Friday, June 4, 2010

May results.

Our sales for May were down 6% from last year. I think I mentioned that last May was a bit of an outlier; about 10% higher than the rest of spring last year. So it was going to be hard to beat.

Nevertheless, combined with the 3% drop last month, we are two/thirds of the way to a trend.

In hindsight, it's pretty obvious that the drastic fall in sales that started in Sept. 2008 had begun to level off around April of last year, which makes perfect sense.

I expect we'll have good months and bad months from now on, maybe for a couple more years. I have to remember what I told myself going into this: these things drop farther, last longer than you think they will....


I think the last six months have probably been hard on everyone. Even though the Spotted Mule isn't downtown, it has been around Bend for a long, long time. It once occupied the building next to where the Bookmark is now; I always wondered at the massive building they constructed on Third St.

There have been about 7 businesses closing and 1 business opening in the last two months, which closed the gap downtown. (Openings had been outpacing closings...)


Seven months of increased sales had begun to fool even skeptical old me. I'd begun to factor a 5% increase in sales for my business plans. But, again in hindsight, the increases were rather pathetic when put into the context of how horrible the plunge of 08 was...

Now, I'm factoring in a 5% decrease in sales -- which means I won't be hurt by that amount of drop, and since I'm pretty quick to respond these days, I could probably drop even further -- even with employees and keeping the store up. I intend to make a profit no matter where the sales land.

The optimist in me still thinks that we'll see a 5% increase -- but my planning self is being careful. I have the wonderful luxury of responding the ACTUAL level of sales through my reordering.

Interestingly, our comic and graphic novels accounted for a full 60% of sales in May; they've been hovering at or slightly below 50% for the last few years due to my diversification. It's good that I can count on my regulars even during slow months; and indicates to me that off the street sales were down. My games and books sales being lower, also indicate to me a lack of strength in tourism and walk-ins. My regulars become even more important in slow months.

Another interesting trend is that comics monthlies have actually gained strength, while graphic novels have lost some of their momentum. There was much talk a few years ago of G.N.'s replacing comics; it certainly seemed the trend and I responded to it by increasing my selection mightily. But...it appears to have stalled a bit; not being able to sell Manga is part of that.

But I've also begun to order more monthlies in advance, and to be quicker on reorders, because -- even with the prices going up -- there seems to be nice, solid base of readers.


The overall economy. I've mentioned before that I think we're in a double dip. If it was ever up at all. This was the Kitty Hawk of recoveries -- not much better than a hang glider could do. Not a real powered-up recovery. In fact, if you see the drop-0ff of 2007-2008 as the White Cliffs of Dover type drop-off, it wasn't too hard to glide above those numbers.

So it's -- be careful and watch the skies.

7 comments:

RDC said...

The problem is that the real state of the economy has been somewhat masked by the level of government spending (deficit spending that we really cannot afford). The deleveraging activity needed has just been delayed. We need to face the real issues which is the high level of debt that exists. Just the drop in spending where debt stops growing, yet alone what is necessary to drop debt levels in a significant way will be noticeable.

The basically the governemnt deficit is such that the banks are getting low cost money from the fed and using it to buy treasuries which is allow the government to increase its debt in a massive fashion. You are not going to see banks lend to more risky sectors (such as small business) as long as they can put most of their money into treasuries at a profit (even if treasuries pay a relatively low interest rate).

The European governments have reached the conclusion that they cannot continue to run massive deficits and that the bill has come due.

A bigger downturn will occur when the US government reaches the same conclusion. It will continue these very difficult times, but unfortunately it is a necessary event if we ever want to fix the structural issues with the economy.

Duncan McGeary said...

Yeah, it's interesting to see the American 'experts' slamming Europe for not being as 'responsive' to the crisis and we were.

And you're saying, it's just that they have decided not to take on more debt and take their lumps with deleveraging.

Duncan McGeary said...

I should mention, by the way, that May was also the most profitable month of the year because I cut back on spending in April and May.

If I can stay disciplined for ten more days in June, it should be equally profitable, and clear all credit debt before July.

It'll be nice not to have to spend all summer paying back, but instead maybe getting a little forward.

Sort of. Taxes will probably take most of it.

Still...holding my own.

RDC said...

I think decided gives them too much credit. I think forced is a more accurate term. The options of actions that can be taken has narrowed for some countries to the point that either they enact cuts in spending and higher taxes and take the short term pain or they default.

They are the canaries in the coal mine so to speak.

Anonymous said...

"Yeah, it's interesting to see the American 'experts' slamming Europe for not being as 'responsive' to the crisis and we were.

And you're saying, it's just that they have decided not to take on more debt and take their lumps with deleveraging."

Duncan, the peculiar problems in Europe are not a good analogy for what's happening in the U.S. (despite what RDC says); they start and end with one issue: countries with vastly different characteristics (and labor stuck in one place, not wanting to move because of language and culture differences) all converted to the Euro, and are stuck with the monetary and fiscal policy that is dictated essentially by the biggest country (Germany).

What needs to happen is for countries like Greece and Spain to leave the Euro, and then vastly devalue, so that they might have a chance of actually making something and exporting again.

If someone's explanation does not begin and end with adoption of a current currency (the Euro) either as the basis for their crisis, or why it will be so hard for Greece etc. to extract themselves, then they are overlooking the key part of the European story.

This is not a simple morality story about debt.

RDC said...

The parallel is not with the EU as a whole (though one could very easily equate the financial condition of individual states within the US with individual countries within the EU).

The parallel is that countries do not have unlimited spending power and that increasing debt load does have costs and negatively impact a countries economy.

While the US has the ability to sell bonds to fund its deficit, the markets acceptance can flip fairly quickly. At this point the Fed's economic policy is providing lots of cheap money for the banks. However, at the same time the volume of treasuries being auctioned is sucking that money up as the banks are using the cheap money to buy treasuries. The government is getting its debt funded and banks are making money and improving their balance sheet, but that money is not flowwing from the banks into more riskier investments such as loans to small business.

We are also benefiting from the fact that most other investments are riskier at this moment and as such outside money is also flowing to the US. That can also switch very quickly and well if the other economies get theri house in order before we do.

Anonymous said...

I don't disagree with anything particular that RDC says in the 3:27 PM comment. This is a good summary.

I would go on to say that the most useful analogy is to Japan. We seem to be mimicking their situation after their gigantic real estate bubble popped around 1990.

Japan remains a formidable economic (with a GDP exceeding China and Germany, etc.) but not exactly a growth market. Deflation (or at least non-inflation) along with a currency that's probably valued too highly. That's why they build their car plants in the U.S.A., nowadays.