Same Store Sales Boosted by Inflation, Retail Slumming

The monthly retail data was released this morning — and it was none too pretty. Same-store sales dropped 0.5% for the month of March, according to the International Council of Shopping
Centers (ICSC).  This was the biggest
decline in almost a year.

Two of the trends we have discussed over the past year are still quite evident: Food and fuel inflation, and consumers moving further down market to warehouses and discounters to save money.


"Wal-Mart Stores Inc. and Costco Wholesale Corp. said March sales rose as consumers buffeted by job losses and declining home values sought discounts on food and electronics.

Wal-Mart, the world’s biggest retailer, said sales at stores open at least a year increased 0.7 percent, within its forecast, helped by grocery and flat-panel TV sales. The Bentonville, Arkansas-based company raised its first-quarter profit projection.

"The discounters, the warehouse clubs, that’s who we think are going to be the winners in this retail environment,” Joseph Feldman, an analyst with Telsey Advisory Group in New York, said today in a Bloomberg Television interview.

Thomson Financial noted that the majority of retailers that have missed expectations are blaming the Easter effect and macroeconomic conditions.

Wal-Mart (WMT) is faring better than most, reporting a 0.7% rise in same stores sales. Their sales including fuel rose 1.1%. Also selling well are health care products and fuel.

One complaint about Wal-Mart’s reporting: They refuse to "ex-out" food in their monthly data. How much of the 0.7% sales (ex-fuel) was boosted by rising prices of groceries is not really known. Hence, we do not get an accurate read on how much of their monthly sales revenue is improvement, and how much is food inflation.


Retail Follow Up (July 2007)


Slowdown biting into discretionary retail sales
William Spain
MarketWatch, 9:18 a.m. EDT April 10, 2008

No Spring in Retailers’ March Sales As Most Chains Post Weak Results

WSJ, April 10, 2008 10:04 a.m.

Wal-Mart, Costco Sales Gain as Bargains Lure Shoppers

Cotten Timberlake
Bloomberg, April 10, 2008

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What's been said:

Discussions found on the web:
  1. Karl K commented on Apr 10

    In my view, these number reflect a long term trend away from full price retailers in general. The more people get a taste of the deep discounters, the more they will stick with them even as the economy turns up, especially if income growth is weak.

    This is, as the pundits say, a “secular” development.

  2. Barry Ritholtz commented on Apr 10

    Why would you think that last months same store sales data should impact today’s trading?

    Along the same lines, why would you think that day to day stock market action was anything other than noise?

  3. lauteus commented on Apr 10

    market is up because it’s all **priced in**… bleeding the shorts little by little and getting joe blow to buy on the rumor and hold the bag on the news. Smart money is on the sidelines…

  4. Steve Barry commented on Apr 10

    Why is market ever up? Because very few people have bothered to look at a chart of housing prices, or total credit in the economy, and realize how screwed this economy is.

  5. sccofer commented on Apr 10

    that’s my question, who is buying this market? Bad news isn’t moving the market, I can’t imagine going long at this point but the tape has me second guessing myself a little.

  6. Steve Barry commented on Apr 10

    Anybody watch CNBC covering Bernanke Q&A live? Question comes up asking him to compare now to the Depression…what does CNBC do? Immediately break to commercials.

  7. me commented on Apr 10

    “that’s my question, who is buying this market?”

    I don’t know either but I wonder how much money in 401Ks goes into the market. You cannot play the market in a 401K without huge fees and penalties so I would guess that is some of the moeny.

  8. Ross commented on Apr 10

    How can an early Easter negatively effect March sales? I’m sure there are retail nuances I do not understand but I know people who spent for Easter as always.

    If Easter had been in April, would we blame a bad March on a late Easter? I don’t understand.

    Inflation adjusting the nominal number would imply a decline of at least 1% in real terms but I guess we will need more data points in future months.

  9. AGG commented on Apr 10

    Who is buying this market ?
    Barry, I agree with you on market noise but many people need to be reminded that what they see are indexes which are up or down and not the whole market. Before computers and block trading, these indexes were somewhat useful. How many people are aware of the massive buying and selling of brokerage houses to “make markets”?
    When you are billed for a stock you bought or sold, there is a high probability that block trading modified the price up or down and you are buying “used” merchandise because the brokerage has the stock in inventory. The idea that when volume is high is because a lot of day traders are buying and selling is a deliberatly fostered Wall street myth. The SEC has been out to lunch for at least 8 years. Even before that, enforcement was highly selective. Look at block trading volume and compare it with small trade volume.
    If you want to know what’s going on, watch block trading volume and the total exchange stock movement. Indexes don’t tell the full story.

  10. Jonny commented on Apr 10

    I do agree, there’s a confounding bouyancy to these markets the last few weeks since the Fed propped up the brokers. Net news since then has been very bad (recession more clearly likely and severe), but the market has shrugged it all off and risen on the slightest of good news.

    It’s got to be institutional money, way more of it out there than new 401k. Either there’s a concerted collusional effort to prop up the market among the major houses, or the perceived returns 6-9 months out seem better than highly depressed debt yields and potentailly bubbly commodities that serve as alternatives.

    My portfolio has given up about 80% of my gains I had up to Fed intervention; took me too long to accept that this bounce would be so relilient, and still hard for me to see bailing now as anything but selling low.

    Curious how you technical traders are seeing the current scenario. Is up still the path of least resistance after today?

    BTW, Barry, first post for me, thanks for the great blog.

  11. fatbear commented on Apr 10

    How can an early Easter negatively effect March sales?

    What Ross said is important – this is a drop with an early Easter, which would usually perk up March retail.

    But I suppose we’ll shortly hear from CNBC about bad weather, too much NCAA watching, excessive attention on the primaries, the DVD-HD demise, the writers’ strike, and sunspots – not to forget Spitzermania.

  12. Venndata commented on Apr 10

    Wal-Mart & Costco shoppers don’t celebrate Easter.

    Everything – and I mean everything – is priced into the market => we’re looking at no change in the indices, ever, right?

  13. Jeff B commented on Apr 10

    Walmart’s business model does not include profit from ‘economic info provided.’

  14. Empire commented on Apr 10

    “The more people get a taste of the deep discounters, the more they will stick with them even as the economy turns up, especially if income growth is weak.”

    Have you ever been to a Wal-Mart? It’s more depressing than a funeral. Everyone looks desperate and sad. (Understandably so.) I can’t imagine anyone continuing to shop there if they can afford not to. I certainly won’t.

  15. Matt M. commented on Apr 10

    .68 cover ratio in today’s auction will have shorts and bears very nervous. Much of the bear case is built around the illiquidity of the credit markets and the coming demise of the BD’s and banks, yet those distressed entities didn’t feel the need to go to the window today and swap their mortgage paper for treasuries…..hummmmm. Very interesting. I trade both sides so I don’t preach my position like many on here…..but this is an interesting development for those wondering why the market has had a steady bid lately.

  16. Estragon commented on Apr 10

    Matt M.

    I can’t claim to speak for the “shorts and bears”, but I don’t think the case is built on illiquidity.

    The case is built more on solvency and the knock-on effects of excess credit, which the fed lending programs aren’t designed to fix. For all their bellyaching about liquidity, what the banks really want is lower rates and fatter spreads.

  17. rw commented on Apr 10

    granted the day-to-day in the market is noise but why is ANYONE bidding up RTH today?

  18. john galt commented on Apr 10

    This is how the Early Easter affects retail sales:

    Last year, the Easter holiday was at the beginning of April, so while the build-up in spending prior to Easter was in March both TY and LY, the Easter holiday, during which many malls and stores are closed, shifted from April LY to March TY.

    Relative to last year, this should be a drag on March sales and be a benefit to April sales this year, as March is basically gaining a day of sales and April losing one.

    Additionally, I’ve heard that many people believe shoppers are less inclined to shop for Easter in March, when it is still cold and wet and snowy in parts of the country, versus when Easter is in April, and people are starting to think about Summer. So there could also be a seasonality thing going on.

  19. Estragon commented on Apr 10


    RTH shows as short restricted (hard to borrow – crowded on the short side).

    Looks to me like less than devastating numbers are getting the “layup” shorts spanked a bit.

  20. captain james t kirk commented on Apr 10

    ****And why is the stock market up?****

    historical analogies are always dubious, however real-world recessions and stock market movements are not necessarily correlated.

    check out 1982, during the worst modern-era recession the DJI gained for the year.

    Naturally YMMV.

  21. Ross commented on Apr 10

    john galt,
    That makes sense to me. Thanks.

  22. NOR commented on Apr 10

    Troublesome to have an inquiering mind isnt it?

    How can they get away with months after months of not reporting the real inflation figures, jobless data, M3 etc.

    Well, thats the way you americans live, thats your daily life, it aint gonna change.

    Land of the free….

    Well, land of the chained, Id say..

    But thats only me

  23. Matt M. commented on Apr 10


    I think solvency and liquidity go hand in hand….no? I disagree with you on the purpose of Fed lending program…the new guidelines were put in to expressly help liquidity at the big institutions via a mortgage for treasury swap program. I’m not sayin’ I agree with the program….just trying to throw out a thought of why the markets have a bid under them. It is important to always check and rethink a position. I am recently long SRS (again!) and will have to watch it very carefully. Some posters were incredulous that the market has been up…. those traders normally have a tough time being successful. Too proud…too smart…no flexibility = tough trading career.

  24. Matt M. commented on Apr 10

    Poor NOR,

    Thinks he’s got it all figured out!

  25. stormrunner commented on Apr 10

    When the FED is willing to trade “Funny Money” for “Vapor Paper”… anything is possible except an increase in the average Americans living standard. The Banking/Industrialist elite have now accomplished that which our Founders warned would occur under a “Bills of Credit” system, greater than 50% ownership of all residential real estate by non-producing economic participants, The Bankers.

  26. bluestatedon commented on Apr 10

    I’m probably one of the few Americans left who’ve never set foot in either a Costco or a Wal-Mart. My wife did drag me to a Sam’s Club once and “depressing” doesn’t do it justice. It’s what shopping in the Soviet Union would have been like had there actually been items on the shelves for sale.

  27. joe commented on Apr 10

    BR, should Safeway report sales ex food? I understand your point about real vs nominal sales, but WMT is the largest grocer in the country, so I’m not sure it would make sense for them to ex out a huge chunk of their sales.

    bluestatedon and Empire are the reason that I bought WMT 18 months ago, that it’s the biggest position in my portfolio and that I have every confidence in the world it will continue to outperform. God bless and keep shopping at Tarjay.

  28. rw commented on Apr 10

    thanks Estragon

  29. Estragon commented on Apr 10

    Matt M.

    I definitely agree about the rethinking thing. It’s pretty clear the can will be kicked down the road, no matter what the cost.

    That said, the lack of interest in the swaps tells me that it isn’t a question of banks having lots of good quality assets that just happen to be locked up in a short term liquidity problem. The issue is banks don’t know who’s holding the real dreck that could blow up at any time, so they don’t trust each other. I think that’s the bear case.

  30. AGG commented on Apr 10

    Stormrunner is right. The financial system is all about providing job security for the members of the financial system at anyone’s expense but theirs’.

  31. donna commented on Apr 10

    I bet a lot of the Walmart number is food. BR’s point is that ex-food, there’s not a lot of retail going on.

    Almost all of our Costco buying this year has been food and gas. I wouldn’t walk into a Walmart if they paid me to.

  32. Bud commented on Apr 10

    Jonny, most technical traders aren’t into fundamentals. We just take what the market gives us and trade patterns. No emotions.

  33. NOR commented on Apr 10

    No Matt, I dont get lots of things:
    1. Why the FED is not behind bars
    2. Why GWB still is riding his horse
    3. Who lets it happen
    4. Why there are no mass riots in the US
    5. Why you keep up with Ben and Hank mocking you everyday as they talk and talk for hours on end on bs fantasy stories that only works as a lullabye. Their stories are actually painting a clear picture that they are taking 90% of the US population for dumbass suckers, and you are putting up with it.
    6. Why the FED lowered the interest rate instead of increasing it, it doesnt help anyways.
    7. How someone can notoriously get away in a Mandrake collective-hypnosis-style on national tv and say claim the pile is getting smaller by adding more shit to an already overloaded pile, claiming it will get smaller and smell less.

  34. Ross commented on Apr 10

    I shop at Wall Mart about once a month for staples. I have noticed a higher calibre of sales clerk over the past year and a half.

    The trick to shopping Wall Mart is to arrive on Sunday morning about 10:30 or so. Lots of lazy sleep in people and many are in route to church. In the afternoon I go to the liquor store to see my church going friends.

    My Dad taught me to shop and I’ve always made it a game of sorts. I remember he exclaimed “4 cents a pound for bananas? Not this week!”

    My guess only, but I am an astute shopper and staples prices look to be up at least 10% YoY. I see lots of folks trading down to store brands.

  35. Pat G. commented on Apr 10

    Re: consumer spending; I was reading an article the other day and was reminded of some of the categories falling under this measurement taken by our government. They count as personal consumption; outlays in Medicare & Medicaid. They also include what they call imputed gains, where money doesn’t actually change hands, i.e. rent that homeowners theoretically pay to themselves in order to live in their own homes.

    With baby boomers starting to retire and former homeowners actually looking to rent, the personal consumption rate in this country should be going up for years.

  36. Karl K commented on Apr 10

    Empire said:

    Have you ever been to a Wal-Mart? It’s more depressing than a funeral. Everyone looks desperate and sad. (Understandably so.) I can’t imagine anyone continuing to shop there if they can afford not to. I certainly won’t.

    Here, ladies and gentlemen, is a textbook case of elitism. It’s equivalent to what Pauline Kael said after Nixon waxed McGovern.

    “I don’t know anybody who voted for Nixon.”

    Yeesh, that’s all I can say.

    Oh, by the way, I HAVE been to Wal Mart.

    And Tiffany’s. Purchased stuff at both.

    Just so we’re clear on this: Tiffany’s merchandise is different from Wal Mart’s.

    Now, back to our usual harebrained commentary.

  37. MitchN commented on Apr 11

    Estragon wrote:

    The issue is banks don’t know who’s holding the real dreck that could blow up at any time, so they don’t trust each other. I think that’s the bear case.


    Let’s call a spade a spade: Would you trust anyone on Wall Street?

  38. Blissex commented on Apr 12

    «The issue is banks don’t know who’s holding the real dreck that could blow up at any time, so they don’t trust each other.»

    Ahhh it is actually much worse: the banks know how many unrealized losses there are in total, but they don’t really know how large are their own unrealized losses, and are terrified of lending some of their nearly wiped out capital to some other bank and than discover that their own losses are bigger than they thought.

    They don’t trust other banks because they don’t trust their own numbers.

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