Consumers Safekeep Holiday Spirit in 2010

Now for the Hangover

While it looks like Americans spent a bunch more money than many expected this year, we wonder if the sharp drop in consumer confidence reported for December 2010 is a result of their day-after realization of overspending and/or undergifting.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC)

Consumers Safekeep Holiday Spirit in 2010

The latest consumer spending data released today covering holiday shopping activity showed Americans may have lost their jobs in 2010, but they retained their holiday spirit - perhaps at their own cost. Last week, we expressed concern about the weekly sales results, based on the data's benefit from the inclusion of Super Saturday and its absence from the prior year comparable. We expressed concern that the absence of Super Saturday from this week's same-store sales data, versus an inclusive prior year comparable might drive equal and balancing disappointment this Tuesday.

However, ICSC reported that same-store sales for the week ended December 25, increased 4.8% year-to-year. Redbook concurred, noting a 4.6% sales increase. It's important to remember though just how bad last year was. While the stock market had already recovered from the pit, the economy was mired in the mud at the bottom of it. Thus, consumers were not as enthused as investors, though they had certainly benefited from wealth restoral in stocks; at least those who had not sworn off the fever forever. The problem is that many had.

A thoughtful reader of our article at a syndicate site last week offered his view that the day off on Friday might balance out the weakness caused by the absence of Super Saturday from the data. The Christmas weekend was a three-day holiday both years despite the date upon which Christmas fell. However, last year, Christmas Eve fell on Thursday, a full work day, and this year it occurred on Friday, an off-day allowing for last minute shopping for all Americans. So, we thank our reader for pointing out an important offset to our concerns. We witnessed with our own eyes streets full of holiday shoppers Friday on the Upper East Side of New York City. This certainly saved the week.

We also wondered whether the fact that a great deal of Americans had already finished their holiday shopping was good news or bad for retailers, considering they had likely paid less this year while chasing early deals. In the end though, it appears the creative marketing that thrives within the retail sector allowed it to adapt and survive 17% underemployment. Even the blizzard that struck the population dense Northeastern US could not stymie retail marketers, who are extending after Christmas sales to fit. It also certainly helped that the government passed unemployment insurance extensions, giving confidence to folks hanging on the edge.

Today, MasterCard (NYSE: MA) Advisors' SpendingPulse, which measures all retail sales (not just credit purchases), said for the period extending from November 5 through December 24, sales increased 5.5%. The rate of growth compared against 2009's 4.1% holiday pace, and it marked the fastest in five years. However, rates of growth are relative to the base they are measured upon. That said, and despite the easy bar setting, this is still good news.

It just so happens that Consumer Confidence was measured and published by the Conference Board today for the month of December. Putting a damper on things, confidence moved against the trend of the sales data noted today. December's confidence index slipped to 52.0, against the prior period's revised 54.3 and economists' consensus forecast for 57.4 this month, as compiled by Bloomberg. It is likely that this news had the S&P Retail ETF (NYSE: XRT) down fractionally through the hour of publishing. Negative housing price data out of S&P Case Shiller certainly did not help either. Shares of Wal-Mart (NYSE: WMT), J.C. Penney (NYSE: JCP), Best Buy (NYSE: BBY) and Aeropostale (NYSE: ARO) are trading with only fractional variance at the hour of publishing.

We have to wonder if consumer confidence didn't deteriorate due to the perhaps season-swayed spending of Americans that they now regret, realizing only afterwards that they really couldn't afford it. Or maybe they are just bummed about the lesser gifts given and received this year, and the friends and family they had to cut out. I would not read too positively into spirited holiday shopping, as consumers are likely to remain tight-fisted due to necessity moving forward.



Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Misunderstood Same-Store Sales Surge Offers Opportunity for Short Investors

Oversight Misled Retail Stocks Tuesday

An important calendar difference was missed by major media and expert analysts alike Tuesday. The oversight, and the later promotion of the wrong message by pundits, looks to have inflated same-store sales growth and provided a special opportunity for short investors over the near-term, especially in retail industry stocks.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC)

A Misunderstood Same-Store Sales Surge Offers Opportunity for Retail Stock Shorts

Loyal Wall Street Greek readers have gotten used to our regular debunking and uncovering of anomalies behind what can appear as strong economic data. Once again Tuesday, we uncovered an important and deflating detail that was overlooked and left out by every major business media outlet and even Wall Street's most respected retail sector stock analysts. This is a reminder of why you read the expert authored blog, Wall Street Greek.

When the International Council of Shopping Centers (ICSC) reported same-store sales Tuesday at a level that marked the best growth for the entire holiday shopping season, economists, strategists, analysts and portfolio managers alike got on television and radio and proclaimed the American consumer alive and well. Indeed, even I was left scratching my head, wondering why… for a second or two. After all, for the period ended December 18, same-store sales marked 1.7% growth, week-over-week, and 4.2% growth against the prior year comparable period. Redbook concurred, showing 3.8% year-to-year growth for the same period. The S&P Retail SPDR (NYSE: XRT) was up fractionally on the day, but Macy's (NYSE: M) moved 1.5% higher, while Target (NYSE: TGT) jumped 1.9% and Nordstrom (NYSE: JWN) gained 1.2%.

After researching the subject, I almost bought into the conclusion offered by some high-level industry folks. The big idea was that shoppers came out in force last week, packing in a good portion of their shopping during the period. The ICSC Index and report released Tuesday seemed to concur with this assumption, given that it showed 74% of consumers had finished their holiday shopping through December 18, which was up from 56.6% the week earlier. That surge in shopping activity could be behind some of the week's extraordinary growth. According to a Bloomberg article on the subject, Oppenheimer Analyst, Brian Nagle, seemed to agree. However, based on one important fact that most if not all of Wall Street and the business press missed, we have to disagree.

What Had Happened...

What the pundits and speak-easies missed was an important calendar difference between 2009 and 2010. Bloomberg Radio Host Kathleen Hays almost stumbled upon it when she asked an expert guest if the reason might be seasonal. He quickly and sternly stamped out that truth, saying it couldn't be seasonal, given that the growth was measured on a year-to-year basis. WRONG!!! Wrong! Wrong! Wrong! And shame on you Mr. Expert for leading Bloomberg's audience in the wrong direction by sounding like you knew what you were talking about. Kathleen, "The Greek" should have been your guest Tuesday. I know from my experience as an analyst, and from the advice given to analysts by a seasoned talking head back at my old firm, that it is widely believed that giving any answer to a television or radio interviewer is better than giving no answer. Wrong and unethical! Thus, many of the talking heads you see on TV answer confidently, when sometimes they are just regurgitating what they have read or heard somewhere else, or they are simply spewing out their best guess. In other words, sometimes the well articulated and seemingly sound advice of experts is completely baseless and hazardous for investors to buy into.

Super Saturday is the second most important shopping day of the year after Black Friday, with Cyber Monday and Christmas Eve likely on their heels. Super Saturday is the Saturday immediately preceding Christmas, but it does not always fall on the same calendar date each year, and this year a slight differential misled the entire market.

Christmas falls on Saturday this year, but it fell on Friday in 2009. Thus, Super Saturday fell on December 18th this year, and was measured in the latest week's same-store sales. However, last year, Super Saturday fell on December 19th, and so it was absent from this latest prior year comparable that the 4.2% growth climbed over; its impact will instead be seen in next week's report. Therefore, next week's same-store sales growth result has a good chance of falling short of expectations and disappointing investors, if our analysis does not restore market efficiency sooner than that. Given this week's message, or false message, investors who might have been misled into buying retail stocks Tuesday could regret their action shortly on market correction.

Other data and expert analysis seem to point toward trouble for the whole of the holiday shopping period. The National Retail Federation Survey released in the middle of the month noted that 62% of adults surveyed said they would spend the same amount of money or more this year than in 2009. This fact also seemed to enthuse a few fools Tuesday, especially while complementing the 4.2% inflated period growth. However, those of us who have a bit of math proficiency remind readers that if this is true, then 38% of shoppers will be spending less this year. That second bit of information, characterizing a large number of people who usually spend about the same amount every year, likely plays more importantly for retail revenues and profits… but not for headlines.

Retail guru, Jay Margolis, pointed out that consumers were following deals this year, and staying home if there were none. He noted desperate retailers' broad store-wide discounting late in the season but well ahead of Christmas, as shop managers seek to ensure the movement of inventory. Otherwise, retailers would be faced with excess, and need to discount even further post Christmas. This is a bad sign, and it means shop-keeps will be turning inventory, but at a lower ticket. That little ditty should keep revenues soft and profit margins tight come quarter end. Therefore, assuming the week's 4.2% growth doesn't coincidentally correlate with the direction and state of the sales season, then this potentially mistaken surge in retail shares could offer opportunity for short investors of retail sector stocks.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: MS, NYSE: C, NYSE: PNC, NYSE: WFC.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Stocks Rally for All the Wrong Reasons

Hype and Profiteering Driving Stocks!

Stocks have been on an upswing of late, but for all the wrong reasons. As signs pointed toward the passing of unemployment insurance extensions and the renewal of tax breaks for the rich, investors grew enthused and sent shares higher. Then this week offered a better than expected retail sales report, and traders feigned excitement. But, dear readers, be careful who you listen to, because this information is not as inspiring as the hyped up media and temptation toting traders make it sound.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: C, NYSE: WMT, NYSE: GE, NYSE: F, NYSE: GM)

Stocks Rally for All the Wrong Reasons

Stocks are on the rise, but the chart for the Dow is deceiving. It illustrates rally through midday each day this week, but late day moves lower, including today (12/15). Thus, it depicts a market short on confidence, but looking for profits. The Dow is only up about a percentage point in reality since the December announcement of the Obama Administration, through which it declared a dastardly agreement with the GOP. The secret meeting would renew tax breaks for all Americans, including those making more than $250K, who the Democrats wanted to leave out this time around. The deal would also speed the extension of unemployment insurance, and offer the Republicans the subliminal coercive idea that a cooperative relationship might be possible between the White House and Congress over the next two years.

So, the market grew enthused, not because of robust economic growth or an improving labor market, but rather because politicians would avoid making the disastrous mistake of cutting off 2 million Americans from their sustaining government supports (unemployment checks). Also, the Dow was determined, not because of a budget balancing endeavor, but because of a budget breaking continuation of tax cuts to the rich, who are notorious for keeping the winnings to themselves. Now, one might argue that the rich reinvest and make capital available to American enterprise, but let's face it, there's no tangible reason for the rise in stocks. We all know there's no way the GOP was going to go down in history, especially ahead of Christmas, as a holdout on unemployment insurance extensions.

Tuesday's Retail Sales Report for the month of November showed activity increased 0.8%, which was a slower rate of growth than October's pace. However, the market was overjoyed that October's data was revised up to 1.7%, from the 1.2% initially reported. The popular press also focused on the fact that the result exceeded the economists' consensus view, which was set at 0.6%, even after the prior month revision (which raised the bar). Also enthusing, were the sales when excluding autos, as those figures increased 1.2% in November, against economists' expectations for 0.7%.

However, wise readers, you will recall why there has been such robust early sales activity from your reading of recent scribbling on these pages. It is because there are a ton more desperate bargain seekers out there this tired year trying to get the best bang for their Christmas buck. So, early sales activity might not offer the great news for the full season that stock investors seem to imply they expect. As this becomes apparent, expect those tricky traders to pull the rug out and run, and then the press will remember that Black Friday does not a holiday shopping season make. Investors should also be reminded that discounted goods make for a lower dollar sales tally and tighter profit margin at Macy's (NYSE: M) and friends.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

October's Retail Sales Simplified

They Simply Weren't That Good

This week's Retail Sales Report offered an upward surprise, but as is often the case, looks can be deceiving.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

October's Retail Sales Simplified

Retail sales are a critical concern of American businessmen, investors and politicians as we enter the key holiday shopping season. So when October's data was reported this week, offering what seemed like a super result, the market cheered. However, by the end of the day economists and strategists had conveyed deeper discoveries to their followings, and the major indexes closed lower then they opened. Wal-Mart shares (NYSE: WMT), perhaps the simplest and best barometer of retail, marked a chart that matched that of the broader market.

October's Retail Sales increased 1.2%, significantly more than the economists surveyed by Bloomberg expected. The economists' consensus was set for a gain of just 0.7%. October's growth also represented a boost above September's revised rate of increase, at +0.7% (from 0.6%). That's super! Right?

Wrong… Excluding automobiles, which are a big ticket item and can skew the data, retail sales rose just 0.4%, matching expectations and easing from a 0.5% advance in September. The 0.4% month-to-month gain was actually the slowest in three months. While it is clear that a 5.0% gain in Motor Vehicle and Parts Dealers' sales skewed the numbers, another factor played a role as well.

Gasoline Station Sales, which are affected by shifts in gasoline prices and can have a big impact on the retail tally, increased 0.8% this month. This followed September's 1.2% contribution. If we look at Core Retail Sales, which exclude autos, gasoline and building materials, the increase drops to a significantly less impressive 0.2%.

Further, other contributors to the gain seem suspect and temporary. Building Materials & Garden Equipment and Supplies Dealers' sales increased 1.9%. Hailing from a contractor's family, it seems clear this is being driven by the weather proofing of homes for winter. There is a lot of window and door replacement that occurs at this time of year, as nest guardians prepare the property for the hard season.

Sporting Goods, Hobby, Book and Music Stores saw a 1.0% increase in October. We would not look to book stores for the reason, but perhaps the start of hockey, football, soccer and basketball season has folks buying new gear for junior around this time of year. September's gain marked 0.9% for this segment. Nonstore Retailers (web and catalog) marked a 0.8% gain last month, but this segment continues to benefit from market share gain, and cannot yet be utilized as a barometer for the economy.

I see trouble in the sales of Department Stores, found in the report within the General Merchandise Stores category. These icons of American consumption saw a 0.2% gain overall, likely aided by the discount shops; department stores posted a 0.7% sales drop in October. The "trade down" play is definitely still hot, with General Merchandise up 2.0% year-to-year, but Department Stores down 2.2% during that same span.

Finally, electronics (and appliance), which is what everyone is supposedly buying these days, marked a 0.7% sales decline in October. If this barometer for American consumption shows red, then how healthy can retail really be?



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Same-Store Sales Are Fading Away

In the beginning of this year, we said investors should expect same-store sales growth rates to deteriorate as the year progressed, which would seem counter intuitive. However, even while the economy finds some traction, sales are increasingly matching against more normalized comparables and finding a higher bar to surpass.

"Same-store sales" is a term coined to describe retailers' sales from stores that have been opened for a year or more. This tracks organic sales, versus the sales contribution from the addition of new retail locations. It is a useful tool to measure the true health of a franchise, as it captures its popularity and success in garnering store traffic and sales in a competitive marketplace.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

Same-Store Sales Are Fading Away

We say "more normalized comparables" above because early year comps were marked against perhaps some of the weakest per capita consumer activity in generations. As you'll recall, March of 2009 marked the bottom point for stocks, and inspired serious panic in the hearts of investors and consumers alike. Only a few brave souls were able to hold their noses, cover their eyes, and buy stocks that spring, and they benefited greatly from that courage. This spring's store sales were compared against that historically soft span, which made for a low bar to leap over this year. Thus, when yearly comparisons of same-store sales ran up to a rate of 3% to 4% earlier this year, we warned investors to temper their enthusiasm and wait for later days to get a true reading of consumer spending.

The International Council of Shopping Centers (ICSC) reported this week that same-store sales for the week ended October 16 fell 0.7%. That might seem bad enough, but weekly sales can track up or down against the prior week on noisy factors like large storms or broad cold spells. Instead, what is troubling retailers and investors now is the year-over-year comparisons they have seen of late.

In the latest period, year-over-year sales increased 1.7%, the slowest rate of growth seen in five months. The latest measure compares against a 3.6% rate reported as recent as this September 25th. Redbook, another consumer group, also measures year-over-year growth, and while it marked a faster pace of 2.7% in the latest period, its data trend line matches the downward slope of ICSC and reinforces concerns. We have noted a streak of slower sales over the last few weeks in particular.

Some may want to point toward auto sales and last year's Cash for Clunkers program as a reason for variation. However, ICSC excludes vehicle sales from its data. In any event, the Clunkers program concluded last August, and so would not play a role in October comparisons. September might be a different story, since the program likely pulled sales forward.

The current period marks a lull in shopping activity, falling in between the back-to-school stimulant and Black Friday, the start of the holiday season. Still, we are marking data against last year, and so seasonal patterns carry the same impact to each year's particular period, except when small calendar variation exists. That said, we may see higher Black Friday sales than last year, given the depth and length of this recession.

With 17% of the American workforce under-employed and near 10% unemployed, about half of which have been that way for more than 27 weeks, you can expect a greater number of Americans will be bargain hunting this year, if they shop at all. Perhaps there will be a shopping moratorium? Here is a nice idea: Let's give kisses, hugs and good deeds this year, to mark the merry season with the spirit of love that birthed it, versus the spirit of commercialism that has since overtaken it.

If holiday shopping is hotter on Black Friday and the Monday that follows, known as Cyber Monday, investors might be wise to again wait and see before banking on retail gains. Cyber Monday marks the first day back to work after Thanksgiving, and it has produced a promotional blitz for web retailers over the last decade. Apparently, many of you are still digesting your turkey that Monday and feeling a little lazy; thus, there is an extraordinary amount of online shopping and general perusing that occurs that day. There are also a ton of online sales to take advantage of, and so Cyber Monday has become a staple of American culture. More shopping now occurs on Cyber Monday than on Black Friday, or this year will mark the takeover. We hope you will also visit us on that lazy day.

In any event, consumers and investors will likely stick with discounters and retailers with creative deals and marketing schemes this year. Keep your eye out for those, and let us know; maybe we will find a stock to splurge on together. I think we will finally get a real feel for how bad things are this year. In the past, folks shouldered the season with savings and spirit, but Americans are hurting even worse this year and are not sure when they will be on solid footing again. Thus, I suspect this will mark the low point for consumer spending for this cycle on a per capita basis, at least until Iran, nuclear terrorism and general chaos rule the day. Hold up your eggnog and let's toast to: May that day never come.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Retail Sales Report Mistep in August 2010

One Step Back, One Step Forward

You know, the retail sales data for August is not so hot, once you take note of the revision to July. It seems though, that most talking heads on the Street today are ignoring that simple fact, perhaps to pat their own backs or to pad their assets under management.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, NYSE: F, NYSE: HMC, NYSE: TM, NYSE: DAI, NYSE: TTM, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD)

Retail Sales Report Misstep August 2010

Retail Sales were reported today for the month of August, and the market jumped for joy from the get-go. Did you notice the back-step she took though, after the premarket leap? Still, as the morning wore on, every economist, strategist and research director with a bullish play on got themselves on TV; and they said "See, told you consumers are still kicking!" But, as The Greek publishes, take note of the reconciliation that occurs, because smart money is listening to us.

Sales increased 0.4% in August, an impressive rate when matched against the economists' consensus at Bloomberg. Experts were looking for a rise of 0.3% last month. Lately, we've found conspicuous drivers of positive data, and so further inspection of this report would be wise too.

Right off the bat we found a reason to sour on the data. July's result was revised lower you see, to now account for growth of 0.3%, down from the initially reported 0.4%. When the number August is compared against is reduced, that has the impact of lifting growth in the current period; this occurs even given the same level of activity as was expected for the month. So maybe August's result was not better than expected at all, given that July was backed down a bit. Thus, the wind beneath the wings of Tuesday's market might dissipate. August's sales still measured 3.6% greater than August of 2009. Though, like July, last year's comparable does not make the best of components to measure economic recovery by. You will recall that most of last year could be characterized as generational low type economic activity.

Excluding Motor Vehicles and Parts Dealers, sales rose even faster, up 0.6% in August and 4.8% against last year. Cash for Clunkers (remember that?) explains the year-over-year comparison, but the fall-off in auto sales against July was -0.7%. Ford (NYSE: F) and friends can't be all too happy about that.

Other areas of weakness included Furniture and Home Furnishings Stores, which saw sales fall 0.5%. This segment's falloff seems explainable too, given the broader decline in consumer confidence and the decrease in housing activity post First-Time Homebuyer Tax Credit. Those government assisted home purchases have been closed on, for the most part, and whatever furniture was going to be purchased initially has been as well (NYSE: ETH, Nasdaq: HOFT).

Electronics and Appliance Stores again showed weakness, with sales falling 1.1%, after a 0.3% drop in July. Building Materials and Garden Equipment Supplies Dealers saw a stagnant rate of sales in August, even after taking into account seasonal adjustment. This is also explainable by the drop in housing activity since spring. Miscellaneous Stores also saw a decline of 0.9%.

But...

The remainder of the component segments recorded sales growth in August. Gasoline Stations led the group, with sales increasing 1.9%. According to the EIA, though, the retail price of gasoline across America fell in August, to $2.67, from $2.74. It is unclear whether the price offered by the EIA is an average or if it is the month’s ending price, which seems more likely given the gas station sales. If the average price of gasoline were higher, it would partly explain why gasoline stations saw an increase of such magnitude, and I expect this is the case. The high-summer driving season surely played a role we suppose, since more of us vacation in August than in July (I am assuming this to be the case). Still, don’t get too excited about the summer driving season, since the unadjusted rate of change for gas stations was negative 0.3%. That would seem to say that the adjustment gives a big boost to August, and that it therefore reflects folks doing less in August, or perhaps spending time in one place (at the beach, mountains, amusement park or overseas).

Still, Clothing and Clothing accessories saw sales rise 1.2%; Sporting Goods, Books, Music and Hobbies Stores posted sales growth of 0.9%; General Merchandise +0.4%; Department Stores +0.4%; Nonstore Retailers (web and catalog - Nasdaq: AMZN, Nasdaq: EBAY) +0.6%; and Food Services & Drinking Places +0.1%. We cannot ignore this growth, nor explain it easily without a positive notation. The feel on the street is that deep back-to-school discounts, states offering tax-free holidays and that restoration of extended jobless benefits last month may have helped boost demand. It all makes sense to us, and so we'll be closely attuned to September and the holiday season for further clarification.

That said, we suggest the gurus with faster lips than intellect might take deeper consideration of the fact that July's number was revised downward. Net, net, we were pleased at some of the components in August, but not enthused as much at the broader gain as the talking heads have been today.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

WalMart's (NYSE: WMT) Same-Store Sales Red Flag

What Your Keen Eye Found in Today's Wire

The day's news wire included two troubling bits of information you may have missed. Thanks to a flood of mostly positive news, an important message was smothered. Both the ICSC and Wal-Mart same-store sales data showed an important and intensified negative trend, but thanks to WMT's better than expected EPS report, the red flag provided to the retail sector Tuesday was missed by the popular press.

Markos N. Kaminis earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, and Mr. Kaminis has appeared across major media. While writing for Wall Street Greek, he presciently predicted the financial crisis in detail.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

WalMart's (NYSE: WMT) Same-Store Sales Red Flag

WalMart (NYSE: WMT) reported street exceeding EPS of $0.97, besting the experts' view by a penny. The nation's top retailer did not stop there though. WalMart also raised its guidance range for the full year by five cents. As a result, the stock is up 2% at the hour of this scribbling.

The S&P Retail SPDR (NYSEArca: XRT) is up nearly 2% too, since WalMart is a dominant component of every retail index, except the ex-WalMart portfolios (assuming at least one exists; obviously it should). Here's why I think you should use this momentary pull up of retail stocks to sell, in case you missed that message here over the last few months. The rise of retail indices today is completely due to Wal-Mart's EPS beat and guidance hike, but within WalMart's report there is an important poison pill for the US retail sector to swallow. That same information came across again today in the ICSC Weekly Same-Store Sales Report, and it's a glaring red flag for retail sector investment.

WalMart's Report Break-Down

We offered WalMart's earnings release highlights earlier today, and you can find that here: WMT Q2 EPS Report.

You heard the good news already, but what you did not get is how WalMart averted industry obstacles presented by a weak US market. Basically, the company overcame an apparent major stumbling block via its growth overseas and tight operational management. It also employed a good deal of cash in share repurchases, which can lift a bottom line.

Net sales increased 2.8%, to $103 billion, but look closely. Eight-tenths of that growth came on currency exchange, and that hints at another key catalyst. Sixty percent of the company's square footage increase came from international growth in Q2. WalMart leveraged operating expenses and expanded its ROI to 19%, versus 18.4% in last year's quarter. However, even as WalMart impressively created value, its report warns of trouble for other less perfect retailers.

WalMart's US operations saw stagnant sales year-to-year in Q2, while its International segment grew sales by 11%, including the currency gains. Sam's Club contributed a 2.2% increase on a smaller sales figure. While WMT's international growth benefited from robust activity in Mexico, Brazil and China, its US namesake division saw a 1.8% decrease in same-store sales. Take note, because this is a store that appeals to price-seekers. This is where poor people shop and where middle and formerly upper class Americans facing tough times trade down to. WalMart has been stealing market share from a broad spectrum of retailers over recent years, and especially during the recession; and now even it cannot grow them. That is saying something rather dire about American consumption. Do you know what else WalMart has been seeing an increase in? Food stamp usage. Now, the company said traffic trends improved toward the end of the 13 week's measured for Q2, but retail stock buyer beware nonetheless, because that is a very vague statement and can mean or not mean a lot.

ICSC Weekly Same-Store Sales Concur

Tuesday's International Council of Shopping Centers (ICSC) data covering the period ended August 14 concurred with WalMart's results and differed from its vague offsetting statement. So which do you want to base your investment decisions on then? Sales deteriorated further in the August 14 period, with the week-over-week comparison losing 1.3%. The yearly comparison still shows 3.3% growth, but that's down from last week's 3.7% change. We also remind that last year's comparable economic activity was simply the worst in generations, and so easy to beat in comparison. Redbook showed a 2.7% increase in sales against the prior year, versus 3.0% last week (another sign of deceleration against normalizing comparables with time). The result? We have a stagnant state of consumption developing, if not a deteriorating state.

Arbitrage Opportunity

I think today's mixed message from WalMart is providing noise to the real retail sector story. Disregarding valuation and stock specific characteristics that may surface a handful of winners, the general retail sector trend is being skewed today because WalMart is such an important part of all retail indices. The company represents a major portion of the American retail sector, and is huge based on market capitalization; thus, it is weighted heavily in these indices. So, as WalMart goes, so go the industry indices. Given this skew, many retail players are likely benefiting today without reason. So I see this an opportunity to save a few dollars by reducing weight in the sector.

Take note that the sensitivity of the sector today to the positive news may also reflect a valuation test, as retail stocks have already seen some downgrades and share price drops since spring and again this month. Yes, stocks will also move ahead of economic data (and I mean recover eventually), but I believe we are still in a period of realization of a new economic paradigm I've been trying to lay out for you to see over recent weeks and months. This economy will not be the same again, at least not for a long while. Regulation and common sense have trimmed that negligent and even criminal lending that had Americans living beyond their means for years. I realized that problem ten years ago, when my little sister without a college degree and with a mall job managed to buy a new car. I knew I couldn't afford one with an MBA, and so something was clearly wrong with the system. I talked about that here before the financial crisis; long-time readers will remember it. Money was too easy to get, clearly. We all knew it, but we blew it off.

There's no blowing it off anymore. New laws and new internal banking rules and reserve requirements are playing an important role in changing all that. 16.5% under-employment is playing a major role in keeping consumption tame as well. Panicked people living on unemployment while Congress debates cutting it off are getting a grip on it too. Welcome to the new economy, not like the old one. In this one, productivity brought on by technological advancement is not a good thing. In the past, it was noted for its role in allowing companies to expand margins. Now, it is also responsibile for keeping companies from hiring workers that are not really needed. It's amazing how a change in the labor market can affect views on unions, immigration and maybe even robotics... isn't it.

Over recent weeks, we have learned that Q2 GDP will get a shaving at its next revision, and it looks as if we might flirt with economic contraction in the second half of the year. Economists cannot imagine that, but the American economy is a consumer driven one. We don't export yet, and even if we did, Chinese domestic growth looks poised for a hurdle of an asset and real estate bubble burst sometime soon. So, can we really count on China and Europe (ex-Germany) to keep buying whatever we do sell? That's rhetorical...

So, my friends, I say take this rally and shove it. The Dow is up 1.0% at this hour (down from +2% earlier); I would sell it. The S&P Retail SPDR (NYSE: XRT) is up 1.5% (down from earlier as well); I would sell it! I think what we have here is an opportunity... to get out.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Retail Sales in July Rest Where Consumers Go to Die

Retail is Regretful

Retail Sales were misleading in July, as headline growth hid the fact that sales fell when excluding autos and gasoline stations. Most every other category lost ground in July. Meanwhile, a slight improvement in Consumer Sentiment might have some ignoring the fact that where sentiment sits now is where consumers go to die.

Markos N. Kaminis earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, and Mr. Kaminis has appeared across major media. While writing for Wall Street Greek, he presciently predicted the financial crisis in detail.

(Tickers: NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, NYSE: F, NYSE: HMC, NYSE: TM, NYSE: DAI, NYSE: TTM, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD)

Retail Sales in July Rest Where Consumers Go to Die

Retail Sales were reported for the month of July today, and the news was mostly sad. While overall sales improved 0.4% month-to-month, they fell short of the economists' consensus for a 0.5% increase. Meanwhile, June's reading was revised for the better, to a decrease of 0.3%, from the initially reported decline of 0.5%.

That said, when removing motor vehicles and auto parts from overall sales, retail sales increased just 0.2%. The ex-auto figure compared against a 0.1% decrease reported in June and was in line with economists' forecasts. Motor vehicle sales were strong, with motor vehicles and parts dealers posting a gain of 1.6%; some of the gains may simply have come as a consequence of weakness in June, as this segment's sales fell 1.3% that month.

"When excluding autos and gasoline station sales, the rest of retail sales fell in July"

The reason expert commentators and the market were generally glum on retail today though was because a broader more detailed look at the data reveals big trouble. While Retail Trade posted a sales growth rate of 0.4%, a lot of that came on special drivers (not only of autos). Gasoline stations, for instance, posted a fiery 2.3% jump in July sales on higher prices (and also on summer driving season). When excluding autos and gasoline station sales, the rest of retail sales fell in July.

As we look further at the details of the data, the trouble becomes clearer. The list of losers includes:

• Furniture & Home Furnishings: -0.3%
• Electronics & Appliance Stores: -0.1%
• Building Material & Garden Equip. and Supplies Dealers: -0.3%
• Food & Beverage Stores: -0.3%
• Grocery: -0.2%
• Health & Personal Care Stores: No Change
• Clothing & Accessories: -0.7%
• Sporting Goods, Hobby, Book & Music Stores: -0.1%
• General Merchandise Stores: -0.2%
• Department Stores: -1.0%
• Miscellaneous Stores: +0.8% (on a small number)
• Nonstore Retailers (web, catalog): +0.2%
• Food Services & Drinking Places: +0.2%

All the way down the line you see nothing but red in July's sales results. The International Council of Shopping Centers (ICSC) reported 2.8% growth in same-store sales for the month of July, but that is a year-to-year comparison. In truth, even that figure was weak, because it is matching up against the panic-level generational-low economic activity of last year.

Take No Solace in the Consumer Sentiment Score

Consumer Sentiment was also reported today by the University of Michigan (with Reuters), and it improved to a mark of 69.9, versus the prior month's close of 67.8. The result also beat the economists' consensus for 69.0. Congratulations!

Here's the problem, who cares that the reading improved slightly; such a small change is insignificant and might not even reflect real improvement. What we should be paying attention to is that this figure averaged a reading of 89 in the five years leading up to the recession that started in December 2007. Taken into proper context then, 69 does not compare well to a healthy reading, which is 89. So take no solace in consumer sentiment, because where we sit now is where consumers go to die.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.