Blaming Soft Retail on all the Wrong Things

The latest retail sales data is out, and its rather mixed:

-Gap fell 2 percent. They expect pressure on profit margins to continue into December.

-Abercrombie & Fitch sales fell 3 percent in the month;

-American Eagle Outfitters (Charts) posted good numbers — plus 14% — but was below expectations for a 14.8% gains;

Pier 1 Imports saw sales tumble 15.3%, despite aggressive discounting / advertising;

Ann Taylor blamed warm weather for sales falling 4.3%, especially "sweaters, outerwear and cold weather accessories."

Wal-Mart, JC Penney and Costco Wholesale all missed estimates. Those stocks are down 1.1%, 2.9%, and 1.9%, respectively. Bebe Stores was even worse, falling 9% after it fell short of estimates.

– Sources: Warm weather chills holiday sales,
Shoppers Await Better Bargains

Meanwhile, all manner of silly blame casting is going on as to who or what is responsible for the problematic retail sales. With over half of the reporting companies missing expectations, it is rather silly to blame all of this on Wal-Mart.

In most years, Retailers blame Snow in the Winter in the Northern climes; this year, they are blaming the weak sales on warm weather. Apparently, it is never managements fault, nor does anyone blame the tiring consumer or a weakening housing / Mortgage App slow down, it is the weather – REGARDLESS OF WHAT THE WEATHER IS.

Considering what the most recent retail sales data looks like, it is no surprise that the sector is flailing about looking for something — or someone — to blame:


If you want a clue as to what is really going on, try this compare and contrast:

Wal-Mart Trips as It Changes a Bit Too Fast

Tiffany Profit Increases 23%

There’s your answer . . .


One more thing: The WSJ has a good interactive chart that allows you to track the performers of a dozen top retailers:


Its a public URL, No subscription required.

Weak November Start Hurts Retailers
As Wal-Mart Presents Grim Forecast

WSJ, November 30, 2006 9:18 a.m.

Build Your Own Chart: A dozen major retailers
WSJ, November 30, 2006

Warm weather chills holiday sales
Parija B. Kavilanz, November 30 2006: 9:41 AM EST

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What's been said:

Discussions found on the web:
  1. advsys commented on Nov 30

    Thanks again BR.
    I can’t stand all the chatter about Walmart. Wrong product mix, bad weather, good weather, growing too fast, growing too slow, failures in outer Mongolia etc.

    Their customer base has been left out of the liquidity based boon. Ergo, their sales are down. The very high end still has cash to burn, ergo, the high end retailers are doing well. What is so hard to understand here?

    As an aside, don’t be surprised if the tables turn once the economy hits a real downturn. Everyone could be flocking to the low price leader.

  2. drsqueeze commented on Nov 30

    When are people going to realize that Walmart is a dying retailer? The old rural stores are in dying areas and the new urban stores are cannibalizing and underperforming. Pretty soon Eddie Lampert will be running WMT for the cash flow.

  3. MarkM commented on Nov 30

    What do we balme soft manufacturing on? Chicago PMI shows contraction at 49.9 reading.

  4. ECONOMISTA NON GRATA commented on Nov 30

    From: The Mess That Greenspan Made

    “Gone are the days when you could borrow on credit cards, pay off the credit cards with newly borrowed HELOC money, then make the HELOC debt vanish by rolling it into a refinanced mortgage with a higher loan balance and a lower interest rate.”

    I just thought that the wording in this paragraph was as good a description of what’s going on as any.

    Best Regards,


  5. Norman commented on Nov 30

    Retail Sales: Seems to me a lot of the soft goods problems relate to those $3,000 HDTV’s being bought at Best Buy, etc.

  6. ECONOMISTA NON GRATA commented on Nov 30

    OT: Let’s just say “adios” and “hasta la vista” to the dollar while we’re at it.


  7. Francois commented on Nov 30

    About Tiffany: doesn’t the weak dollar helps them with the high-end European Consumer?

    After all, why shop in Euros when the greenback gives you more bang for the buck?

  8. GerryL commented on Nov 30

    Isnt it interesting that a few years ago Walmart couldnt do anything wrong and there was concern they were too powerful? Now they are being called a dying retailer.

    I realize that they have made many mistakes and arent doing well. However, I still think that their customer has gotten squeezed by the rising costs of energy, housing, insurance, etc.

  9. Bob A commented on Nov 30

    Ebay should do better. Because as people find they can no longer simply “get cash outa their homes”, they will be more inclined to sell the old stuff in their garages to pay for all the things that costs more even though there is no inflation.

  10. calmo commented on Nov 30

    The wealth gradient is getting more of the attention it deserves: not the steepness but the non-linearity of that slope. So Wal-Mart is important in providing a picture of those vast low-cost retail wetlands, but on the other end, we have Art auctions for those who have real disposable income and don’t trifle with petty distinctions like “investing” or “spending”.

  11. Rich Lather commented on Nov 30

    “Sometimes the retailers blame Snow in the Winter, this year they are blaming the weak sales on warm weather.”

    Too hot, too cold, is this the goldilocks scenario you posted about earlier?

  12. Michael C. commented on Nov 30

    I’m buying like it’s 1999, or better yet 1998. Anyone else with me here?!!!!

    And why not?! Money is cheap and only getting cheaper!!!

  13. donna commented on Dec 1

    I blame stores full of cheap crap from China. Seriously, there’s damn little out there I want to buy.

    Today I bought a nice coat made in Vietnam, since I didn’t want to freeze again at the holiday party that is always outdoors lately since hubby’s company is now huge. Looked around for a blouse towear, couldn’t find one in the store I wanted to buy. Ended up over at my little small local clothing store and found a very nice sweater from a small volume manufacturer.

    The big stores can’t buy anything nice because they have to buy too much cheap crap to move enough volume. And I don’t want any of it – it all looks like junk.

  14. diva commented on Dec 1

    advsys – you have it exactly right

  15. dsquared commented on Dec 1

    I have always longed for the day when the chief executive of a retailer steps up at the quarterly meeting and says:

    “we had fantastic blow-out earnings and beat the estimates by a mile. However, of course, this was mainly due to a late Easter, extremely favourable weather conditions and there being no big sporting events”.

    in the UK, we actually had the circumstance in which one leading retailer said that the World Cup was “of course”, partly responsible for their excellent performance and another in the exact same segment said it was “of course” responsible for their poor performance.

  16. Rich_Lather commented on Dec 1

    I don’t know about other sectors of the US, but here in my town, our wal-marts suck. I have a 50% chance of walking out empty-handed while searching for simple stuff. Target has become my choice because the chance of having a wasted trip is less likely (and the pretty women). Wal-mart has stretched the margin too thin here. The inventory looks like a hurricane is coming and folks have cleaned the shelves….and that’s not during the holiday season but all year long.

    Wal-mart is going k-mart.

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