The Retail Abattoir -- Blood on the Selling Floor

Yikes.

I figured same-store sales were going to be bad, but this is pretty gruesome.

Target - down 10.4%. Macy's - down 13.3%. Nordstrom - down 15.9%. Kohl's - down 17.5%. Ab & Fitch - down 28%. American Eagle - down 11%.



Unless my memory is faulty, last year wasn't exactly a blow-the-doors-off, we're-in-the-money month to remember for retail. So, this is a really dreadful performance relative to a year-ago number that wasn't all that unbeatable.

Wal-Mart was up pretty good (3.4%), and BJ's was pretty strong as well. I suspect other off-price retailers like Dollar Tree will show some growth as well.

Does any of this surprise me? I guess not ... but I have to confess that saying aloud "oh yeah, retail is going to get hammered" is one thing, but seeing high-teens declines in SSS does give one a moment of pause.


At the bottom line, people HAVE to save more, consume less, and improve their personal balance sheets. Unfortunately, the U.S. economic is a retail consumption-driven economy; exports or corporate cap-ex investment can keep things afloat for a few quarters, but they don't drive the ship.

So here's the paradox -- people need to rebuild their balance sheets, but if consumption tails off too much companies will start firing more workers. Those fired workers will, in turn, spend even less than they would if they were just cutting back.

There's some (small) hope that that small cadre of American savers will come out of their bunkers and take advantage of the opportunity inherent in desparate retailers. I know that I've already spent more this holiday season than in the past five years combined; I needed to replace some higher-ticket items and I saw some unbeatable bargains for things I could use (but maybe didn't strictly "need").

But here's the rub -- if people like me are coming into your store, you've got a big problem ... because I'm cheap and I'm only buying your stuff when you're willing to take a de minimus margin on it. And I'm willing to bet that most of my fellow penny-pinchers and Herculean savers are the same way; if we're buying, it's likely at your loss.

So what do we do? I think free marketeers and Libertarians are going to just have to swallow hard and accept some good ole fashioned Keynesian fiscal stimulus. What's more, the American public is going to have to accept the reality that stimulus today means taxes tomorrow.

I know, I know ... fat chance of people realizing that. The majority of voters want to be lied to -- they want to be told that they can eat the whole cake in one sitting, never exercise, and yet wind up slim, trim, and damn-near immortal.

Consequences? Responsibility? Maturity? Feh! That's un-American danggit, and after all ... ME WANTEE!!!

In the meantime, them GNMA bonds are looking better and better...