Target and Lowes reported their quarterly results today. Target’s results were atrocious and Lowes’ results were lackluster, to say the least. When you dig into the numbers for two of the largest retailers in the world, you can see our dying warped society clearly.

Target’s annual sales exceed $72 billion.

Lowes’ annual sales exceed $53 billion.

There are a couple data points that reveal the death of retail on the horizon. Target operates 1,925 stores. Lowes operates 1,835 stores. Prior to the 2008 financial collapse these two behemoths were opening hundreds of stores per year. Their scientific financial models spit out ever higher sales as they dominated their markets. It seems their assumptions were slightly optimistic. They’ve had their come to Jesus moment and now realize their expansion days are done.

Target has opened a grand total of 7 stores in the last year. Lowes will open 10 new stores this year.

Target is the poster child for awful management over the last seven years. Of their 1,925 stores, 1,795 of them are in the U.S. Their dreadful foray into Canada accounts for the other 130 stores. They had 1,719 U.S. stores in 2009. It costs approximately $25 million to construct and open a Target store.

In the last five years they have spent approximately $1.9 billion building new stores. Over this same time frame they spent $10.9 billion buying back their own stock. Think about that for a moment. Rather than investing in their business or giving the money back to shareholders through dividends, they bought their own stock in order to boost EPS for Wall Street and drive their stock price higher. They borrowed $2 billion to buy back the stock. With $13.9 billion of debt, maybe their cash could have been used to pay it down rather than buying their overpriced stock. Their stock price is exactly where it was in 2010, and 20% below its 2013 high.

Guess who received a huge chunk of the shares bought back? That’s right. Top management received massive multi-million dollar compensation packages in stock. It was in their best interest to drive the stock price higher. Maybe that is why they didn’t invest in information technology security. The unprecedented breach and loss of millions of credit card data to criminals has destroyed their credibility as a retailer.

The chickens came home to roost today. Their profit plunged by $377 million to a pitiful $234 million. For comparison purposes, they made $686 million in the 2nd quarter of 2007. Their comparable store sales continue to stagnate. Comparable store sales were flat, but the number of customer transactions declined by 1.3%. Price increases of 3.0% offset the traffic decline. Nothing like a little non-existent inflation to help out.

Target is a disaster. Their expansion days are over. They haven’t admitted it yet, but they will be closing hundreds of stores as our consumer society runs out of money to buy their Chinese made crap.

Lowes is a few years behind Target in the downward spiral phase, but they are employing the exact same warped strategy. Their profit was up 10.4%, while comparable sales were up only 4.4%. They didn’t report their traffic counts, but you can assume they had the same price inflation as Target, so store traffic increases were probably in the range of 1% to 2%. They lowered their profit guidance, as the fake housing recovery is not boosting sales.

But, they are implementing the Target strategy of buying back their stock to boost EPS. Their reported EPS was up 18%, as they bought back $1.1 billion for the quarter and $2.0 billion for the first six months. Since 2009 these bozos have bought back $14.1 billion of their own stock, enriching their executives at the expense of employees and stockholders. And they didn’t do it with excess cash flow. They borrowed $5.6 billion to buy back that stock. Over this same time frame they only spent $3 billion on new stores.

The managements of the mega-retailers know the glory days are over. The American consumer is tapped out and Boomers will not be spending what they don’t have. The CEO’s have chosen to enrich themselves on the downside, rather than return cash to stockholders. This is now the American way. It has been aided and abetted by the Federal Reserve. The excessively low interest rates have allowed corporations to borrow and buy back their stock in order to boost their stock price. Actual profit growth not required. When “high yield” junk bonds issued by dodgy companies across the land yield less than 5%, you’ve got yourself a bond market bubble.

According to the Federal Reserve, corporate debt has risen 27% over the past five years to an all-time record of $9.6 trillion. Close to $2 trillion was used to buy back stock, with $500 billion used last year alone. These companies then turned around and issued $180 billion of the shares to top management. This is the circle of life at the top. Meanwhile real wages for the real workers continue to decline. The Fed has created another bubble in corporate stock buybacks, and it isn’t just retailers.

The iconic manufacturing giant Caterpillar just announced its 20th month in a row of negative year over year sales. If manufacturing hasn’t recovered and retail hasn’t recovered, what is left? The stock market is reaching new highs solely on the bubble blowing abilities of Ben and Janet.

Caterpillar has it all figured out. Increasing revenue and profits is old school. Investing in your business is for suckers. You can push your stock to all-time highs with new paradigm thinking. Just buy back $2.1 billion of your own stock and redistribute it back to your top executives. Then it will trickle down to the working class eventually.

I wonder if historians will look back on this period in U.S. history and wonder WTF were those idiots thinking. They will rightly wonder how  a country could believe that layering trillions in debt upon trillions of debt, in order to consume our way to prosperity, while waging endless wars, making entitlement promises that couldn’t possibly be kept, and funneling the vast majority of the nation’s wealth to .1% of the population, would possibly end well.

This dying, warped, delusional empire is a wonder to behold. We surely won’t go out with a whimper.


  1. Target, at least, had a lot of assistance from local taxpayers in constructing their stores. Like Walmart, Target extorts a multi-million dollar subsidy from local governments for new stores. At least one location here in Chicago was assisted by generous TIF subsidies, and most likely so was at least one other of the three that opened up along the lakefront between the north end of the city, and the south loop area, in addition to the one a few blocks from me.

    Last I was in there to pick up an organizer tray for a drawer, the place was almost empty. There were only 4 cashiers on duty, and no lines at them.

    Municipalities, particularly outer suburbs, have been running a race to the bottom to see who can offer the most in tax-funded gimmes to big barn stores, power centers, and shopping malls. Now these facilities are shuttering right and left, creating massive pockets of blight and leaving local taxpayers with monster property tax bills to fund all the empty concrete slab garbage that these concerns leave behind, that is built to last a depreciation schedule and for which there is no other use.

  2. LA is a horrible place to try and find a grocery store or a big box retailer like Target and Lowe’s. If you go to a Walmarts there, you will be at least a half hour to check out. Best to drive up to Santa Clarita to the Target there. If you keep going another 30 miles, the AV has 4 Super Walmarts around the valley. The population density isn’t there to sustain all those and 3 Targets, 2 Lowes and 2 HD’s We have one mall though a small one, and that has light traffic. Still, LA has the high price real estate thanks to Chinese investment. Yep, let’s call it Ching-Ching town.

  3. Damn shame about Caterpillar. I actually like Big Companies that actually make this.

    I recall reading several articles not that long ago (maybe the ’90s?) that proclaimed Cat as one of the World’s Best Run Companies. My, how the mighty are falling.

  4. Where does a country get the money to pay all the debt when taxes won’t cover it? The short answer is a war of conquest, not this humanitarian bull. Send in scouts, then advisers, then foment an attack on our friendlies and soon we have an excuse to send in peace-keeping troops while we steal everything of value. It would be out of character for us but desperate times call for desperate measures.

  5. Don’t worry about Target. Q3 results will include my wife’s latest shopping spree. EPS should rise by 20% on that alone.

  6. This is entirely anecdotal, but there is a super target near me. I went into it once to buy a fan for my office. I doubt there were more than fifty people in the entire store.

  7. I have to force myself go to Target, which I do as infrequently as possible. Last Saturday for a toothpaste/catfood/shampoo/soap/packet of socks/and out of there run. 20 minutes and gone.

    I hate Target. I’m blinded by the glaring lights on RED everything – gigantimous red shopping carts, red shelving, red walls, REDredred everywhere red! It’s fucking blinding.

    And the place always has this chemical smell of cheapshitfromChina that hits you when you walk through the door. It reeks of that Chinese factory smell.

    Unpleasant place. Let them go out of business, I don’t care.

  8. Iska, I can’t imagine going on a “spree” in a place like Target. I somehow just can’t get excited about low-quality clothes and cheap decorative items.

  9. @Stucky – My favorite toys when I was a kid were my Dad’s old metal Cat construction toys, and metal tractors.

    At night we’d pretend to drive around building things (book forts) and planting crops.

    I’ll always have a soft spot for American manufacturing, but they are a large part of the reason why things are so fucked up today.

    Globalization, what a farce.


    Sears posts large loss as revenue, margins shrink

    By Michael Calia

    Published: Aug 21, 2014 6:57 a.m. ET

    Sears Holdings Corp., the struggling store operator that was once a prominent fixture of the U.S. retail landscape, indicated that more cost cuts and changes are on the way as it posted a $573 million quarterly loss amid declining revenue and margins.

    Sears, which has shed businesses lately in a bid to refocus its operations, said slumping electronics sales continued to weigh on results, as did margin-squeezing costs from promotions.

    Sears is now relying on its membership program and online business to drive sales while its turnaround grinds on.

    The company is targeting 130 store closures this year, with potentially more coming, while it continues to evaluate spinning off its auto-center business and divesting itself of its 51% stake in Sears Canada Inc. Earlier this year, the company, which is controlled by hedge-fund billionaire Edward Lampert, spun off its Lands’ End apparel unit.

    “We have continued to show progress in our transformation, as demonstrated by our year-over-year increase in online and multi-channel sales, and with our member sales now representing 73% of eligible sales, ” Mr. Lampert said in a news release. “However, our second quarter earnings are unacceptable and we are taking steps to address our performance on several levels.”

    Mr. Lampert also said Sears would pursue cost cuts, more investments in its “Shop Your Way” and integrated retail customer programs, and “rationalizing our physical footprint and improving pricing and promotions.”

    Sears posted a fiscal second-quarter loss of $573 million, or $5.39 a share, compared with a loss of $194 million, or $1.83 a share, a year earlier. Excluding costs of closing stores, certain tax matters and other items, the company’s adjusted per-share loss was $2.87.

    Revenue fell 9.7% to $8.01 billion, while gross margin for the period slipped to 21.7% from 24.6%.

    Overall, same-store sales fell 0.8% at domestic stores during the period ended Aug. 2. Sears said domestic same-store sales rose 0.1% at its namesake locations, but noted they would have grown 1.6% excluding the impact of consumer electronics. The company’s Kmart stores suffered a 1.7% decline in same-store sales, dragged down by electronics and by its grocery and household-goods business.

  11. Bon-Ton Stores shares drop after disappointing Q2 results, outlook

    By Tomi Kilgore

    Published: Aug 21, 2014 7:55 a.m. ET

    NEW YORK (MarketWatch) — Shares of Bon-Ton Stores BONT, slumped 7.7% after the apparel retailer cut its full-year profit outlook following a wider-than-expected fiscal second-quarter loss. The company now expects full-year per-share earnings of 25 cents to 55 cents, down from a previous forecast of 40 cents to 70 cents. For the quarter ended Aug. 2, the company lost $36.2 million, or $1.86 a share, compared with a loss of $37.3 million, or $1.95 a share, in the same period a year ago, and the FactSet consensus loss estimate of $1.54 a share. Sales increased 1.1% from last year to $563.5 million, missing the FactSet estimate of $578 million. Same-store sales for the quarter rose 1.6%. Bon-Ton’s stock, which is on track to open at a two-year low, has dropped 44% year to date, compared with a 7.5% gain in the S&P 500.

  12. Corporations are controlled by Boards of Directors who actually own only a very small % of the corporation. They bought and paid for the laws that enable them to use other people money without their permission. Damn, that is theft or by another name socialism.

  13. I haven’t shopped at Target in 10 years. Now that we live just outside the city limits of a town with a Lowes, we shop there less than ever, choosing instead to do business with Ace Hardware, which is a less-of-a-hassle, 4-minute drive.

    Fourteen months since hubby and i have been in a Wal-Mart. Why people think they must shop at these stores, if you have other choices, is beyond me. I have not been deprived of anything that mattered and life is good!

  14. Have only been in a Walmart twice in my life. Sloppiest, most badly-organized, ugly stores I’ve ever been in, and far too big. And the prices for big-ticket goods are not cheap. You can easily beat Walmart prices just by watching the ads and shopping around.

    There is a very attractive Target store four blocks from where I live, handy for emergency shopping, and for basic household stuff, but little else. Groceries there are very over-priced. For hardware, I usually go to a local True Value franchise that is known to be the best hardware store in the city, owned by the same family for 3 generations. They can advise you on household repair jobs and have the best selection of tools in town. Landlords from miles around go out of their way to shop at this place, and run tabs there.

    Patronize your local places, because, in another decade, local will be all we have. And that will be a good thing.

  15. Mr Chen says “Send in scouts, then advisers, then foment an attack on our friendlies and soon we have an excuse to send in peace-keeping troops while we steal everything of value.”

    How, exactly, would that be out of character for us? What do you think we have been doing for the past 100 years?

  16. I’m a software contractor here in Minneapolis – home of Target. You should see their employees at the ‘main campus’. A bunch of 20 somethings, in vast cube farms. The whole company from start to finish is a shit hole. Including their shitty products from China.

    The CIO babe (which they canned a couple of months ago) was an MBA – never wrote a line of code in her life. They were paying her $1,000,000 – all they got was a massive security breech.
    Now the new CEO of Target, is from PepsiCo. Wow that makes as much sense as the selection of the previous CIO.

  17. Stuck…I followed Donald Fites career at Caterpillar for a while back in the mid 1990’s . He was a masterful CEO…..I doubt the union workers thought so but it was amazing some of the stuff he did and how he did it .

  18. With the death of newspapers we are down to just getting the Sunday paper only. The Sunday paper is basically a method of delivering reams of advertising sales flyers for all the big box stores in the area to your home. As I skim through the ads week after week I find that there is not one single thing in them that I need or desire.

    Who is buying all of this shit?

    How many pairs of this and sets of that do people need? Consequently I have no desire to even venture into a Target, a Walmart or any of the other retail stores selling plastic crap. Plus I would much rather go into the local hardware store where they still actually employ folks that have a clue about what they are selling, than to go into a Home Dump or Blows to try and get some assistance from people that go out of their way to avoid you. Big Corp retail is fucked up and bullshit.

  19. So, Admin, that chart @ 9:45am… does that seriously say that the people with high HHI are spending that much less, while people in the lower HHI bracket are spending that much more than their actual income? (presumably sub-prime loans on cars, houses)

    Or am I just reading it wrong?

  20. What peace out said. We recently moved to recycling, so I asked the paper guy to quit bringing me the rag due to all the flyers. I can’t be bothered to look thru them for useless shit I didn’t needs anyways. Plus the rag is full of useles Info anyways, only good for cleaning the windows.

  21. Thinker

    Here is the basis behind the chart:

    The Bureau of Labor Statistics coincidentally released a study to confirm what has become the biggest economic problem in the US: those at the lower-income levels, those who’ve gotten ripped off by inflation and wages, have become terrible consumers in an economy dependent on consumer spending.

    The report found that the average income of households in the top 20% grew by $8,358 per year from 2008 through 2012. But the lowest 20% saw their already minimal incomes get whittled down by $275 per year. The earnings of the second and third quintiles increased only $143 and $69 per year. So for the bottom 60% combined, there really wasn’t any improvement.

    And their spending patterns? The lowest quintile cut their spending by $150 per year in total. They cut where they could: in seven categories, totaling $490 per year, mostly on apparel, entertainment, housing, and personal care. And they increased spending where they had to: in seven other categories totaling $340, topped by “cash contributions” such as alimony, “miscellaneous,” and healthcare.

  22. We were trained to be consumers – and as the decades came and went we became less and less discriminating in defining wants over needs.

    I have come to realize that many don’t know how to be poor – frugality and fiscal common sense were obscured from public life and conspicuous consumption ruled the day.

    I’m guessing the people aware enough to see the potential and/or inevitable decline in income are cutting back expenses left, right and center – much to the dismay of those who would we have a consumer versus a production driven economy.

    And perhaps when we stop mindlessly consuming we might begin mindfully producing.

  23. Thanks, Jim. I found the full report, based on that. Surprised that “cash contributions” (money given to people outside the household, such as alimony payments or contributions to charitable organizations) grew so much for the lower-income group. It’s always been evident that lower-income people give more during recessions, but I think a large part of the contributions have gone toward helping out family, since charitable organizations have reported significantly lower income.

    Either way, there’s still room for further weakening, and everything I’ve seen is pointing to one hell of a holiday retail season.

  24. Yeah, not surprised on either one. 15+ years ago Target was the relatively cool, or at least not uncool, alternative to Kmart (and, where it was present, Malwart). Along the way Target’s merchandise suffered in all ways while their prices went up. That was bad enough, but their enormous data breach, and the way they handled it, killed all my interest. I go to Target maybe once or twice a year, about the same as I do Malwart. Both have become lower class focused, SNAP/EBT type places. Yes, it’s obvious. As for Kmart, why do they still exist? Really, why?

    Lowe’s I think is a little different – lack of a building boom and lack of disposable cash for remodeling, repainting and other common but unimportant “home improvement” projects. I would imagine Home Depot is a carbon copy of Lowe’s results. Neither great nor terrible stores, but very much a product of the real estate boom. So large that many areas can’t support even one in non-boom times. I’ll watch for a resurgence of the hardware stores. Locally, ACE is always much more expensive, but they usually have what I need, are much faster and easier to get to and into/out of, and are staffed with native English speakers (often related to each other!) who are capable of helping you out. Tractor Supply, despite the name, is also a hardware store for everything but lumber.

  25. Went to another bidness lunch today.

    I wonder when all those trendy, over priced restaurants (Pittsburgh Blue, Red Stone, Granite City, etc) will be closing their doors? Honestly, $15.95 for a lunch Cobb salad?

  26. I don’t shop at Target. I do shop at Lowes but only if what I’m buying is made in America. If I’m forced by lack of choice to buy cheap Chinese shit I shop at a local Trustworthy hardware store since they are locally owned and have excellent service.

    Eighteen years ago we had a severe ice storm with no power for two weeks in the dead of winter. I was well prepared for the problems that caused but none of my elderly neighbors were prepared or able to help themselves so I went to buy a generator at the local Trustworthy so I could run my gas furnace and use my portable heater to keep my neighbors warm. They were out of stock but were taking names for a shipment they were receiving in two days. By chance I got my name on the list for the last one and the people started offering more money by double and even triple. The employee told them it was first come, first served at regular prices. When they called to say they had arrived I went down there but the place was pandemonium. People were again trying to buy them out from under people at huge prices but were told no. They continued to try and buy them from those who had just bought them and a few tussles broke out in the parking lot.

    That store has been my go to hardware store ever since. I still have that generator. Unfortunately my Greatest and Silent generation neighbors are gone now. They were good people!

  27. Went shopping for watch batteries for 3 of the Mrs. watches that had stopped. Clerk was very helpful and I bought 3 batteries for just under $20, which I thought was a little pricey. Nothing but cobwebs and crickets the 2 times I’ve been in this store. Other than me, zero customers.

  28. 1. How, exactly, would that be out of character for us? What do you think we have been doing for the past 100 years? You win the Zerbina award for failing to spot the ironic tone of that last line.

    2. I hate Target. I’m blinded by the glaring lights on RED everything.

    a. Red is an exciting color, it probably raises your pulse and you feel rushed or impulsive, it is an action color. We all love and want the woman in a red dress or red shoes or at least red lipstick.
    b. Orange is a warm color that has a universal appeal. I hate to see a woman dressed in orange, there is something wrong with her or she’s old.
    c. Blue is a cold, intellectual color. Women in blue are passion killers, food on a blue plate or blue drinks are repulsive but kids like them.
    d. Used to go to a seafood restaurant with bright mango color walls, then some ignoramus painted the walls tan, never went back.

  29. Historians won’t be looking back on this and thinking WTF because history is written by the elite class.

    While someone somewhere in the future is speaking out from whatever remains of our freedom of speech and will be citing the current run-up to their memory of an historical collapse as evidence of their then pending collapse, it will all fall on deaf ears as the same ignorant, government educated, low-info, one-issue voters of today become the grandparents of the same ignorant, government educated, low-info, one-issue voters of tomorrow.

    Or, to look at it another way, someone said the same thing you said about future historians, 100 years ago, and look how well that’s worked out.

    Humans are stupid. Intelligence is a mutation.

  30. I’ve always read that the color red conveys feelings of dominance, aggression etc which is why you never want to wear red to a job interview. However, if you are going to a place to complain or seek satisfaction, they red is a good color to wear.

    On the other hand, a fine looking woman in a nice red dress can be sexy, provocative, alluring and hot as hell. I find that a little black dress on a fine looking woman does the same.

    I don’t think the woman pictured is all that hot, looks like a wax dummy to me, but the dress on her is killer!

  31. Chi-town, do you know where AWD is? He can’t be so rich to take such a long vacay. Could it be he is in Ferguson fighting crime as Officer GFY?

  32. Angrywoodchucksblog says:
    “Humans are stupid. Intelligence is a mutation.”

    That would explain a lot! It’s a great way to think of it too!

  33. if you are going to a place to complain or seek satisfaction, they red is a good color to wear.

    it’s a movie and real life trope: the scorned woman wears red at her rival’s wedding. hmm, red panties or black, I-S? Target logo underpants definitely beat HD logo panties.

  34. Last I saw of AWD, every other comment he posted was railing against bb’s incessant, idiotic bullshit. He probably had to bail just to preserve his sanity. He’s been burning the candle at both ends posting articles here and raging against the bullshit that passes for govt and leadership in this country so give him a break. He’ll be back I’m sure.

  35. Being of average IQ, my teacher told me I had room for improvement. You white boys are pretty near to topping out.
    To use an Air Force conundrum, ‘your either green and growing or ripe and rotting.’
    I be growing.

  36. Chen said:
    ” hmm, red panties or black, I-S?”

    I don’t want to know until the moment she decides I’m worthy of knowing. I won’t say that I hate miniskirts but leaving some things a mystery is half the fun in life. When I see women in miniskirts I mostly wonder how many other guys have already rode that pony.

  37. I tip my hat to you and Billy, I never ever see or come close to women of that caliber, beautiful women, I mean. I have seen some tranny’s that looked fabulous.
    Like most guys, I feel comfortable around a 7 and start to consider having a seizure in the presence of an 8 or 9. Five to seven, that’s my comfort zone.
    I was at Caesars a couple of years ago when I spotted Maribel Guardia. She looked around hoping someone would say hi, I glared at her. Some others hugged her and took pictures with her. When my wife came back from the H&M, I told her and she ran after her to get a good look.

  38. And here I was beginning to wonder if AWD was really Robin Williams. Manic, funny and disappeared around the same time.


  39. In the final “Walking Dead” episode, humans find safety in the 2 places even zombies fear to tread, Wall Street & Sears stores.

  40. Sears & Kmart websites, even when U type in the exact name of a product from their ads, U still may not find the item.

    Using their sites is a form of sadistic punishment.

  41. Mr Chen, AWD might have enough crime to fight out in Rockford, which now has the highest violent crime rates in the state, next to E St Louis, a place that hardly even exists anymore.


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