The government issued their monthly retail sales this past week and four of the biggest department store chains in the country announced their quarterly results. The year over year retail sales increase of 2.4% is pitifully low in an economy that is supposedly in its sixth year of economic growth with a reported unemployment rate of only 5.3%. If all of these jobs have been created, why aren’t retail sales booming?
The year to date numbers are even worse than the year over year numbers. With consumer spending accounting for 70% of our GDP and real inflation running north of 5%, it’s pretty clear most Americans are experiencing a recession, despite the propaganda data circulated by the government and Fed. The only people not experiencing a recession are corporate executives enriching themselves through stock buybacks, Wall Street bankers using free Fed Bucks while rigging the the markets in their favor, politicians and government bureaucrats reaping their bribes from billionaire oligarchs, and the media toadies who dispense the Deep State approved propaganda to keep the ignorant masses dazed, confused, and endlessly distracted by Cecil the Lion, Bruce/Caitlyn Jenner, Ferguson, and blood coming out of whatever.
You won’t hear CNBC, Bloomberg, the Wall Street Journal or any corporate mainstream media outlet reference the fact retail sales growth is at the exact same levels as when recession hit in 2008 and 2001. Their job is to regurgitate the message of economic recovery and confidence in the future, despite overwhelming evidence to the contrary.
Retail sales are actually far worse than the 2.4% reported number. Excluding the subprime debt fueled auto sales, retail sales only grew by 1.3% in the last year. The automakers are practically giving vehicles away as their lots are stuffed with inventory. The length of auto loans and the average amount of auto loans are now at all-time highs. The percentage of subprime auto loans is surging to record levels, as defaults begin to rise. The percentage of vehicles being leased is also at an all-time high. To call these “auto sales” strains credibility. These people are either perpetually renting their vehicles or just driving them until the repo man shows up.
The relatively strong year over year furniture sales is also driven by the fact that you can finance the purchase at 0% interest for seven years. All is well for the Ally Financial, GE Capital and the myriad of fly by night subprime lenders until the recession arrives, unemployment soars, and defaults skyrocket. Then their bloated debt ridden balance sheets will explode in an avalanche of defaults. That’s when they insist on another taxpayer bailout to “save the financial system”.
The year over year crash in oil prices was supposed to result in a huge spending splurge by the masses, according to the media talking heads. You don’t hear much about that storyline anymore. The talking heads are now worried that oil prices are too low. I guess the tens of thousands of layoffs in the oil industry and the obliteration of the Wall Street financed shale oil fraud storyline is offsetting the $10 per week in gasoline savings for the average driver.
At least restaurant and bar sales remain strong. It seems Americans have decided to eat, drink and be merry, for tomorrow they die. I do believe there is some truth to that saying in today’s world. I think people are drowning their sorrows by drinking and eating. They’ve drastically reduced buying stuff they don’t need with money they don’t have. Spending their gas savings at a restaurant or bar is still doable.
With real median household income at 1989 levels, real unemployment north of 15%, a massive level of under-employment, young people unable to buy a home – saddled with $1 trillion of student loan debt, middle aged parents struggling to take care of their aging parents and struggling children, and Boomers who never saved for their retirement, the mood of the country is decidedly dark and getting darker by the day. The rise of Trump and Sanders in the polls is an indication of this dissatisfaction with the existing social order.
The part of the retail report flashing red is the sales of General Merchandise stores, and particularly department stores. This category includes the likes of Wal-Mart, Target, Costco, Sears, Macy’s, Kohls, and JC Penney. General merchandise sales fell 0.5% in July, with Department store sales dropping by 0.8%. Sales at these behemoth retailers have barely budged in the last year, with overall sales up a dreadful 0.3%. The dying department stores have seen their sales plummet by 2.7%. The talk of a retail revival is dead on arrival. Wal-Mart and Target muddle on with lackluster results, while JC Penney and Sears continue their Bataan Death March towards the retail graveyard.
The false narrative of economic recovery can be blown to smithereens by the historical data on the Census Bureau website. Their time series data goes back to 1992. GDP has supposedly risen by 22% since 2007. General merchandise sales were $48.4 billion in July 2007. They were $56.1 billion in July 2015. That’s a 15.9% increase in eight years. Even the manipulated and massaged BLS CPI figure has increased 14.5% over this same time frame. That means that REAL retail sales at the nation’s biggest retailers has been virtually flat for the last eight years. Does that happen during an economic recovery?
The department store data is almost beyond comprehension. July department store sales were the lowest in the history of the data series. Sales of $13.8 billion were 22% below the July 2007 level of $17.6 billion. They were 28% below the peak level of $19.2 billion in 1999. Real department store sales are 36.5% BELOW where they were in 2007, and Wall Street shysters have had buy ratings on these stocks the whole way down. These worthless hucksters remove the buy rating the day before these dinosaur department stores declare bankruptcy. Excluding the debt driven auto sales, real retail sales are flat with 2008 levels.
The data from the Census Bureau has been more than confirmed by the absolutely atrocious financial results reported by Macy’s, Kohls, Sears and J.C. Penney. Retailers do not report results this poor during economic recoveries. The results clearly point to an ongoing recession for the middle and lower classes who do the majority of working and spending in this country. The rich continue to spend their stock market winnings at exclusive boutiques and high end retailers like Nordstrom, but the average American is being sucked into the abyss by rising food prices, rent, home prices, tuition, and the Obamacare driven health insurance and medical costs. With declining real wages, they have less and less disposable income to spend buying cheap Chinese crap at their local mall department stores.
Here is a glimpse into the results of department store dinosaurs headed towards extinction:
Macy’s
- Overall sales fell 2.6%, while comparable store sales fell by 2.1%, as Macy’s continues to close under-performing stores. News flash: there are many more stores to close.
- Profits crashed by 25.7% as gross margins declined and expenses rose.
- Cash flow from operations has declined by a staggering 46% in the first six months of this year.
- The bozos running this sinking retailer have mind bogglingly burned through $787 million of cash, while adding $452 million in long term debt to buyback their own stock. Executive compensation is stock based, so wasting close to $1.6 billion in the last year as sales and profits fall, is considered prudent management by the CEO.
- Despite falling sales, the management of this sinking ship have increased inventory by $200 million in the last year. This bodes well for margins in the second half of the year.
- The long-term future for this retailer gets bleaker by the day as their long-term debt, pension liabilities, and other long term obligations total $10.4 billion, while their declining stockholder’s equity totals $4.8 billion.
- To show you how far Macy’s has come in the last nine years you just need to compare their results from the 2nd quarter of 2006 to today. They registered sales of $6.0 billion versus $6.1 billion today. On a real, inflation adjusted basis, their sales have fallen by 16% over the nine year period. They had profits of $317 million in 2006, 46% more than the $217 million in the 2nd quarter of 2015. They had $13.6 billion of equity and $8.2 billion of long-term debt.
- And now for the best part. Despite generating 46% less income than they did 9 years ago, Macy’s stock sits at $63 per share, while it traded at $36 per share in 2006. A company with declining revenue, declining profits and a bleak future should not be sporting a PE ratio of 16. When this recession really takes hold, their 2009 price level of $9 per share will be challenged on its way to Radio Shack land – $0 per share.
Kohl’s
- Overall sales were up a pathetic 0.6% after last year’s 2nd quarter sales were lower than 2013. Comp store sales were up only 0.1% after being down 1.3% the previous year.
- Profits fell precipitously by a mere 44% versus the prior year, down by $102 million. Margins fell while expenses rose.
- In the lemming like behavior of corporate CEOs across the land, this struggling retailer thought it was a brilliant idea to go $330 billion further into debt, while buying back $543 million of stock in the first six months.
- While sales are essentially flat, the executives of this company ratcheted up their inventory levels by 9% in the last year. Flat sales growth and surging inventory levels leads to plunging margins and profits. I guess that’s why I got a 30% off everything coupon in the mail last week.
- Cash from operations has crashed by 52% in the first six months. You would think prudent executives would be using a half a billion of cash to buy stock and boost their compensation packages.
- Another comparison to yesteryear provides some perspective on how well Kohl’s is performing. During the 2nd quarter of 2007 they generated $3.6 billion of sales and $269 million of profits. Their overall sales are up 19% (3% on a real basis) even though they have increased their store base by 38%. Profits in 2015 were 52% lower than 2007.
- Sales per store is 14% lower today than it was in 2007. And even more worrisome for their long term survival, inventory levels are up 59% compared to the 19% increase in sales.
- Again, the stock price peaked in 2007 at $76 and earlier this year reached a new all-time high of $79. Despite deteriorating financial conditions, poor management, plunging cash levels, and nothing on the horizon to portend a turnaround, the stock trades at a PE ratio of 13.
Sears
- Sears hasn’t reported their 2nd quarter results yet, but pre-announced that same store sales crashed by 10.6% versus last year. They are truly dead retailer walking, as Eddie Lampert’s real estate maneuvers attempt to hide the coming bankruptcy from unsuspecting investors is nothing but smoke and mirrors perpetuated by Eddie and his Wall Street shyster bankers. Excluding his desperate real estate schemes, they will lose another $300 million.
- In the last four years, during an economic recovery, Sears has seen their sales crater from $43 billion to $31 billion, and still falling. They have managed to lose $7.4 billion in just over four years and their stock still trades at $25 per share – proving there is a sucker born every minute.
- They continue to close hundreds of stores and still can’t stop the hemorrhaging. The decade of using financial gimmicks rather than investing in his stores is coming home to roost for Eddie “the next Warren Buffett” Lampert. Of course, he will arrange matters in a way where he wins, while the stockholders lose when the bankruptcy papers are filed.
- The balance sheet is a disaster. They have generated a Negative cash flow from operations of $1.4 billion in the last twelve months. They have burned through $556 million of cash. They have $8.4 billion of long-term debt and other liabilities, with equity of NEGATIVE $1.2 billion.
- Sears may be the worst run business in America, and its chances of going bankrupt are 100%, but the Wall Street hype machine has its stock price at $25 per share, 20% higher than it was in late 2008. For some perspective, Sears’ 2nd quarter 2008 revenues totaled $11.8 billion and they made a $65 million profit. Sales in the 2nd quarter of 2015 will be approximately $6 billion with a loss of at least $300 million. Of course their stock should be higher.
J.C. Penney
- I found it humorous to see the Wall Street hucksters and their mainstream media mouthpieces cheering on the J.C. Penney 2nd quarter results as “better than expected” and proof they have turned the corner. Their overall sales went up by 2.7% and comp store sales went up by 4.1%, as they continue to close stores. For some perspective on this tremendous sales gain to $2.9 billion, their sales in the 2nd quarter of 2009 were $3.9 billion. When your sales are still 26% below where they were six years ago, maybe you shouldn’t be crowing too much.
- It seems Wall Street and the MSM didn’t really want to focus on the only thing that matters – profits. They lost another $138 million and have racked up $305 million of losses so far this year. They have lost money for 13 consecutive quarters. That is no easy feat. They have managed to lose $3.6 billion in the last four and a half years, while driving their annual sales from $18 billion to $12 billion.
- Their balance sheet isn’t as horrific as Sears’, but it is nothing to write home about. They have $6.2 billion of long-term debt and other liabilities, supported by a mere $1.6 billion of equity. Back in 2011 they had $5.5 billion of equity to support $4.9 billion of long term liabilities. The deterioration of this once proud retailer is clear to anyone with two eyes and a brain. So that eliminates all CNBC pundits and guests.
- Wall Street pumped the stock 5% higher on Friday to celebrate their $138 million loss. A company that is on track to lose $500 million has seen its stock price rise 32% this year on hopes and dreams. Wall Street has had buy ratings on this stock from its peak of $82 per share in 2007 on its 90% downward path to its current price. I’m sure they’re right this time.
The truly disturbing revelation from the Census Bureau data and the terrible financial results being reported by some of the biggest retailers in the world is that it is occurring with unemployment at 5.3%, the economy in the sixth year of a recovery, and a Fed who has pumped $3 trillion into the banking system while still keeping interest rates at 0%. What happens when we roll back into the next official recession, unemployment soars, and consumers really stop spending?
What is revealed when you look under the hood of this economic recovery is that it is a complete and utter fraud. The recovery is nothing but smoke and mirrors, buoyed by subprime auto debt, really subprime student loan debt, corporate stock buybacks, and Fed financed bubbles in stocks, real estate, and bonds. The four retailers listed above are nothing but zombies, kept alive by the Fed’s ZIRP and QE, as they stumble towards their ultimate deaths. The coming recession will be the knife through their skulls, putting them out of their misery.
“Retail chains are a fundamentally implausible economic structure if there’s a viable alternative. You combine the fixed cost of real estate with inventory, and it puts every retailer in a highly leveraged position. Few can survive a decline of 20 to 30 percent in revenues. It just doesn’t make any sense for all this stuff to sit on shelves.”
Marc Andreessen
There is J.C. Penny, Kohls and Sears then there is Sak’s Fifth Ave, Nordstrom’s and Nieman Marcus I suppose. While I don’t buy Burberry, Louis Vuitton or Brioni brand stuff, it would be interesting to see how the high end apparel stores are doing.
While the old mall around here is dying, they put up a new one that feature Saks , Nordstrom’s and a Capital Grille steakhouse. Maserati has a local dealership nearby too. If I had trusted in Ben Bernanke
and the Fed I might have even bought one instead of a Mazda. Instead I asked my financial advisor to just get me 3% and I’ll sleep better at night but even 3% seems risky today.
I just buy gold and silver, put it in the safe, and will later have an unfortunate boating accident losing the precious metals.
Thanks Admin. Inflation plus population expansion are far in excess of sales growth. Be we iz in a recovery!
Stupid knows no bounds.
In my town there is a shopping center with J.C. Penney, Marshall’s, Kohl’s, Target, and Dress Barn. In a burst of confidence surely generated by too much drought-related sunshine, the new addition to the mall has just opened and we now also have Nordstrom Rack, T.J. Maxx, Ross, Old Navy, and Gap and Banana Republic outlet stores. I am interested to see how this will work out.
When was the “Summer of Recovery” ?? Five years ago? TBP is behind times. The government says everything is great but we still have work to do. Same line every month for the last 5 years.
These retailers are probably going the way of on-line purchasing. In the long run they need less staff, no middle man, and less bills to pay! Personally, I find it far easier to shop on-line!
Excellent analysis, as always, extra brilliant bits hidden in there this time as well-
“and blood coming out of whatever.” priceless.
Big problem with this kind of data is that the vast majority of Americans simply do not understand what it means (recall the failure of the 1/3 pound burger to unseat the McDonald’s 1/4 pounder because people thought the 4 was bigger than the 3 therefore the guys selling the 1/3 pounder were ripping you off?)
It’s like the periodic table to most people- percentages, earnings, profits, P/E- those are just confusing wordy things. NPR is the best example I can think of at dumbing down the economic news of the day by playing a snippet of either “We’re in the Money” or “Stormy Weather” before reading the DJIA for the day- and NPR listeners represent the intelligentsia of modern America compared to FOX or MSNBC viewers. It would be desperately sad if it weren’t kind of funny.
Let me give you my view from the sticks of New England. We moved right at the time of the ’08 collapse. I thought for sure that the implosion was unstoppable. Driving the last load of our stuff up here on the day the Dow dropped 777 points was exhilarating. At that time the area around us had several of the store types you mentioned a Sears, a massive Lowes under construction a quarter of a mile from the Home Depot, a Blockbuster, Staples, etc.
Fast forward 7 years and all of them are gone. The Sears even abandoned their delivery truck in the parking lot when they departed and it sits there to this day, tires flattened, graffiti on it, windshield caved in now, like something from a war torn area in Bosnia. The Blockbuster put a tarp over their sign instead of taking it down and now it’s shredded to hell and kids have stoned it until there are more holes than sign. Everywhere there are half to three quarters empty mini-malls, vacancy signs, abandoned retail stores with almost nothing replacing what has left. The only new commercial construction has been a couple of gas stations- this is an area of forty or fifty square miles from where we live. Our state has no real urban areas with the exception of the Capitol and a sister city that last saw an economic boom when they were turning out wool uniforms for the Army of the Potomac. The biggest changes we’ve witnessed are the following-
HUGE influx of non-assimilated refugee types from places like Bhutan, Senegal, Syria, Cambodia, all wearing their traditional garb as they slowly wander back and forth between government buildings and subsidized housing, their woman following a respectful thirty feet behind with their covered heads downcast. And lots and lots of brand new police cruisers that always seem to be rushing full speed with lights flashing to wherever these refugees dwell. Oh, and graffiti which when we first arrived was noticeably absent. There is also an explosion- if the news can be believed- of heroin deaths, and massive drug busts involving heroin.
The brand new Lowes that spent God knows how many millions to build a stone’s throw from the Home Depot went belly up in less than a year but has since been replaced with a Runnings Store which, like the other new retailer Tractor Supply, always seems to be busy and well stocked (both cater to homesteaders/gardeners/farmers/ranchers/do-it-your-selfers).
I have noticed that any service type business has shifted to a pay up front type policy with big signs on desks telling you that money is expected either at the conclusion of your visit or even upfront- the local vet is an example I noticed where you pay before they even treat your animal. Lots of aggressive style upselling with costly markup type items, increasingly poor service at restaurants by increasingly larger and more tattooed and pierced servers with surly attitudes and little or no training with the requisite hike in cost of 75-100% over five years ago.
Two anecdotes:
I needed white athletic socks- most of the ones I had left were either worn out or my oldest son took the best with him when he moved out. My wife brought home a pack when she went to the Capitol to pay taxes. I opened the pack and pulled out a sock to put on and had difficulty getting it on my foot. When I examined closely it turned out I was trying to pull on a pair rather than an individual sock. The thickness of the sock was so thin it seemed like one rather than two. The first pair developed holes at the toe within a month. Crap. Major manufacturer, same style and type as I have always worn, twice the cost of the last ones I bought.
A family we know lost their business and declared bankruptcy- lost their house, their vehicles, everything. Very sad story, really nice people, hard workers, etc. last week the husband bought a brand new Ford F-350 fully loaded with every type attachment and add-on. They just bought a house as well. Less than a year since bankruptcy. I have no idea how they were able to swing it, I’d never ask, but I can see what they have and it makes me wonder what kind of risks are being taken by banks right now and how that will play out as things decline.
I’m grateful that we no longer are in the buying stage of our lives and we’re able to feed ourselves, repair or make do, can trade for services and goods and are healthy enough not to require medical care because in virtually all of these areas the service and product are clearly inferior with the cost having in most cases doubled.
In conclusion, drug sales and spray paint up 5%! Government assistance to immigrant populations up 50%! Farm and garden type stores up 100%. Everything else either down or closed already.
Great retail analysis as usual Admin. It will be interesting to see how the back to school sales go this year, it used to be a very profitable sales period for us in the 1980’s at Jordan Marsh where I was a manager, fresh out of college. I love reading your detailed analysis because it shines a bright light in the rotting insides of this supposed recovery. We are so over retailed it amazes me how many of the companies stay in business as long as they do. As for me and my daughter we will continue to shop at Savers second hand store. Recently purchased a practically new pair of Johnston and Murphy dress shoes (sole barely scuffed) worth well over $100 for $15. She bought 6 sweaters last fall for under $30. Being cheap does not mean you cannot dress well.
Bob.
Between Walmart and the internet I don’t see the need for any of those stores.
I think I was in a Kmart within the last year, but I can’t remember the last time I was in any of those other stores.
Let me give you a view from another perspective. I live in a government town. Right beside an army post that houses an infantry division. We are BOOMING. Flush with Fed printed government funds. Our local governments get “impact funds” so every form of local government have built palaces for themselves so that they can “govern” us accordingly. New retailers are flocking here.
****** NEWS ALERT ******* for LLPOH **********
“Australia Orders More Foreign Homeowners to Sell”
http://www.wsj.com/articles/australia-orders-more-foreign-homeowners-to-sell-1439024595
QUINN’S CHEAP ASS DEPARTMENT STORE ………
……… because when all those Big Box fuckers disappear, SOMEONE can make a killing cuz people still need to buy shit.
Who better than James Quinn, ex-Ikea Executive extraordinaire, to swoop in?
Fuck ‘Murika coffee mugs, Shit Thrower clothing line, a special section for Village Idiots, Trufers Are Morans tee shirts …. … all paid for via the STM Credit Card
The internet changed people’s buying habits permanently. Rent must be cut, utilities also, and taxes and even gas cost and maybe people will come back.
Otherwise it will be a merry go round with land owners as one business after another closes down on them.
Good retail read Admin.,
Home Depot, Costco, Tractor Supply Co, Trader Joes, and the Internet round out my retail needs.
Even Tractor Supply is sending out 10% discount coupons, so would guess they are not setting the world on fire.
The big losers are China and the corptocracy……..why should we care? Let them sell all of that crap to the Chicom population where it is made, not my problem. Oh, that’s right they only make $5 per day.
The MSM cackles about the tremendous performance of Home Depot.
Some perspective is necessary.
Home Depot 2006 annual sales – $90.8 billion
Home Depot 2014 annual sales – $83.2 billion
Down 8.4% from eight years ago.
WINNING!!!!
Some perspective on Best Buy financial results:
Best Buy 2011 Sales – $49.7 billion
Best Buy 2011 Profit – $1.5 billion
Best Buy 2015 Sales – $40.3 billion
Best Buy 2015 Profit – $1.2 billion
As usual, thorough and educational analysis. Suggestion to Administrator and Burners: Keep the posts and responses as concise as possible.
Many communities are wondering what they will do with derelict malls. Locally, the former regional mall is now down to a Sears store and, I suppose, a few hoodrat shoe and apparel stores. I don’t go near the place anymore. The whole mall sold for $25 million 18 months ago when Macy’s was still there.
It occurs to me that with new 2000 student high schools costing $100 million or more school districts should consider buying derelict malls and converting them into community colleges or K-12 school complexes. They have the necessary square footage and parking, even food service and how hard would it be to convert a movie theaters into a lecture halls. They are centrally located with good road access and our local one even has a police substation located across the street!
I agree with the vast majority of this analysis. Stores are struggling. There are too many, they are all pretty interchangeable and quality of goods and service is low. The masses don’t have the income for the nice things they just had to have ten years ago. They can order through the internet and not deal with traffic, screaming children, inconsiderate and unsightly citizens and non-citizens alike. At this point I think most retail is in extend and pretend mode; the managers are just trying to milk the cow long enough to pad their resumes, squeeze their stock options, and deploy their golden parachutes. Retail isn’t about making profit anymore. It’s about grifting investors for as long as possible.
With regards to Americans eating and drinking their misery away, the eating part is true. Restaurants are packed. But the drinking thing is way down. I live in a tourist down and do some work in the nightlife industry. This is the summer that wasn’t. Most bars are empty during the week. On the weekend the bulk of patrons were either born in ’93 or ’94. Only the recently legal are coming out because the novelty has not worn off yet. The rest of the population is either broke or over it all. Probably both. They gasp at the thought of a $5 cover charge. Tipping is way down. Everyone wants a “special” or a freebie. They want to buy a 40 oz. at the bodega and bring it into a bar.
Yes, the restaurants are doing well, but this has much to do with the obesity epidemic and half the shows on cable being about extreme eating. If you look closely you will notice most ordering water with the meals to save money.
Americans have limited funds and they are using them accordingly. The old essentials were material goods, brand name clothing, a night out on the town. The new essentials are Netflix, Xbox, smartphone, and some sort of bacon entree.
“…and some sort of bacon entree.”
That there is laugh out loud funny, Tumbleweed!
I agree with every word you wrote and love how you topped it off with bacon!
I wonder how much of the downturn is due to general malaise. At some level, the middle class knows that life is changing dramatically and it will never go back to the way it was in 2005. Since worry about children’s futures, societal breakdown, and the iffy retirement benefits to come take up an inordinate amount of attention, the thought of recreating by shopping at the mall doesn’t seem so attractive. Better to belong to Amazon Prime and get same day delivery – or maybe two days’ – on many things you need. We’ve come full circle since Sears and Roebuck catalogues could provide everything a household required, including a kit for building the house.
The Boomers demographic is well into retirement now and thus is cutting spending. The Millenials are broke and/or not nearly as interested in buying cars and houses and furniture as their parents and grandparents. The majority of immigrants have yet to join the middle class.
It feels like spending money just isn’t as fun as it used to be, even if you have it to spend. Maybe it’s part of the darkening mood of the Fourth Turning.
Sorry, this is not a very balanced article. You didn’t bother to mention online retailers, like Amazon, for instance: sales #s (2010) 34.2B (2011) 48.08B (2012) 61.09B (2013) 74.45B (2014) 88.99B. You also didn’t mention the big box stores, like Walmart, Costco, Home Depot or Lowe’s. Another thing you didn’t bother to mention was that while under roof malls are dying (who the hell can afford to heat them and cool them), butnopen air “Town Centers” concept malls, and gentrified downtowns (like Denver, Co) have been kicking butt.
Rich
Not balanced my ass. The national retail numbers include ALL retail. It includes on-line. Read for comprehension.
The retailers I listed all have on-line sales in their figures.
Please list Amazon’s profits. Oh you can’t. They continue to lose money year after year. I guess that is success in your book.
Read my comment about Home Depot. Sales are 8.4% lower than they were 8 years ago.
Wal-Mart’s results have sucked for years. Do some research before spouting nonsense.
From time to time I wonder if Admin gets exhausted from predicting the doom of retail years in advance to no mainstream avail or credit. I predict when the illusion comes crashing down and the first time MSM shrills taut “Nobody could’ve seen this coming” he’ll have a heart attack, stroke, and brain aneurysm all at once.
[img]https://lh3.ggpht.com/JWbMvkP7Q-8MnwEzjb04mdeqIeA_QANL-ZAuGsKVJhMrKuU7Rj8JaURKkC-DUAi2CW0=w300[/img]
Zero Hedge has had this article at the top of their page all evening. It’s up to 72,000 reads so far.
At this point it’s not even a prediction. The actual results confirm a downward spiral.
Remember my never ending articles about Radio Shack. They are now in the retail graveyard.
Sears will be next. Then JC Penney.
Rich, are you residing in a mental institution? It’s ok I know people who can help. But, just don’t comment on current financial goings on. You sound like a retard.
Archie
Thanks for the generous donation. I’ll buy a cheesesteak from my favorite truck tomorrow.
M brotherhood in w h in key positions.IMO goal to collapse the country.Epa now dumping toxic waste in US water supply.I would never trust vaccinations
Admin- I think you should start writing about restaurants again. A little known tidbit of restaurants is their vending contracts are based on 18-month futures. A great way for them to benefit from inflation but I am predicting an all out collapse of all corporate restaurants based on slumping commodities and deflation. Considering nearly all use the same vending companies such as Sysco.
Stephanie
I’m unfamiliar with restaurant vending contracts. Wouldn’t they benefit from commodity deflation, as their input prices decline?
Steph, he had better not get tired of it. Jim is just reading the fundamentals, they used to call that sort of thing economics. Criminality has made the charade go on far longer than I thought possible. Jim is as correct about retail and commercial property, as merideth whitney is about municipal bonds. It’s onl a matter of time. y
The way vending contracts work (as told to me by a Denny’s owner I once worked for) is they buy contracts 18 months in advance for today’s food prices. This works great for them as long as inflation continues because they can inflate menu prices based off of food costs for 18 months ago. If food prices decline it will crash all of them.
I certainly see the subprime vehicle explosion here in Washington State.
The cook at the little Mexican fast-food place where I often dine drives a $40,000 pickup truck.
Perhaps he paid cash.
Ok admin, thanks. I’m jealous. It’s not really generous in SSS terms, but it’s the best I can do. The rest of the cheap bastards should pony up. Donate today you bastards. Admin has several hungry boys he has to feed and put through college. Put up some change you donkeys, you cheap bastards.
Admin brown bags it each day. He can hardly afford to eat a damn cheesesteak in south philly once a month. He can only afford the west philly kind, decent but not stellar. That’s bullshit. Pony up up you bolshevik bastards.
Admin works 60 hours a week at the university, 20 at home on the blog, and another 20 teaching his children. And another 20 writing articles. His free time is between 1 and 4 AM.
Donate the damn money you cheap bastards. You like this blog, the best of its kind? Fork over the cash, you Bolshevik bastards.
Llpoh exempted.
Stucky exempted.
T4C exempted.
SSS exempted.
HSF exempted.
But, The rest of us must pay. Do it now.
Quite the little cherry picker, aren’t you? You forgot to include this:
Lowe’s
“Sales for the first quarter increased 5.4 percent to $14.1 billion from $13.4 billion in the first quarter of 2014, and comparable sales for the quarter increased 5.2 percent. Comparable sales for the U.S. home improvement business increased 5.3 percent.
“I am pleased that we executed well and delivered another strong quarter,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “We generated comparable sales growth in all regions of the country and across all product categories, driving strong earnings per share growth. I would like to thank our employees for their dedication to serving customers.”
Delivering on its commitment to return excess cash to shareholders, the company repurchased $1.0 billion of stock under its share repurchase program and paid $222 million in dividends in the first quarter”
And this:
http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why-it-works/
Which proves that Amazon’s sales are booming, and the profits, that you either don’t (or refuse to) comprehend, are coming along nicely.
And this:
Walmart
“Delivering a solid financial performance I’m encouraged that Walmart’s fiscal 2015 revenue grew by more than $9 billion to nearly $486 billion and earnings per share were $4.99, a nearly 3 percent increase from the prior year. But, we have higher expectations. Our priority is to run great stores, clubs and e-commerce everywhere we operate to grow the business. Walmart U.S. delivered net sales of $288 billion, a more than 3 percent increase, and improved its sales and operating income trends each consecutive quarter during the year.”
Now who can’t comprehend shit?
Rich
Do some basic research and don’t read press releases, you moron.
Yes profits are overrated. They only determine whether you stay in business over the long run. Jeez, you’re a rocket scientist.
We have enough cut and past bullshit already. Try investigating the facts behind the numbers.
Go back to 2007 and see Lowes and Wal-Mart results to see how much progress they’ve made in the last 8 years.
I really should require an IQ test to weed out the intellectually inept like Richie boy.
Nice job Richie rich boy. Can you please tell us from which mental institute you are spewing this bullshit? I have an uncle who can help you.
Rich, when you have 137,000 reads and counting over on ZH, let us know. Just a day that ends in a Y for jim quinn. Knowhatimean?
Rich
You quote the CEO of Lowe’s as proof that Lowe’s is doing great? What could be wrong with that? LOL
“Delivering on its commitment to return excess cash to shareholders, the company repurchased $1.0 billion of stock …” ———— CEO’s statement
What a crock of shit!! Buyback is a company moving cash from its left pocket to its right pocket. It reduces the firms’ investments or increases its borrowing … both of which reduce future earnings. So, it is of no real value to shareholders. However, it does increase diluted earnings per share …. giving the ILLUSION of earnings growth and that the company has met analysts’ earnings forecasts … i.e., a well run company.
It’s all BULLSHIT and a fools game. The cash managers are using to buy back shares could have been put to much better use. One should probably RUN from companies who do this crap.
Amazing what one can learn in 10 minutes on investopedia.com.
Richie Boy
Now listen closely. I’m going to teach you something. It requires math skills, so you might seek the help of a 3rd grader to explain it to you.
Lowes sales in 2007 – $46.9 billion
Lowes number of stores in 2007 – 1,385
Lowes Sales per store in 2007 – $33.8 million
Lowes sales in 2015 – $56.2 billion
Lowes number of stores in 2015 – 1,840
Lowes sales per store in 2015 – $30.5 million
Now the math. Lowes stores are selling for 10% LESS than they were in 2007.
More math. Inflation is up 14% since 2007. Therefore, Lowes REAL sales per store is down 24% since 2007.
I know that probably hurt your pea brain, so make sure you think before responding. I look forward to kicking you in the balls again.
Apparently, my idea regarding QUINN’S CHEAP ASS DEPARTMENT STORE is not being supported by the majority of TBP readers.
Cheap bastards.
Hahahahaha! I knew Rich was gonna get kicked in the nads.
Archie – I appreciate the mention. But I am gonna keep donating now and then. Everyone should.
Any place that puts up with my horseshit is worth the price of admission. That Admin keeps doing this is an act worthy of sainthood.
Thank you, Admin, from the bottom of my tiny little black heart. You are the man.
I haven’t been to a Kohl’s since an idiot cashier couldn’t figure out how to apply my $10 off coupon to a purchase, told me it was only ten bucks and made me so mad I went home and wrote such a scathing email that I got a phone call from Kohl’s HQ by that afternoon and told them I would never shop in their dive store again. It became a joke around my office when someone wore something I complimented and they told me it came from Kohl’s “but YOU can’t buy it!!!”
My son is finishing up an internship as a professional engineering intern here in the beltway and that required a professional wardrobe. The only items I purchase new were socks and underwear. My husband took him to Payless for shoes. Haha.
I scoured the thrift shops for new and almost new business casual slacks, khakis, shirts, polo shirts, etc. and he now has an awesome wardrobe. Many of the items I bought for $2 and $3 had tags on them from Sears, JCP and Kohls stores that were closing down and selling merchandise to thriftshop vendors en masse. Works for me and what my son doesn’t know has served us well. He got the same toy for three years straight until he remembered it at age three and said “Oh, good, I lost the one I got last year.”
They paved the neighborhoods and little apartments and parks across from Tinker AFB in Oklahoma City to build a giant strip mall a few years ago. And then, the Air Force Base CLOSED the gate that fed that strip mall where all the restaurants were built, hoping to become the go to place for military lunches. LOL The place was packed initially, but before we left, there were lots of empty parking spaces almost always. I only went to the Kohls ONE TIME.
Admin, you really need to see someone about that NPD problem. How can Lowe’s same store sales not be down when they are flooding the market with more Lowe’s stores every 30 miles or so? Their aggregate sales are up, and, consequently, people are spending more money at Lowe’s today, than they did yesterday. Gotta love that BH&G channel and all those traveling house flipping “seminars”, coming to a town near you soon.
“Rocket scientist”, “pea brain”, “moron”; damn, if you had an original thought in your head, it would be lonely. Still, I am impressed with the group of confirmation biased “ditto-heads” you’ve got following this blog. They’ll probably never figure out that you prey upon the obvious. But who am I to knock it? After all, look at all the success Trump is having doing the same thing, on a much larger scale. He, of course, is far more entertaining. So tell me, Admin, what percentage of your followers do you think is intelligent vs broke-dick/ pissed-off?
Since you refuse to notice, I’ll explain what’s happening to you (indulging in a little prey upon the obvious, myself). What we are witnessing is Business Darwinism. Instead of shopping for higher mark-up crap, in sticks and bricks malls, the hoi polloi now spends borrowed money online at Amazon, Ebay, etc, on $40,000 trucks (using subprime loans), on student loans, on Apple and Droid cell phones and minutes, on streaming, and on eating out, drinking out (and, in Colorado, on zoning out). Those without money spend their EBT cards at any Walmart they can reach by bus.
America worships at the Church of I-Am-What-I-Have. This is a country in which people spend money they don’t have, on shit they don’t need, to impress other people they don’t like. America is not the same country it was when those shopping malls were built in the 1960s. The credit card has long since taken the place of lay-away financing. Well paying blue collar jobs are all but extinct, and our young choose to live in cyberspace. It’s called devolution. Acknowledge it and get used to it, because it ain’t gonna get any better.
Rich
I know you are desperately attempting to not look like an idiot by spewing as much gibberish as possible, but I’ll obliterate your latest bullshit about Lowes with some more facts.
Lowes has virtually stopped building new stores because they were cannibalizing the shit out of themselves and reducing profitability. Back in 2007 they were opening 150 new stores per year. They opened 8 last year. They’ve only opened 91 stores in the last 5 years.
They’ve stopped expansion because profit margins have declined.
Lowes Profits as a % of Sales in 2007 – 6.62%
Lowes Profits as a % of Sales in 2015 – 4.8%
More math – That’s a 27.5% reduction in profit per sale.
Here’s some more facts that will blow your little mind:
Average ticket 2007 – $68.98
Average ticket 2015 – $65.61
So their average transaction is DOWN 5% in 8 years. In case you don’t understand inflation, their REAL average transaction is DOWN 19% in 8 years.
Some more data Richie:
Sales per square foot 2007 – $300
Sales per square foot 2015 – $280
Down 7% and Down 21% on an inflation adjusted basis.
I’m sure you understand balance sheets, since you are a retail guru. How about these facts:
2007 Long-term Debt – $4.4 billion
2007 Equity – $15.7 billion
2007 Debt to Equity Ratio – 22%
2015 Long-term Debt – $11.4 billion
2015 Equity – $10.0 billion
2015 Debt to Equity Ratio – 53%
Their balance sheet continues to deteriorate as they borrow money to buyback stock. If the retail business is so good, why would they be using their money to buy billions of their own stock and only build 8 new stores?
I know this question is too hard for your pea brain to comprehend. I look forward to your six paragraph gibberish answer attempting to look like like you know anything about retail.
As the Zero Hedgers say, when the Muppets don’t have jobs, they can’t shop. Besides, the average
American has a closet full of clothes, shoes, etc. Ever see the never (seemingly) expanding self
storage places? We already have lots of “stuff”. What we need are quality jobs. But TPTB are sending them all hither and yon via trade treaties. Unless you make things (like the USA used to), you can not have vibrant economy. We have too many slackers, government workers, and financial types, and not enough producers. One day it will all come crashing down and we’ve let the politicians lie to us and yet they still get reelected by hook or by crook (or is that crooked).
“My son is finishing up an internship as a professional engineering intern here in the beltway and that required a professional wardrobe” ——- Maggie
Please tell us how his first day at work went.
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“The Lowe’s store, located about a quarter mile from its main competitor, Home Depot, opened in May 2010 after spending multiple years and millions of dollars cleaning up contamination on the property. Lowe’s closed the store in November 2011, citing a weak economy that did not recover as expected from the recession. ”
“The company closed one location nationwide in 2009, three in 2010 and, before Sunday’s closings, had closed seven so far in 2011.”
SEE!!! SEE!!! THE ECONOMY IS GETTING BETTER!!! WE’RE CLOSING MORE STORES THAN EVER!!! MORE IS BETTER, RIGHT?!!!
– See more at: http://www.unionleader.com/article/20111017/NEWS02/710179959&template=mobileart#sthash.bWuAex5S.dpuf
That’s the quote from the Lowes I mentioned above.
1. Build a multi-million dollar store 1/4 mile from your competitor.
2. Give it some time to develop a customer base, like 18 months, then fire everyone and sell what’s left for next to nothing.
3. Sell it for 1/8th of the cost to build it.
4. Cite “an economy that did not recover from the last recession” as the reason for closing despite the fact that your corporate brags that its getting better.
5. Repeat.
How can that not be a good business model?
Admenstruater
You ferget Dollar General:
1950: 5 million in sales
2002: 6 billion
2014: 17 billion
Me n Billy git our cigarrettes, frozen pizzas and canned dog food Billy Jr’s sloppy joes there. There ain’t as concerned as walmart about people with shit in their britches neither. I just love the place ter death.
With unofficial employment at 23% and 50M people lining up at food banks, how in the hell can anyone call this a recovery?
Confirmed global depression is more like it. Don’t tell the American public, they might demand action. Too bad the only thing their government does well is wage war. Hey, wait a minute…
Admin – those debt to equity percentages look out. Your point is accurate, but the percents are off, seems to me.
28% and 114% by my calcs.
llpoh
Isn’t it debt/(debt + equity)?
Not sure how his first day went, but I’ll let you know how his last day goes… Have been invited to the going away happy hour event at the local hangout. He has been asked to remain “temp on call” since some of his database work has been so helpful they feel they may want additional input from him over the coming months.
I really am very proud of my son. And except for the snake, he would look good in that getup.
In spite of my story being self-serving (bragging on my son), it was meant to show that most of the big retailers are dumping their merchandise to thrift stores, where people like myself who are savvy enough to realize it can buy their “quality” dry goods for pennies on the dollar.
I have an acquaintance whose job is simply to call and schedule pickups of truckloads of items being purchased from final day going out of business sales or flea market types of events that are ending. I was really shocked to learn that was a “full time job” not only for her but for a whole office full of people like her. She said they get bonuses if they can get pickups after church bazaars because there are usually some high quality items donated to those events that sell well to vendors.
Just think about that… someone knows that the U.S. retailers are in so much hot water that they set up a business to buy their merchandise when they are going out of business and then sell it to thrift stores. And, they can make enough of a profit to pay people to find going out of business sales, flea markets and other types of garage type sales where cheap items might be had by the truckload cheap.
But our economy is booming.