S&P500 Retail Sector vs Wal-Mart

Early this morning, we mentioned Wal-Mart’s (WMT) monthly sales data, as well as the rest of the retail sector.

Michael Panzner sends along the following chart, asking: "Does the performance of the retail sector relative to Wal-Mart’s tell you
something about the changing fortunes of consumers? Look at the attached
chart and decide for yourself.



Chart courtesy of Bloomberg, Mike Panzner

Good stuff, Mike, thanks! 

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What's been said:

Discussions found on the web:
  1. Rich Shinnick commented on Apr 10

    Wal Mart?

    Heck, I have a business myself and I see the decline every day. We do photos of youth sports players and a lot of it is in the Southern California areas. Year over year sales are generally way down. Parents are buying less photos and less add on novelity items (trader cards, magazine covers). It is the largest year over year decline I have seen in 20 years.

    Something is up. Parents are buying less photos of their kids!!!

    Well…I know, it is a limited data point, Wal Mart we ain’t. But hey, interesting isn’t it.

  2. dblwyo commented on Apr 10

    Barry (or someone) – overall the chart’s conceptually clear but what’s the data ? Sales:Consumption ? Stock prices ? Can’t tell. And where’s the data from you.

    Don’t get me wrong – it’s a great chart but how’s it built ?

  3. bdg123 commented on Apr 10

    If memory serves me correct, Wal-mart breaks down sales in their public reporting.

    And, it really wouldn’t be that hard to back into how much was inflation by analyzing their largest grocery competitor, Kroger.

    Wal-mart’s sales are AWFUL! People who say they are taking share from Target don’t get it. Wal-mart’s strategy to move upscale is an utter failure. So, now they focus on cutting back capital spending to meet their financial numbers. And, Wall Street cheers.

    In the end, there is reasonable evidence building to suggest Wal-mart is going to be the next Kmart. And, that is not a good thing because Eddie Lampert bought himself a pig. Not that he hasn’t managed to make it worse because there is reasonable evidence of this fact as well.

  4. Pat G. commented on Apr 10

    Yes, it tells me that people are looking for bargains and what’s wrong with that?

  5. B.B. commented on Apr 10

    Sorta O/T,

    I have been bearish since 2005, and finally pulled my IRA out last year. I have always thought that this was going to be some serious problems with the economy. But, Damn you listen to bubble T.V. And everything is just fine, the world is great and Q3, Q4 are going to be fantastic!! Am I missing something? I know these guys are mostly wrong, but they seem so confident lately. Starting to doubt myself. I see 1400-1430 is very possible on S/P. But all time highs like these perma-bulls think?

  6. SR commented on Apr 10

    …Along the same lines of ‘holding onto value’. Sure does not bode well for the auto mfg/dealer sector….

    Btw Check the 5yr charts for Toyota & Honda: Jan ’07 was the peak of the consumer frenzy for auto sector.

    addendum: NPR had a quick blurb about how the auto repair and the auto auction (ah, the repo-man) sectors are starting to see major upticks.

    R. L. Polk & Co. Reports Vehicle Age In U.S. On The Rise

    Median age for passenger cars remains at a record high of 9.2 years for second year in a row

    The total truck scrappage rate of 4.8 percent is the lowest since 1996


  7. RW commented on Apr 10

    Well shoot and I thought people were just slumming when I heard Wally World was taking back some of the market share it lost to Target et al; looks like folks could just plain be running out of dough.

  8. VennData commented on Apr 10

    I found a Wal-Mart near me, asked them if the had any ‘Free Tibet’ t-shirts (heading to the torch run later.) They said they’re getting a container of ’em any day now. Cool.

  9. Bob A commented on Apr 10

    Back in August it was said here that when people start walking away from loans that cost them $5000 a month in interest for a house they could rent for $2500, it would free up money that was going to interest payments for other uses. Bad for banks. Good for Wal-mart.

  10. Mark E Hoffer commented on Apr 10

    has anyone cobbled together a chart showing the raising tax bite, on Citizens, of the various levels of gov’t and the rise of WMT’s Revenues, over time (20 years?)

    or, could that association be a False correlation?

  11. 75 Hours commented on Apr 10

    Another cause and effect fallacy by Michael Panzner.

    Retail Sector relative to Wal-Mart? Say what?

    Why Wal-Mart and not Costco??????? (because using Costco would give a different chart)


    BR: Because Walmart is the biggest retailer in the USA.

    You are asserting that there are different results with COST. Do you have an actual analysis showing that, or are you making that up? How about a link to a chart, a while paper, or any credible research ?

    Seriously, even after you get tossed out of here, try to be less of an asshat the rest of your life.

  12. Turley commented on Apr 10

    Plotting two lines together on a chart doesn’t reveal any relationship necessarily. Did the chg (inc/cons) convienly start at 1? i.e indexed? and Retail/WMT began at +12 ? Seems to me like if comparing a change in one variable, you need to compare it to a change for the other, not arbitrary starting points. I’m not sure.

    with out seeing the data points it’s hard to assume a meaningful relationship- Beyond the obvious – that we already know and would expect- Income growth slows : discretionary spending slows as well.

  13. Barry Ritholtz commented on Apr 10

    The data is pulled straight from Bloomberg — the top chart is a ratio between WMT and S&P retail sector. The bottom chart is income over expenditures (% Y/Y). Its a fairly straightforward analysis.

    But I have to tell you, I find your criticism rather weak and misplaced.

    Whether this is merely a case of correlation with no causation, that is certainly possible. But you will note that Panzner posed this as a question, not as a definitive answer.

    And Panzner’s track record — see his book — is quite impressive . . .

  14. Michel de Nostredame commented on Apr 10

    Re: “Panzner’s track record”

    Hmmm … Lets do the math… In 2006, Mike Panzner has declared the “impending catastrophes” of Financial Armageddon and went into 100% USD cash.

    In 2006, S&P 500 was @ 1300
    Currently, S&P 500 is @ 1300
    Good call right? Not so fast comrades.

    In 2006, USD was by 20% higher than it is now. Adjust it for inflation and you get 30% loss on investment — fantastic record of accomplishment indeed.

    Good job Mike!

    P.S. I guess (not sure because I did not buy his book and do not know anybody who did) he has made money from his book to compensate for his 30% loss.


    BR: He did not go into cash, as he was very active in overseas equities, Oil, Gold and Ag.

    But even if he did, your math sucks: The drop in the dollar is not relevant between cash versus stocks in terms of asset class performance. That’s before we start consider a risk adjusted returns of equities (volatile) versus cash. And no one just sits in cash, money goes to short term treasuries, paying yield.


    Lastly, stop posting under multiple names. (Michel de Nostredame, 75 Hours, Opinionated Liberal, Overhyped and Overpriced Search Engine). That”s considered rookie kids stuff around here. And if you want to be taken seriously, use a real email address (not Hotmail)

  15. Al Czervic commented on Apr 10

    OK, I decided. It’s you.

  16. Turley commented on Apr 11

    Michel- let’s do the math… you can’t add inflation to a depreciating currency- 20% + 10% inflation = 30%? Inflation is already in the decline in value of 20% of the USD,, it causes it- you’re counting it twice.

    By definition, inflation is the loss of purchasing power of currency relative to it’s own currency- which obviously will affect the value of a domestic currency relative to a foreign currency. Unless you are primarily a forex trader, the value of the dollar is irrelevant to returns on most all assets classes since they share the same exposure.

    Maybe the dumbest statement I have read all weak. Think. It’s not prohibited.

  17. B.B. commented on Apr 11

    BR posts:
    Lastly, stop posting under multiple names. (Michel de Nostredame, 75 Hours, Opinionated Liberal, Overhyped and Overpriced Search Engine). That”s considered rookie kids stuff around here. And if you want to be taken seriously, use a real email address (not Hotmail)

    Cmon, this can only be our infamous, CINEFOZ.

    It reeks of the same youth, arrogance, angry, perma-bull. And he has not posted lately. You know he still lurks and just couldn’t resist telling everyone how brilliant he is.


    BR: Different IP addresses

  18. Barry Ritholtz commented on Apr 11

    NOTE: I banned a troll, unpublished their comments, and went back and reread their prior posts. I just learned something fascinating: Apparently, I am obligated to carry their posts on my site.

    Really? You have that absolute right? And its my obligation to provide you with a forum for that? Hmmm, I never knew that.

    I always laugh when someone tells me that. Go read the terms of use for this site, then get back to me . . .

  19. Graham P. Knopp commented on Apr 11

    It would be nice to see the above plot indexed by total sector revenues.

    Also – why has MaoMart’s share of total retail declined since the 1998-2003 period?

  20. Coolio commented on Apr 12

    Post #1 by Rich nails it. When my 5 year old had soccer pictures, I picked the cheapest one (6 months ago.) Last week we got this slippery notice about his Pre-K pics (fill out form if you DON’T want pics). I filled out the form. We own a digital camera and a phone that has a camera, IOW, no thanks.

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