of the things that was striking about that operation is we didn’t even sit down and think about it until six months after the event. And the reason we didn’t do that was because economic data being as volatile as they notoriously are and as subject to revisions as they notoriously are, you really can’t make a determination about that kind of thing until well after the event. And so that’s what we did in that particular episode.

What was ironic about it was even though we waited quite a while to make a determination, subsequent to our determination there was yet further revisions of the data, further information, that you know cast doubt eventually on our dating. It just goes to show you how difficult these things are to interpret and evaluate.

“The Federal Reserve is not currently forecasting a recession. We are forecasting slow growth. but as I mentioned today there are downside risks and therefore it’s very important for us to stand ready as I mentioned to take substantive action to address those risks and provide some insurance against those negative outcomes.”

http://blogs.wsj.com/economics/2008/01/10/bernanke-calling-recessions-is-tough-and-i-should-know/

RDC said...

I don't think that they will lead to recession, I think they indicate that we are already in one.

goes hand in hand with the recent jobs number.

Duncan McGeary said...

Jeff, I think there is the letter of the law and the spirit of the law.
You can manipulate numbers legally by putting certain costs in one quarter or month, certain assets, etc.

I'm pretty sure these latest numbers are probably closer to the truth. They're willing to admit them, because they know it can't affect Christmas sales, they need to prepare for what are certain to be lousy profit statements.

Amazing that such lousy numbers are not being mentioned by most of the media. In fact, I've only seen them in the Bulletin.

Every armeggedon blog ought to be trumpeting these numbers.

Duncan McGeary said...

rdc,

yeah they keep telling us that consumer spending is 80% of the pie, or something.

Now what are they going to say?

Duncan McGeary said...

These are the worst percentages I've ever seen, by the way.

So the question becomes....how much did they have to cut their margins to get even that level of sales?

And how much cost-cutting on overhead were they able to do?

Duncan McGeary said...

I mean, if you're Walmart or Target, and you've had nothing but dramatic growth for years, you are going to want to hide behind the 'recession 'word.

See, it's not our fault. The consumer quit spending. That's why I think it will be common currency that we are in a recession by the end of this month, whether we are actually in one or not.

Because it gives upper management a fig leaf to hide behind.

Duncan McGeary said...

And then, of course, the 'recession' becomes a self-fulfilling prophecy.

Anonymous said...

Dunc,

What I noticed before & after xmas was the carts with only 1or2 items, not the normal full of shit @ walmart/costco.

Note, there are people who go to these places twice a day. Looking for a bargains. Here's a better stat in case you didn't see, Over 1Million post-xmas gifts were put on ebay!!

That's a ton of stuff, so folks got what they got for xmas, and down they're going to turn around and dump it for penny's on the dollar.

Note, in MY various businesses, the recession started this past summer. I'm seeing a 90% drop in sales after May 2007. Biggest drop since post 911. Corporations have pulled back.

Good one on the net right now, folks are no longer paying their cable bill. These +$100/mo cable bills are going to be one of the frist good-life bennys to go.

Xmas was down, we people bought less, but they were out there. Yes, Walmart, and especially COSTCO had some incredible deals, but at least they cleared inventory.

America has so far to go, people are so well off here. They say that consumer credit is 80% of our Economy What will they be saying soon? I suspect it will be as we have known for years now, prisons, security, and enforcement.

Recession started in Summer 07, remember it takes two bad quarters to even accept the fact.

Lots of cheap shit to do, ... here in Bend.

Duncan McGeary said...

I'm going to keep adding updates as they come in.

Amazon made some big profits, but their 'operational' profits were lower: which means that all their sales and discounts ate into the bottom line.