Retail Remains Firm

Retail comps were better than expectations this morning. As we warned during the holiday season, many retailers lowered their profit forecasts, blaming rising costs (thank goodness there is no inflation!), aggressive discounting, and an inability to pass along price increases

Most stores were in line. Wal-Mart lowered their range for February, but I am not reading to much into that, as the post holiday gift card season ends. February is one of those odd months — after the Winter clothing shopping season, but before spring shopping.

The WSJ noted:

"January caps the all-important fiscal fourth quarter for
retailers, and the increased use of gift cards has raised its profile on the
retail calendar during the past few years. Still, it remains a relatively
unimportant month for the industry, accounting for 10% to 15% of the quarter’s

Same-store sales are a key indicator of overall U.S.
consumer-spending trends, but the reports also miss many online purchases and
other kinds of retail spending. What’s more, not all major chains report sales
on a monthly basis, particularly hard-goods retailers such as Home Depot Inc., Best Buy Co. and Bed Bath & Beyond Inc., which only report sales quarterly."


Balmy Weather, Gift Cards Helped Warm Retail Sales
February 2, 2006 8:48 a.m.

What's been said:

Discussions found on the web:
  1. David Silb commented on Feb 2

    Yes! Thank God there’s no inflation. I mean retailers would really be pressed if rising costs could not be passed on too consumers. No Wait?!?! That’s wrong/right, wait I’m confused is inflation under control or is it rising. Hmmmm. Let me check the CPI for clarification. Thank God nobody fiddles with the CPI. No wait!?! ……………………………..

  2. Terry Mitchell commented on Feb 2

    So, what does this really mean for the economy?

  3. David Silb commented on Feb 2

    Put a pot of coffee on and wait for the returns to come in. :^)

  4. calmo commented on Feb 2

    This is the nature of consumer resilience: ameliorated by gift cards, discounts, generational handoffs, guidance rather than revisions to lending standards, and of course that fiddling with the CPI (thanks DS) to ensure that change, no matter how abrupt, precipitous or chaotic, never registers as anything but smooth and gradual.
    It is a testament to good government or atleast good measurement of government. [Or forgiving measurement of pisspoor government, I can be radical.]
    But there may be a limit to how good (wise? is that still a word?) smoothing dislocations like $3B/day are.

  5. cm commented on Feb 3

    I am under the impression that local grocery prices have been more or less stable for 2-3 months, and I’m seeing more grocery sales. But perhaps I should reserve judgement for a bit more time.

  6. David Silb commented on Feb 3

    CM I would argue that watching grocery stores would be a lesser indictation of consumer sentiment or inflation. A better judge is to see sales at mid range restuarants. Are people eating in more or are they going out? That might point to consumer feelings than stocking up or food brokers discounting products.

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