It doesn’t look good. Funny how the analysts were roosters crowing about Black Friday sales being up 3% over last year. They’re like PT Barnum.
“The American consumer is a train wreck,” said Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consultancy. “We don’t know when it is going to get good but I think the worst is yet to come. The results are terrible and will continue to be terrible.” http://www.guardian.co.uk/business/2008/dec/04/useconomy-walmart
The article goes on to say that during November Macy’s, Abercrombie & Fitch and GAP reported sales declines of more than 10%. Just for sh and giggles I ran some numbers. Last year Macy’s sales declined from the previous year (2006) by 2.4%. Macy’s net income declined by 10.3%. If Macy’s sales over the next 12 months fall by 10% its net income could fall by 40%.
What’s bad for retail is bad for America. “Consumer spending is the primary engine of the economy, accounting for more than two-thirds of gross domestic product. If those pistons start to slow, the system is likely to sputter to a halt.” http://www.iht.com/articles/2008/05/02/business/02econ.php
If you work at one of these places you may want to start looking for a new job. “At Target, sales at stores open at least a year, a critical measure of retail health, tumbled 10.4 percent, in contrast to a 10.8 percent increase a year ago. Sales at Kohl’s sank 17.5 percent compared with a 10.2 percent increase last year. Children’s Place, which had a 4 percent sales increase in October, was down 7 percent.” http://www.mercurynews.com/business/ci_11138933?nclick_check=1
“Speaking before the Joint Economic Committee Friday, Bureau of Labor Statistics Commissioner Keith Hall gave testimony on Friday’s jobs number.The text of his prepared remarks also showed that retail trade employment fell by 91,000 in November…” http://www.rttnews.com/Content/AllEconomicNews.aspx?Id=794968
How many more retail jobs will be lost after the New Year?
“Macy’s, Gap, Target, Nordstroms and Kohl’s all reported feeling the pinch, and one source expects almost 6,000 store closings this year. Consumer expert Jay Seaton said some of your favorite stores may not be around this time next month.” http://www.msnbc.msn.com/id/27795751/
And the closings will increase next year. ““The economic meltdown that’s affecting the overall economy is certainly going to challenge retail,” said Steve Lieberman, CEO of the retail real estate firm the Retail Connection. “It’s likely that we will see a greater number of store closings. Supply is exceeding demand, and vacancy will clearly increase.” http://www.bizjournals.com/dallas/stories/2008/12/08/story9.html
And as the stores and malls close leaving vacant, empty shells behind both sales and property tax revenues fall. “Activities in west Mesa offer some cases in point. The shell of a former Walmart sits 2 miles from a Kmart that will close in January. A Mervyn’s and Circuit City will soon depart the area. Such losses this year contributed to Mesa’s $62 million budget shortfall. The city announced 315 layoffs last month.” http://www.azcentral.com/arizonarepublic/news/articles/2008/12/02/20081202retailloss1129.html
“We’re probably in the first inning of the commercial mortgage problem,” said Scott Tross, a real estate lawyer with Herrick Feinstein in New Jersey. That’s bad news for more than just property owners. When businesses go dark, employees lose jobs. Towns lose tax revenue. School budgets and social services feel the pinch.”http://www.cbsnews.com/stories/2008/11/28/business/main4637008.shtml
Teachers, cops, firefighters, clerks and managers get laid off. Think you hate going to the DMV now? Maybe they don’t plow and sand as well or pick up the trash as often. Maybe they cancel school sports or the glee club.
Try to work this information into your view of the evolving world.
Check out the beautiful stand of gray birch (?) in the background.