Saturday, December 27, 2008

Hijacked sales day.

Much like Black Friday, the day after Christmas has pretty much been hijacked by the box stores. Used to be a pretty good day for me, up until the last few years. What I notice is that I usually do have a big day sometime in the following week, however.

I still think it likely I'll reach my goal; one good day, and four mediocre days would get me there.

I noticed a bunch of stores downtown with big "Sales!" signs. Never really understood that; the amount of taxes saved by liquidating inventory just doesn't seem worth it to me to empty out a store. Especially below cost. I'd rather have a fully stocked store.

In fact, Diamond published an absolutely magnificent liquidation list on Friday (always seems to happen at the beginning of the off season) and I went ahead and ordered a bunch of it. This was great stuff, and I have the capital to take advantage of it.

There is a bit of fortuitous timing in the Holiday's this year. Because it was so slow until the 15th of December, I didn't reorder that week. Because of the way shipping days fall, I then saw no point in ordering this week, nor is there much point in ordering next week. So if I can just wait one more week, I've cleared away a whole lot of budget to restock.

My liquidation order is the exception, but even that won't come due until the second half of January, when I have the cash flow to cover it.

I don't really garner any savings from Pat's leaving until February, because employee taxes are due in January. So the month off of reorders dovetails nicely with the budget. Almost like I planned it.

1 comment:

bruce said...

Best Blogger Fodder in 20 years, ...

Meat's back on the menu , ...


The recessions of old vs. today
Longtime Bend businessmen put the area’s troubled economy in historical context. The verdict? It’s bad - but it’s been worse


By Jeff McDonald / The Bulletin
Published: December 28. 2008 4:00AM PST

The current recession is bad and likely to get worse, but it’s not as bad as the one that enveloped Central Oregon in the early 1980s, which in turn wasn’t as bad as the one that hit the region in the early 1970s, said Bill Smith, a longtime developer in the region.

The region, which has seen housing prices tumble over the past year and a half, could be only about halfway to the bottom, said Smith, 67, who first came to Bend in 1969. Housing prices could drop another 25 percent, Smith said.

“There are not enough people and not enough jobs,” he said, noting that more people will leave the region in search of work than will come here and buy a home.

“We have been looking at this coming and hope we have prepared adequately,” Smith said of his company, which developed The Old Mill District in Bend.

Smith is among three longtime businessmen The Bulletin asked to reflect on how the turbulence buffeting Bend’s economy compares with past recessions. Others who weighed in were Mike Hollern, CEO of Brooks Resources Corp., and Jim Bussard, president of Bussard Engineering LLC. Combined, they have about 120 years of work experience in Bend.

They’ve seen the highs, lows and everything between. And the new year seems sure to be a deep low, they say.

Still, there is reason to be optimistic long term, Smith said, noting the region will eventually bounce back.

“It could take two years, three years, four years or six years, but we will come out of it,” he said.

Hollern thinks 2009 will be a “really tough time” for Bend and Central Oregon.

Bussard thinks the current recession could be worse than those in the 1970s and ’80s.

There’s no question the local economy is hurting. Deschutes County unemployment was nearly 10 percent in November, highest for that month since at least 1990. Median sales prices of homes in Bend last month were 23 percent less than November 2007 and 34 percent less than their peak in May 2007, according to the latest report from Bratton Appraisal Group of Bend. Default notices through mid-December were running more than 200 percent ahead of last year in Deschutes County. The number of people seeking food stamps in the county is up nearly 28 percent, leading the state, according to the Department of Human Services. Credit markets remain tight. Many businesses, like consumers, are struggling to make ends meet. And consumer confidence is rattled as people worry about declining home equity and job security.

Smaller communities like Bend and Central Oregon are hit harder by recessions than larger cities because more people are leaving to find jobs, said Smith, who came to the region in 1969 from Stanford Graduate School of Business as an employee of the real estate division of what was then known as Brooks Scanlon. The company would later become Brooks Resources Corp., and as president of the company in the early 1970s, Smith would develop Black Butte Ranch, a sprawling resort northwest of Sisters.

In 1993, Smith, as owner of William Smith Properties Inc., purchased 270 acres of ground on which Bend’s former cluster of mills once operated. The site would become The Old Mill District, a group of 49 retail stores, restaurants and offices that transformed a decaying industrial zone into a thriving commercial, employment and entertainment hub.

The severity of the current recession will depend upon one’s employment position today compared with prior recessions, Smith said.

Bend skipped the national recession in the early 1990s because more construction jobs were created then, he said.

“It’s a relative thing — if I lost my job in 2008, but didn’t lose my job in the other two (recessions), this is the worst one,” Smith said. “But if I lost my job or a whole bunch of money in ’82 but didn’t lose my job in the other two, then that was the worst one.”

In the next few years, more people with construction skills will leave the community in search of work in places that are still growing, like Texas, Smith said.

Deschutes County’s construction labor force is 12 percent of its total work force, compared with about half that amount for the rest of the state, according to the Oregon Employment Department.

Developers will take a cautious approach at least until 2010 or 2011 because they can’t as easily borrow money with tightening credit standards or are hesitant due to the area’s overbuilt office and housing sectors, Smith said.

Over the long haul, though, the region will be attractive for growth, he said. “Relative to other places, we’re always going to be better off because of our proximity to national forests and the weather,” Smith said.

Hollern’s Brooks Resources has a lot staked on an economic rebound. It’s developing several projects around the region, including IronHorse, Prineville’s 2,771-unit mixed-use development; Yarrow, Madras’ planned 1,730-home community east of town and NorthWest Crossing in west Bend, among others.

Hollern, a 1965 Stanford Business School graduate who recruited Smith to Bend, is, like Smith, confident in the area’s long-term prospects because Bend is so much more diversified today, which he said should assist its recovery.

“We were just trying to figure out what to do with real estate at the time,” he said of the early 1970s when he, Smith and others began developing housing and resort properties around the region. “Central Oregon had Mt. Bachelor (ski area) and Sunriver, but no other resorts. It was largely a timber-dependent town.”

Brooks survived the 1980s recession by selling property at bargain prices to developers who would later profit handsomely, said Hollern, now 70. “There were tremendous opportunities in the 1980s,” Hollern said of cheap land. “People who bought land from us have benefited tremendously.”

Today, people with patience and available cash can profit over time from land investments, he said.

“We will continue to grow more rapidly than the rest of the country,” he said. “We will continue to work off the excess (housing) inventory, but it will take time.”

The Bratton Appraisal Group, which tracks Central Oregon real estate trends, said there was a 14-month inventory of homes in Bend last month, meaning that at the current sales pace, it would take that long to sell the homes. Six months is considered healthy.

Climate change may play into Bend’s favor in helping attract more homebuyers to the region, Hollern said. Future migrants into the region could be “planet refugees,” who will escape to Central Oregon from highly populated areas in the Southwest, where water availability is a concern, for Central Oregon’s vast water resources, Hollern said. “We are likely to see significant influx of refugees from places that are more at risk (of climate change) than we are.”

In the short term, the success of Bend and the region depends on the national economic picture, which portends more suffering in 2009, Hollern said.

“Obama’s stimulus plan may stimulate highway construction, which would create jobs,” he said. “Things may pick up more than people think.”

Or they could get worse, said Bussard, of Bussard Engineering, which has operated in Bend since 1972.

“I think (the downturn) is probably going to go a little deeper — it’s going to be a little worse,” said Bussard, who experienced both the mid-’70s and early ’80s recessions.

A government-funded sewer treatment project in the late 1970s pumped $55 million into the local economy, which would be equivalent to more than $500 million today, Bussard said. “What really helps the economy is not bailouts but putting money into infrastructure projects throughout the U.S.,” he said. “Every city and community can use the jobs and money. It puts people to work.”

In the 1980s, Bussard’s company laid off a majority of its 126 employees, but found work outside the region and at the Redmond Airport, he said.

“We had to start looking for different places and different kinds of work,” he said. “It was really a tough one.”

But not as tough as today’s recession, he said.

Bussard Engineering has shrunk to five employees. In January, the company had been combined with Bend engineering firm Hickman Williams & Associates Inc. and had 49 employees, but the two companies decided to separate in November due to lack of work, he said.

“I don’t see any money out there for public works projects and that kind of thing,” he said. “We have been laying people off steadily and we have lost so much money this year. It’s the first time ever. We’re making a third of what we’ve always made.”

The decline in income for companies will have an impact on state and federal income tax collections, which will put further stress on already strained public coffers, he said.

The company lost so much money this year that it will not have to pay state or federal tax for at least two years, he said.

“I think it’s worse than a recession,” Bussard said of today’s economic climate, “because the shortfalls are going to be far greater than anticipated. Governments need to get money into businesses that create jobs.”

Jeff McDonald can be reached at 541-383-0323 or at jmcdonald@bendbulletin.com.