NRF: Strong November Retail Sales Surpass Expectations
Submitted by
CalculatedRisk on Tue, 12/13/2005 - 8:06am (7 comments)
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Well, clearly someone is in denial here -- it's either the American consumer who's shop... shop... shopping by taking on an increasing amount of debt, or it's ME thinking that the party just can't go on.
Maybe the party CAN go on forever, and I should just give in and go buy that plasma TV.
How far below 0 can the household saving rate plundge ?
When does it start to rise ?
Maybe the party CAN go on forever, and I should just give in and go buy that plasma TV.
Really.
I think this thing can go on as long as the financing is there to support it. Setser's blog ran a piece on recent TIC data about a month ago... At that time the flow of funds into the country & reserves building up in Asia he said would support a CA deficit 30% higher than the one we have now... something like a trillion dollars per year... without attacking the dollar much.
So 'yup'... it appears this could go on for a while longer. Charge it.
::::
Thanks CR for the piece... BTW do you have an opinion about this? A strong Novemeber often leads to a HUGE December (though the reverse is not always true... a weak November doesn't always kill the Holiday Season).
Also it doesn't say much about margins or profits... Black Friday had some of the most aggressive early discounting I've ever seen. Anyone know anything about this? Just curious...
Proof here that there is more to retail than just gross sales numbers (hat tip to vader):
Best Buy Says 3rd-Qtr Profit Drops 6.8% on Expenses
Dec. 13 (Bloomberg) -- Best Buy Co., the largest U.S. electronics retailer, reported a 6.8 percent decline in earnings and said ``unacceptably high'' expenses would weigh on results in the fourth quarter. The company's shares fell the most in more than three years.
Third-quarter net income declined to $138 million, or 28 cents a share, from $148 million, or 30 cents, a year earlier. Sales in the three months ended Nov. 26 climbed 10 percent to $7.34 billion, Richfield, Minnesota-based Best Buy said today in a statement. Earnings missed analysts' estimates.
Expenses jumped by $289 million as the company hired 2,500 people for its ``Geek Squad'' technical-support service. Best Buy said costs may rise faster than profit growth as Chief Executive Officer Brad Anderson remodels stores.
We over invested in certain transformation activities,'' said Anderson in the statement.Spending was unacceptably high. We are evaluating our spending to increase the yield and will edit activities that aren't delivering results.''
LINK
My guess is it will be snowing pink slips in Bloomington after the holidays.
df, this is all a little confusing. I think retail is solid, but not spectacular. Falling gasoline prices have distorted the Census data and made retail numbers look worse than they really are.
I expect a decent holiday retail season. My reason is simple - equity extraction was still strong in Q3 and some of that money will flow to retail spending in Q4. We will find out in a couple months if that logic is OK.
Best Regards.
Did they really say "edit activities"? I sure cannot keep up with the recent proliferation of euphemisms anymore.
today there's still ample equity extraction and cheap credit available to have enough dollars to spend to achieve decent holiday sales for retailers. the rub is going forward. the longer the current environment exists the weaker the #'s will become. foreign central banks are still pumping money into this country to support their own export driven economies but this has an end as the consumer gets more pinched by increasing debt loads. housing can't rise like it has recently much longer to to support the splurge. this train is almost at the end of the tracks. i'd look to second half 2006 to see the negative effects of this climate start to snowball.