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…)

Each week, we provide a PDF of 5 articles of interest to investors focus on the retail/consumer space. Enjoy.

Executive Changes Stir Retail Industry Click to Open PDF
We chuckle when in this article that “Old Navy was making some turnaround progress.” What progress was being seen here?

Also, one un-named retail CEO suggests that “retailing is a very difficult business.” The reality is that retail is a fairly simple business. There is so much data to mine, yet so few retail CEO’s actually spend the requisite amount of time to adequately study the metrics and test strategic initiatives.

Finally, the industry’s “growth at all cost” mentality inherently makes the job more “difficult” than it should be.
Posted: Tuesday, February 21, 2012
Source: WWD

Chico’s Plots Store Expansion Click to Open PDF
An analyst in this article seems to believe in the company’s desire to open stores in smaller markets. The reality is that most retailers have determined that the web is a more capital efficient way to serve these customers.
Posted: Wednesday, February 22, 2012
Source: WWD

The Lampert Letter, 2012 Edition Click to Open PDF
Mr. Lampert fails to recognize here that many other Chapter 11 candidates had similar ‘sources’ of liquidity only to fall victim to the darker perceptions of the vendor community.

Also, Mr. Lampert is touting the wonders of a loyalty program. That’s so 1990’s.
Posted: Thursday, February 23, 2012
Source: WWD

Kohl’s Net Falls 7.9% As Weak Holiday Pushes Sales Down Click to Open PDF
The authors of this article got lazy. They failed to recognize that the ‘news’ from the company’s conference call was the company’s decision to consciously give up GPM% in FY 2012 in order to drive traffic.

The KSS GPM% “white flag” was a “shot across the bow” of the broader retail apparel industry. Previously, we (not many others) expected retailers to return product sourcing savings in 2H 2012 to customers in the form of lower pricing as competitive pressures continued unabated (save for a macroeconomic rebound). But, this morning’s announcement by KSS suggests that retailers will be forced to lower prices AHEAD of the average unit cost savings that were expected to be realized by retailers beginning in mid-2012.

As KSS begins to more aggressively compete on price, look for peers to follow suit. Q1 2012 has a natural weather boost, especially in April. But, we believe that FY 2012 is shaping up to be an ugly year for apparel as the price war has only begun.
Posted: Thursday, February 23, 2012
Source: WSJ

Cotton Falls Despite Expected Crop Reduction Click to Open PDF
Cotton is sitting today in the $0.87 to $0.89 range (per pound). It’s hard to believe that the crop hit a record high of $2.27 just about a year ago in March 2011.
Posted: Thursday, February 23, 2012
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…)

Each week, we provide a PDF of 5 articles of interest to investors focus on the retail/consumer space. Enjoy.

Whole Foods Aims to Alter ‘Price Perception’ as It Expands Click to Open PDF
This is a novel concept that many other retailers should take notice of… a smaller size store in a smaller market. Most retailers take a “cookie cutter” approach to their real estate and should instead focus on different merchandising strategies for different venues. Largely, the optimal sizing of stores is the most over-looked opportunity in chain retail today.
Posted: Tuesday, February 14, 2012
Source: WSJ

McDonald’s Asks Farmers for a Kinder McRib Click to Open PDF
Not only is CMG the strongest performer in the restaurant space today, but they’re badgering MCD to advocate for animal welfare.
Posted: Tuesday, February 14, 2012
Source: WSJ

Green Mountain to Add Higher-End Coffee Machine Click to Open PDF
Look for the Vue coming to a store near you at a $250 price point. Interstingly, CBTL (Coffee Bean & Tea Leaf) has what may be a similar machine priced at $180. At what point will the addition of in-home brewers and cappuccino makers hurt SBUX?
Posted: Wednesday, February 15, 2012
Source: WSJ

VF’s North Face Stays Hot in Warm Winter Click to Open PDF
North Face continues to outperform… despite the warm weather that many thought would finally slow down the brand (at least temporarily). VFC’s CEO addressed this issue at the outset of this quarter’s earnings conference call.
Posted: Thursday, February 16, 2012
Source: WWD

World’s New Rich Fuel Luxury Boom Click to Open PDF
It’s become vogue for investors/analysts to view the high-end as “immune” to macroeconomic woes. But, let’s be real about what has transpired over the past few years. Luxury suffered a larger sales hit in calendar 2008/2009 than more moderate price points. In addition, luxury product is largely differentiated product, unavailable elsewhere. This contrasts sharply is the mid-level price point spectrum where largely undifferentiated product is in a constant never ending battle for market share.
Posted: Thursday, February 16, 2012
Source: WSJ

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 +4.3% year-over-year sales improvement in January 2012 versus LY. This represents a deceleration versus the +4.6% growth rate in December 2011.

The most compelling category specific storylines in January 2012 were:

January 2012 represented the 27th consecutive month of positive year-over-year growth for our favorite mall measuring stick. But, year-over-year growth again decelerated versus the prior month.

Driving the year-over-year growth deceleration in January 2012 versus December 2011 were the following categories: Clothing & Clothing Accessory Stores, Health & Personal Care Stores, Motor Vehicles & Parts Dealers, and Non-Store Retailers. All other categories reported an acceleration of year-over-year sales growth in January 2012 versus December 2011.

The headline this month was the dramatic decline in year-over-year sales growth by Non-Store Retailers. The category saw its year-over-year growth rate plummet to +4.9% in January 2012 versus +10.1% in December 2011 and +13.0% in November 2011.

Furniture & Home Furnishing Stores again reported impressive year-over-year growth in January 2012 (+7.8% in January 2012 follows +7.0% in December 2011).

That said, the category remains the worst performing category versus calendar 2008 (-13.1% in January 2012 versus January 2008).

Over the same 4-year timeframe, other struggling categories such as Motor Vehicles & Parts Dealers are down -3.4% and Electronics & Appliance Stores are down -11.9%.

Sure, Food Service & Drinking Places likely benefitted from favorable weather in January 2012 versus LY. But, the category’s January 2012 growth rate of +8.2% versus LY in the month was the category’s strongest growth rate since December 2006. Impressive.

Monthly “Big Picture – what’s happening at the mall” year-over-year results for the trailing 6 months:

August 2011 September 2011 October 2011 November 2011 December 2011 January 2012

+5.9% (+10.9% 2-year) +6.0% (+11.1% 2-year) +6.0% (+11.3% 2-year) +5.2% (+11.3% 2-year) +4.6% (+10.0% 2-year) +4.3% (+10.1% 2-year)