Retail Sales: So much for the “Gasoline Effect”

The camouflage continues to drop like the leaves off of the trees. As we noted earlier today, the anecdotal evidence is quite telling (if you look beyond the parking lot).

The data’s decline is now to the point where the cheerleaders have nothing left to spin:

"Wal-Mart said it expects its October sales at stores
open at least a year, or same-store sales, to increase just 0.5%. That
is short of the 2% to 4% increase the company forecasted early in the
month, and would mark the slimmest gain it has reported since December
2000. Wal-Mart saw a 0.3% increase at its namesake stores and a rise of
2% at its Sam’s Club locations in October. The company said it expects
flat U.S. same-store sales for November. Shares declined 1.4% in
pre-market trading."

Bloomberg noted the Wal-Mart forecast is for the "worst
results in more than 10 years."
But its not just Wal-Mart:

"According to Thomson Financial, based on 50 merchants
that have reported same-store sales so far on Thursday, 28 retailers
had results that missed expectation; 22 beat estimates.

"There are some signs of strength in these reports,
but clearly there were more companies missing expectations," said Ken
Perkins, president of RetailMetrics LLC, a research firm in Swampscott,
Mass, who said he was surprised by the results."

Its all good. Back out the companies that missed expectations, and there is lots of strength in retail. 



I don’t know what to make of this chart, but the colors sure are purty:


Source: WSJ


Wal-Mart Outlook May Damp Holiday
As Retailers Post Mixed October Sales

WSJ, November 2, 2006 9:19 a.m.

Charting Sales: Autumn Mix

Retail sales sputter
Specialty retailers a mixed bag; sales choked at Wal-Mart
Pier 1 suffers another double-digit decline.

Parija B. Kavilanz,  November 2 2006: 8:39 AM EST

Wal-Mart Expects Unchanged November Same-Store Sales
Lauren Coleman-Lochner
Bloomberg, November 2, 2006

Retailers miss the mark on October sales
Wal-Mart weighs on results; department stores stage a comeback
Dan Burrows
MarketWatch, Nov 2, 2006, 11:03 AM ET

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. KirkH commented on Nov 2

    Good thing they made the right hand side of that chart orange because I wasn’t sure if how these charts work with their fancy “time” and “x axes”.

  2. joe commented on Nov 2

    The bulls keep saying that consumer spending hasn’t been affected by the housing “slowdown”, so there’s no need to worry about a recession. But, just as there are lags in the effects of monetary policy on the economy, so too does it seem reasonable that there would be a lag between a macro shock like the housing collapse and consumer spending. We’ve only seen a few months of price declines in housing and yet pundits are so quick to proclaim that this has had no effect on consumption. It seems to me that first, we’ll have price declines in housing (currently underway). As house prices decline, MEW will slow, and consumption will marginally be effected, with the effects accelerating over time. We’ll also start to see the effects of ARMs resetting in the forms of reduced consumption caused by higher monthly payments. By that time, with residential construction activity having already plummeted and consumption slowing, it’s hard to imagine that companies will be splurging on capital equipment or that commercial developers will be incented to open new projects. To think that because we haven’t seen any effect on consumer spending yet in spite of housing declining for two whole months that there’s no chance of a recession seems ridiculously shortsighted and optimistic

  3. bob commented on Nov 2

    It’s very funky. The housing slowdown does not hit everybody. It hits certain classes, some of them very hard.

    Not all places are even. Boston and San Diego are hit very hard. Texas and Carolinas are ok.

    Some people do care that their home lost $10,000 (or $100,000) in price. Some people don’t care.

    For example, my home lost about $70,000 in price from last year. It definitely affects my big ticket (over $5k) shopping, but in general I don’t care. If I need new computer I will buy new computer no matter how much my house lost. My clothes or groceries are not affected. I would not buy a new car, but I never buy a new car, I prefer 30k-milers.

    But several million of people already have negative net worth, not just negative equity in the house.

  4. Just me commented on Nov 2

    Could it be that people jsut dislike shopping at Walmart for one various reason or another? Looking at the retail sales of just one company to extrapulate how retail is doing as a whole and short sighted at best. IMO, more and more people are opting not to shop at walmart for one reason or another and going elseplace.

  5. masterson commented on Nov 2

    I get spam from for visiting, but they do send the generic listings of foreclosures, and I noticed the
    number of properties as doubled and I’m seeing that the new entries have an interesting new twist: the amount of the default is WAY higher than the market value. Here’s one from today:

    Market value: $170,283
    Default amount: $250,300

    Maybe it’s a new marketing gimmick that makes it look like a more attractive deal?

  6. bob commented on Nov 2

    That’s why the banks have problems.

    Yes, it’s totally typical for some areas that, say, the mortgage is $600k but the bank brings the home on market for $480k.

    For me, the bank that punts on money is a very dangerous sign of times.

  7. Phil commented on Nov 2

    Hi, (great! Sales are still UP!!!)

    One question? Who is in the american stock market, it seems to me that at least no one in this blog is that stupid.
    I mean: European PERatio is about 12, in America 18, that is not good at all..

    Why is oil so low? The FED prints more and more, I think, this recession is going to be one of the worst: There is no new technology on the horizon, debt is at record level, oil is runing low,

    Could we have a last shot of Whiskey please?

  8. M.Z. Forrest commented on Nov 2

    Like you Phil I am more heavy in Europe right now, particularly Spain. For those keeping score at home, the ECB pretty much announced it was going to raise rates in December. And to think folks here are begging Big Ben for a rate cut. Commodities seem to have found a floor. The dollar may sit for awhile, but I don’t see anything that is going to increase its value.

  9. Diana Manwaring commented on Nov 2

    I think that Walmart is hoping that with its $4 prescription scheme, more people will shop at their stores. Funny thing is, Walmart keeps alienating the poor. Take how they treat their employees, for example. Walmart has recently been sued because they forced workers to go w/o lunch breaks, or do extra time without compensation, etc.

    Re. oil prices – gas, while it has been coming down gradually, is still too darned high. I am postive that once this election is over with, gas prices will shoot back up. This is very hard on the poor (like me), because when gas goes up, so does everything else, including groceries, dry goods, rent, etc, etc.

    I’m not overly fond of Walmart, especially because its PAC contributes to Republicans and Conservatives for the most part. Walmart, when established in a small town such as Central Square, New York, pushes out local competitors. Poor people like me are forced to shop in a store that is hurting our local economy because of their prices.

    I just love how our nation’s economy is geared towards those who are rich and away from those who have the most to lose. Walmart claims to support those who are of low income (with that $4 presription scheme, etc), yet it did away with layaways. Most of the comments I heard about this new policy have been negative.

    While we’re on the subject of how to treat the poor very badly, what about big oil companies? Gas continues to drop, but this will only be temporary. After the election, it will go up and more poor people will be forced to go w/o their own cars. I’m in a similar bind as my car is a gas guzzler (’97 Taurus) and it needs repairs. I can’t afford to repair my vehicle, can’t afford high gas prices and can’t afford a new or used car. On the other hand, I can’t afford to go without one as I am on disability and have several doctors to see regularly, including an oncologist in Syracuse, New York.

    I live in Pulaski, New York, which is about 35 miles north of Syracuse, and about 20 miles from the Central Square Walmart I just mentioned. Public transportation is very limited, and I had to resort to creating my own blog (see above link) because I desperately need a car.

    This nation’s economy is run by people who don’t give a hoot as to how the poor will live. The poor have to struggle while the rich get richer. People like Lee Raymond, retired Chairman of ExxonMobil, get retirement packages worth much more than the average American can hope to earn in a lifetime, while us little people have to scrimp and beg for crumbs.

    Why companies like ExxonMobil, Walmart, etc, can’t do more for the poor is beyond me. Big oil companies should be forced to finance gas subsidies for the poor. Walmart should be forced to pay their employees an honest wage and not treat them like slaves.

    The American public deserves better than this. I’m tired of suffering. I worked hard for many years and am now stuck in a rut that I cannot get out of on my own. Our government does nothing to help those who are less fortunate (remember Katrina and the botched evacuation?) and Corporate America is walking in lockstep right alongside our politicians.

    Money talks, and when you don’t have it, no one will listen.

  10. Robert Cote commented on Nov 2

    Not all places are even. Boston and San Diego are hit very hard. Texas and Carolinas are ok.

    I hear this canard all the time. There is a national credit bubble expressed as a housing bubble. Unless Dallas and Charlotte never heard of Countrywide, Ditech, BofA, Downey, Golden West, Freddie Mac or Fannie Mae they are going to suffer as well.

  11. Q-Ball commented on Nov 2

    “IMO, more and more people are opting not to shop at walmart for one reason or another and going elseplace. ”

    Just because you see the media bashing Wal-Mart all the time doesn’t mean anyone other than the small number of people who try to exact social justice via their spending patterns care.

    “Funny thing is, Walmart keeps alienating the poor.”

    Just because Wal-Mart squeezes their employees doesn’t mean that the people shopping there care other than those who try to exact social justice via their spending patterns. The majority of shoppers at Wal-Mart come from the lower wage earning crowd. I base this statement on my own anecdotal evidence by examining the vehicles in the parking lot when I am at Wal-Mart versus Target. Discount it if you want but its not random. Wal-Mart has cheaper prices. People who have less money go there to get more for their buck. Very few of them are going to shop somewhere more expensive because they care about what Wal-Mart does to their employees. To the poor Wal-Mart is not alienating them. They are giving them cheap prices. How the go about getting those cheap prices, very few care, and they certainly don’t feel like they are being alienated by Wal-Mart.

    “Looking at the retail sales of just one company to extrapulate how retail is doing as a whole and short sighted at best.”

    Retail stunk up the joint across the board today. Its not just Wal-Mart, just that Wal-Mart is the biggest and the biggest surprise since their earnings don’t have as much fluctuation as smaller or more niche retailers. What it says is the consumer is showing weakness. It says very little about the shoppers of Wal-Mart despite the desire of some here to believe that the poor masses are rising up to revolt against Wal-Mart. Get Real. Those with less money to spend love Wal-Mart. They ain’t shopping elsewhere, they are just spending less.

  12. winjr commented on Nov 2

    “I hear this canard all the time. There is a national credit bubble expressed as a housing bubble. Unless Dallas and Charlotte never heard of Countrywide, Ditech, BofA, Downey, Golden West, Freddie Mac or Fannie Mae they are going to suffer as well.”

    Well said, Robert. Dead-on correct.

  13. donna commented on Nov 2

    WalMart is an evil, evil company. See

    Watch the WalMart movie.


    And worse is the WalMart economy. Which is our current economy. The rich getting all the benefits, the poor getting the crumbs left from the dog’s bowl.


  14. anon commented on Nov 2

    Gas prices are going up where I am. ='(

    Maybe this is related to the supply of gasoline falling?

  15. MarkM commented on Nov 2

    What is going to be the wooden stake that kills this vampire of a market? Ordinary bullets are not going to do it. Today was proof. I saw about six hits on it today from various bad economic reports and it shrugged them all off.

  16. MAS (San Diego) commented on Nov 2

    Looks like KUDLOW is doing well. The Big Picture effect! The greatest story never …

  17. Paul commented on Nov 2

    gas is falling because we are entering a recession. GDP has gone from 5.6%Q1 to 0.9%Q3 (see Bloomberg article on ‘revisions’). The comparisons to the 1930’s are striking.

  18. Leisa commented on Nov 2

    Oh Barry…the new permabull (I’m agnostic, mind you) retort is that it’s the high end consumer that will shoulder consumer spending (just as cap ex will replace the consumer– take perverse delight in the sensible capex slashes that have been discussed in the earnings calls–I told you that CFO’s would be tight fisted on capex if the economy slows–and just as commercial real estate expenditure will replace residential). And I must commend your lovely turn of the phrase “The camouflage continues to drop like the leaves off of the trees.”

  19. Richard commented on Nov 2

    we need to get through the holiday season before y’all claim victory that we’re heading into a 30’s style depression. the Fed is looking for a GDP growth rate of 2-2.5%. i think they’ll get slightly less over the next 2 quarters and drop the rates to keep the consumer afloat. in the end the Fed is looking for bank stability but i feel they’ll blink when the consumer starts to keel over.

  20. M.Z. Forrest commented on Nov 2

    I don’t foresee a Fed rate cut with the ECB practically announcing a rate increase in December. It would put too much pressure on the dollar. I believe there is a greater liklihood that there will be another Fed Runds Rate increase before there is a decrease.

Posted Under