TV Prices Fall, Squeezing Most Makers and Sellers Click to Open PDF
A huge increase in manufacturing capacity led to an oversupply and continued downward pressure on prices from low-cost manufacturers and online retailers. That said, what’s interesting is that the future of televisions appears to be more about “what content” they can provide than “new hardware” features like flat screens or 3-D technology.
Posted: Monday, December 26, 2011
Source: New York Times

Fiber Prices Stabilize After Wild Ride in 2011 Click to Open PDF
Cotton prices reached an historic high of $2.12 per pound in March 2011. Today, cotton has declined to $0.86. That said, cotton is still above its $0.65 average over the previous norm.

Wool prices continues its upward path. Wool is higher +25% over the past year and is expected to continue to climb.
Posted: Tuesday, December 27, 2011
Source: WWD

Mexico Eyes Antipiracy Deal with China Click to Open PDF
If you can’t get your government to crack down on counterfeit goods from China, it’s better to work directly with the Chinese. Estimates suggest that 60% of apparel products purchased in Mexico are counterfeit. Wow!
Posted: Tuesday, December 27, 2011
Source: WWD

Holiday Sales Woes Cast Cloud Over Sears Click to Open PDF
Gosh, we still remember the days (Spring 2007) when SHLD traded above $190 because a bunch of folks thought Eddie Lampert was the smartest investor since Warren Buffett. Just amazing. Now, you have a former tech guy running the show at SHLD who, despite today’s dire news, touts his grocery biz at Kmart and online sales. Note to Lou D’Ambrosio… EVERYONE is having success with groceries (inflation) and the web (free shipping and increased advertising spend).

The fact that he refers to two areas of his business that are having tremendous success elsewhere shows investors how clueless he is.
Posted: Wednesday, December 28, 2011
Source: WSJ

Late Sales Surge Lifts Season Click to Open PDF
ICSC and Goldman Sachs estimate that comp sales increased +4.5% in the week ended December 24th. The problem is that nowhere is it mentioned that the fiscal week benefited from an extra day (the fiscal week that ICSC is comparing to ended on Christmas Day last year).

While Shopper Trak does explicitly mention the calendar boost, they seem to want to emphasize a “more ferocious appetite for last-minute purchases.” How they come up with that thesis is beyond us. The fact is that comp sales in December 2011 were greatly boosted by an optimal calendar this year versus last year.
Posted: Wednesday, December 28, 2011
Source: WWD

A CEO’s Demand: Fix Immigration Click to Open PDF
Here’s our advice for Mr. Moran… pay your employees more and you’ll find a larger pool of potential employees. Does he believe that it’s the job of Congress to ensure he has a steady supply of minimum wage employees?

The company loves to talk about their industry-leading profit margins. Therefore, CMG has the ability to stomach a higher average wage rate that will give the company access to many more potential employees.
Posted: Monday, December 19, 2011
Source: WSJ

Misses’ Chains Under Siege Click to Open PDF
In our view, department stores gave up on this customer… until 3-5 years ago. They’ve since fought back and have aggressively reclaimed market share.

That said, the clueless CEO’s at CWTR and TLB have exacerbated their problems with many strategic missteps
Posted: Tuesday, December 20, 2011
Source: WWD

Best Buy Shoppers Find Black Friday Deals Unreliable Click to Open PDF
Simply, CEO Brian Dunn should be fired. ASAP. This may be the straw that breaks the camel’s back. This may be his NFLX moment.
Posted: Tuesday, December 20, 2011
Source: TheStreet.com

Former CEOs Criticize Avon Click to Open PDF
This is hilarious. The reporters get a copy of a letter ex-CEO James Preston wrote the Avon’s Board of Directors that was critical of Ms. Jung and suggesting that she step aside. Yet, when the reporters confronted Mr. Preston, he backtracked and suggested that she has “done some wonderful things for Avon.”
Posted: Thursday, December 22, 2011
Source: WSJ

Retailers Try to Thwart Price Apps Click to Open PDF
This is the reason merchandise margins will continue the downward slide that began with commodity cost pressures earlier in the year.
Posted: Friday, December 23, 2011
Source: WSJ

Let’s be honest. Management teams are always putting their best foot forward. Press releases and conference calls are filled with Truthiness.

Each week, we’ll challenge “managerial spin” and offer some news and commentary about the retail industry. You are encouraged to provide any feedback to info@RetailGeeks.com.

Click to Open PDF (more…)

Study Reveals Dip in Thanksgiving Weekend Sales Click to Open PDF
Got inflation! Apparel prices at retail were up +4.8% in November 2011 versus LY.
Posted: Tuesday, December 13, 2011
Source: WWD

U.S. Shoppers Foot Bill for Soaring Pay in China Click to Open PDF
Yes, commodity prices have retreated. But, labor costs are still rising in China. Labor intensive products (e.g. shoes, furniture) continue to be the hardest hit. China’s Ministry of Human Resources and Social Security suggests that annual minimum wage increases of +22% had been instituted by October 2011. Check out the dire commentary from the CEO’s at Michael’s and Hooker Furniture.
Posted: Thursday, December 15, 2011
Source: WSJ

Michael Kors Prices IPO Click to Open PDF
Comp store sales of +42% in the 6 months ended October 1st. Wow! In addition, the company has experienced comp store sales growth in every quarter in the last 5 years.
Posted: Thursday, December 15, 2011
Source: WSJ

U.K. Retail Sales Dip Click to Open PDF
Unlike the Black Friday buzz here in the U.S., the Christmas shopping period has started slowly in the U.K. as unemployment hits a 17-year high.
Posted: Thursday, December 15, 2011
Source: WSJ

Retail Apparel Prices Rise in November Click to Open PDF
Got inflation! Apparel prices at retail were up +4.8% in November 2011 versus LY
Posted: Friday, December 16, 2011
Source: WWD

Reminder: We like to look at the Commerce Department data on a comp basis (year-over-year change). Hey, it’s government data, so caveat emptor. See Full Report Here

Big picture, our favorite measure of “what’s happening at the mall” (excludes Motor Vehicles, Gasoline, and Building Materials) suggests a +5.5 year-over-year sales improvement in November 2011 versus LY. This represents a sharp decelecration versus the +6.2% growth in October 2011.

The most compelling category specific storylines in November 2011 were:

November 2011 represented the 25th consecutive month of positive year-over-year gorwth for our favoirte mall measuring stick. 2- year growth rates are still accelerating.

Electronics & Appliance Stores reported strong +6.4% year-over-year growth in November 2011 versus LY. This follows a +3.3% improvement in October 2011.

Furniture & Home Furnishing Stores again reported impressive year-over-year growth in November 2011 (+4.4% in November 2011 follows +4.0% in October 2011). That said, the category remains the worst performing category versus calendar 2007 (-17.0% in November 2011 versus November 2007).

Over the same 4-year timeframe, other struggling categories such as Motor Vehicles & Parts Dealers are down -6.8% and Electronics & Appliance Stores are down -8.2%.

Most categories have reported weaker year-over-year sales growth thus far in calendar Q4 (Oct – Nov) than calendar Q3 (Jul – Sep).

Conversely, the following categories have generated a higher year-over-year growth rate thus far in calendar Q4 (Oct/Nov) versus calendar Q3 (Jul – Sep): Electronics & Appliance Stores, Furniture & Home Furnishing Stores, Sporting Goods, Hobby, Book & Music Stores, Food Service & Drinking Places, and Non-Store Retailers.

Monthly “Big Picture – what’s happening at the mall” year-over-year results for the trailing 12 months:

December 2010 January 2011 February 2011 March 2011 April 2011 May 2011 June 2011 July 2011 August 2011 September 2011 October 2011 November 2011

+4.9% (+7.7% 2-year) +5.2% (+7.5% 2-year) +5.2% (+8.5% 2-year) +5.3% (+10.4% 2-year) +6.0% (+10.5% 2-year) +6.2% (+10.3% 2-year) +6.0% (+10.7% 2-year) +6.6% (+11.1% 2-year) +5.9% (+10.9% 2-year) +5.8% (+10.9% 2-year) +6.0% (+11.3% 2-year) +5.5% (+11.7% 2-year)