Wednesday, February 13, 2008

According to the news today, retail sales rose .3% instead of dropping .3%.

One, that seems an awfully small number. Again, it would seem like the margin of error could make either number suspect.

Two, retail apparently including things like tractors and soda pop, not sure they have much to do with me.

My sales have been pretty consistently down about the same percent for the last three months, which means, as far as my planning goes, that it's no fluke. My wife's store sales are staying almost exactly even with last year for the last three months, which considering her constant and steady growth, is pretty much the same thing.

My sales have dropped to the point where it can still be absorbed without damage, and I figure, with the spring 'optimism' is likely to stay right about where it is. Summer business will without doubt pick up from where it currently is, (though the percentage from last year will be probably down) so that should give us a boost.

Fall? Probably it will drop again, but that enough time for me to keep making adjustments.

Like I said the other day, there is still money in the account after all the bills are paid, and I've never managed that before in a slowdown.

After hesitating, I even did my double mortgage payment as usual.

I'm so much more cheerful about this slowdown than ever before. I'm not sure if it's totally because I'm more economically secure, or because I've been through it so many times, that I've learned to accept it.

I remember the first few times it happened, I got very upset and even angry. Very vocal. Not helpful. But I took it almost personally, which is pretty silly. I remember even having a casual customer say to me, "If you are going to get upset about these things, you're in the wrong business."

He was right....but he was also wrong. ANY business I might be in could get me upset, instead of lowering sales, it might be my boss, or co-workers, whatever. Secondly, I have to believe that it was same passion that caused my emotional reaction that kept me going, that made me keep working at it.

Nevertheless, taking it in stride is much more preferable.
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8 comments:

Anonymous said...

Duncan,

Thats the reported news wire that came out this AM, the print edition of the WSJ said that retail is terrible, commercial real estate the worst since WWII,

The worst jan following xmas on record, and had a whole list of retailers that are closing,

Consumers have cut back big time, most notably on RV's, motorcycles, boats, ...

Just waiting for the $600 check then everything will be good until the election is over, then watch out.

The WSJ thinks that they McCain can beat Clinton if there is NO recession prior to Nov, they know McCain can't beat Obama, but certainly the powers that be MUST have hilly-pooh in the race, all public unions to have their own tv-ads for hillary soon, to bypass campaign limitations.

We're going to have some liquidity in 2008, watch out for 2009, by then there will be no need for liquidity from the government, it will be pain for everyone.

Normal election year cycle, cheap rates, life is good, watch out for 2009 rates will go up, and there will be no more free money for nothing,

2008 will be remembered as a good year.


Regarding the 'bet' sure I think 2010 will be a low like BEM, because 2012 is the end for the ARM reset, but the problem is that for the next twenty years we have to work through all this housing the boomers are going to dump, ...

The collapse of Bend RE is like looking at the DR-HORTON stock prices today, sure you can see in 2004 everything collapsed, and is still going down. You need a few months to look back at the bottom and to see when things go up,

If a NEW bubble ( ALT-ENERGY ) isn't started by 2012, if something BIG isn't happening like a new-bubble, then Bend will deflate or stagnate.

But yes, I guess for a seasonal historic price, 2010 will be a good time, but will the homes be cheap enough to pencil for rentals?

What's important is historic re-price/income ratios, it should be less than 4X to really make homes affordable.

20% down, is going to be the rule in the future, which means 88% of recent buyers can't play anymore, so who is going to be buying?

Far & few.

I'm sure glad I'm not going to be buying anymore BEND RE, ya my wife wants a bigger house, but I don't, she's like let's buy a mansion when they get cheap, and I'm like you don't clean the little house, what are we going to do with a big house?

February 13, 2008 at 12:23:00 PM PST
Anonymous said...

OK,

Dunc, here it is the DEATH-LIST for JAN-08, see anybody you know here?

***

Movie Gallery closing another 400 stores
Charming Shoppes (CHRS) closing 150 stores and cutting expansion plans by 50%
Starbucks (SBUX) closing 100 stores and slowing expansion plans by 34%
Ann Taylor (ANN) shuttering 117 stores and slowing store growth
Boston Market evaluating its real estate opportunities
Buffet Holdings sorting out its underperformers
Sprint Nextel (S) closing 125 stores and 4,000 distribution points
Cost Plus World Market closing 18 stores
Liz Claiborne (LIZ) closing 54 Sigrid Olsen stores
New York & Company (NWY) axing the Jasmine Sola brand and its 32 stores
Ethan Allen (ETH) closing 12 stores
PacSun (PSUN) closing all of its 173 demo stores
Talbots (TLB) exiting its kids and men's lines through closure of 78 stores
Rite Aid (RAD) exiting Nevada by closing 28 stores
Macy's (M) closing nine stores
Krispy Kreme (KKD) expecting many franchisees to close stores
Kirkland's Home (KIRK) likely closing 130 stores
CompUSA's remaining 103 stores being disposed of
Rent-A-Center (RCII) closing 280 stores
Sofa Express closing 44 stores in bankruptcy
84 Lumber closing 12 stores
Home Depot (HD) closings some call centers
Levitz Furniture disposing of 76 stores in bankruptcy
Pep Boys (PBY) closing 31 stores
Lifetime Brands (LCUT) closing 30 stores
Big A Drugs liquidating its 21 stores Movie Gallery closing another 400 stores
Charming Shoppes (CHRS) closing 150 stores and cutting expansion plans by 50%
Starbucks (SBUX) closing 100 stores and slowing expansion plans by 34%
Ann Taylor (ANN) shuttering 117 stores and slowing store growth
Boston Market evaluating its real estate opportunities
Buffet Holdings sorting out its underperformers
Sprint Nextel (S) closing 125 stores and 4,000 distribution points
Cost Plus World Market closing 18 stores
Liz Claiborne (LIZ) closing 54 Sigrid Olsen stores
New York & Company (NWY) axing the Jasmine Sola brand and its 32 stores
Ethan Allen (ETH) closing 12 stores
PacSun (PSUN) closing all of its 173 demo stores
Talbots (TLB) exiting its kids and men's lines through closure of 78 stores
Rite Aid (RAD) exiting Nevada by closing 28 stores
Macy's (M) closing nine stores
Krispy Kreme (KKD) expecting many franchisees to close stores
Kirkland's Home (KIRK) likely closing 130 stores
CompUSA's remaining 103 stores being disposed of
Rent-A-Center (RCII) closing 280 stores
Sofa Express closing 44 stores in bankruptcy
84 Lumber closing 12 stores
Home Depot (HD) closings some call centers
Levitz Furniture disposing of 76 stores in bankruptcy
Pep Boys (PBY) closing 31 stores
Lifetime Brands (LCUT) closing 30 stores
Big A Drugs liquidating its 21 stores

February 13, 2008 at 3:20:00 PM PST
Anonymous said...

You know, it'd almost be better off if consumers didn't know about the current depressing economic statistics. Doom-and-gloom prophecies can be self-fulfilling.

The more I hear that other consumers are cutting back, the more I hesitate to spend. Magnify this by 40,000,000 people, and consumer spending contracts by more than it really has to. Numerous businesses get hurt, even though there's been no concrete change to the real economy.

Maybe there is a place for "cheerleader" newspapers and salespeople that always make things sound better than they are. Maybe the only thing to fear is fear itself.

Or maybe nobody is paying attention to the doom-and-gloom statistics anyway?

The only people cutting back are those that actually did lose some income?

February 13, 2008 at 3:33:00 PM PST
Anonymous said...

The only people cutting back are those that actually did lose some income?

*

Most people are going to lose their job, unless you work for the government, which just prints more money for itself.

If you don't cut back, then you'll NOT survive, for most people survival is important.

Duncan is a survivor, that's why he's been in biz for 27 years.

Most people are NOT survivors,

February 13, 2008 at 4:02:00 PM PST
Duncan McGeary said...

Jeff, I agree, if it was possible. COBA's trying to do just that with their "Best Time to Buy in 20 Years" campaign.

But....the truth will out, as they say. You can delay the inevitable, but you can't put it off forever.

So, fundamentally, to hell with it. Business is slowing down, and why hide it?

Besides....it presents opportunities, you know. My new lease, the chance of finding an even better spot at an affordable price, less likelihood of crazy competition, not constantly trying to buy in advance of demand, and so on.

So, might as well as candid as possible.

February 13, 2008 at 4:07:00 PM PST
Anonymous said...

"At the end of the day, Wall Street and economics will reward the companies that are being this forward thinking, because if they don't get rid of the things that aren't working, it will be a far worse situation."
"If they can't be successful in real estate and inventory liquidation, they will have no choice but to file bankruptcy because they cannot otherwise remain viable." She added, "from my perspective as a retail lawyer and real estate restructure specialist and strategist, we are in a cycle where the retailers are consistently thinking long and hard before expanding their store numbers and are in fact tightening their belts and taking off balance sheet things that aren't working and they're trying to be leaner and meaner, because otherwise their own numbers won't work."

*

You can't have an honest debate, if the subject is taboo. Fortunately nobody reads these blogs.

The fact is if you want to survive you must plan, and in order to plan, you must be playing with a full deck of cards ( information ).

Those that play to survive will be rewarded in the end.

Like the above says, those who ignore reality, and fail to restructure and/or to reduce 'inventory' will go bankrupt.

*

COBA's trying to reduce their inventory, by making their problem 'inventory' into someones else's problem. This is classic desperation at the 11th hour ( on a 12hour clock ) of any RE bubble.

February 13, 2008 at 6:09:00 PM PST
Anonymous said...

Where does retailers closing stores en mass leave landlords and developers? Can landlords expect retailers not closing stores to attempt to renegotiate lease rates? What should a landlord be doing in response?

One of the specialties of Kampler's firm, Hilco Real Estate, is renegotiating leases and restructuring real estate portfolios for retailers. She says landlords can expect to see more retailers attempting to renegotiate leases. "First, you have retailers who don't need or want to close stores but still have to tighten their belts; if they can keep their costs down, they will succeed and stay healthy. So they want to try that approach. Second, you have retailers seeing vacancies on either side of them and they'll see sales being impacted, maybe not enough to cause them to leave, but its enough for them to need to rewrite their economic portrait so that they can stay open and actually make some money instead of just paying rent," said Kampler.

"When you have a situation of mass closings in the way that the beginning of 2008 seems to be indicating, its not something the landlords can easily adapt to, its not merely a matter of finding a replacement tenant in one spot in a mall. Perhaps stores need to be shuffled around so that more tenants don't fall in a domino effect. If closings are happening in significant numbers, landlords may question whether the existing shopping center economic model works," said Kampler. She suggested that some landlords and developers should be questioning if there are more profitable uses for their real estate. "Some centers in some locations may have outlived their useful life. I think it’s going to trigger some deeper analysis. If this goes away in the next quarter, no, but if this is a reflection of America being over-retailed, then I think it will precipitate some serious re-thinking by shopping center landlords and developers to restore and rebalance the interplay of the landlords and retail tenants."

Graiser says, "Landlords are certainly getting inundated with a lot of calls right now and aren't surprised because they see the store sales and track these companies. But how flexible the landlord will be in terminating leases or giving rent concessions depends on the type of center. In addition, if a retailer is showing that it really is in trouble, the landlord will typically adjust to those problems; especially if they believe the retailer is one that can survive. Landlords have historically worked with those situations pretty well. Now what they're being faced with is a lot of healthy retailers that are retrenching and closing stores - and there's certainly less flexibility than they normally have. The landlords certainly are feeling the pressure from some of their tenants that have been with them for a long time."

"While there can be an adversarial relationship in some cases with the landlord suing the tenant in a store closing situation, that landlord is still going to be working very hard for to get that space released. In general, the owner is not going to help the retailer while its still operating, but as soon as the doors are closed, that hurts his property and he's going to work really hard to get that space released by marketing it, re-tenanting it, reconfiguring it, etc. The landlord or developer is going to be much more capable and have more resources at his disposal to get that space back into production," said Miller.

On whether or not landlords can expect retailers to try and renegotiate lease rents, Miller said, "They always do. The smarter retailers do try to renegotiate, but they also realize that if it’s a good location, they don't want to run the risk of losing a good unit by negotiating the renewal rates too hard."

February 13, 2008 at 6:20:00 PM PST
Anonymous said...

The wall street journal today reported on why retail-sales went up 0.3% yesterday AM, after the paper went to press.

It turns out that the GOVERNMENT tossed in RETAIL-GASOLINE SALES.

NOTE also that RETAIL-SALES are not indexed to inflation, so you would assume sales to go up, ever so slightly. That said, consumer spending is plummeting.

Most notable is furniture is down for six months. Also BIG ticket items are NOT selling.

The final revised report this AM is that retail-sales were flat, excluding gas stations.

It's interesting that the government released this, because when they report inflation, they remove gasoline, but now when they report retail-sales they include gasoline, ahh having it both ways.

Brave New World, Animal Farm, 1984, ... we have all been here before when government shortage is a over-supply, and a decline is an increase.

The late 0.3% did boost the stock market yesterday 130 points, so something was achieved.

Walmart has now announced the lowest sales in its 30 year history of business. Walmart the holy grail of American Consumerism.

February 14, 2008 at 5:49:00 AM PST

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