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3'Oclock High: Love Letters


Love Hurts.


Minyan Sandi writes:

Mr. Macke,

I love you writing and sense of humor but, as a retail analyst to hedge funds and trading desks, AND A FORMER CHAIN STORE OWNER, it is unfair to dismiss the impact of weather as quickly as you did. While I agree most weather related excuses are bunk, SOME weather events cause significant effects.

When the retailers in the paths of the hurricanes reopened, the vast majority of residents would have LOVED to go to the mall for power and a/c, something the VAST majority of homes still didn't have by last weekend. HOWEVER, 5 hour waits at the 7 open gas stations in the county, and dangerous driving due to landscape debris and the absence of a single traffic signal deterred all but the bravest or most desperate.

Now, just for information, I was not only BULLISH on retail on October 13--on the next test of that day's lows or better.

Strong retailers can work thru most weather with marketing and events but to dismiss weather out of hand is unfair to those of us with broken backs from cleaning up debris, who suffered from 9 days in the dark, b-b-q'in everything including pancakes, still unable to buy a dozen eggs, ice cream or many of the other staples we lost; simply grateful we can flush the toilet like people in most developed nations.


Dear Sandi,

If I had been born with Super Powers the world would be my oyster.

I would focus my Super Powers primarily on personal entertainment and looking out for my own self-interest. I would bet sporting events, trade options on Super Margin and probably start an extremely lucrative hedge fund called "Jeffmacke's Super Power Fund: We Know the Future. Seriously." I would never lose and my biggest problem would be tedium.

I was not born with Super Powers. Though I spend countless hours musing ruefully about my mortal allotments of X-ray vision, time travelability, flight, bullet-proofness and teeth, I have no actual control over the matters. I consider my mortality to be a "(non) Act of God". This is a secular term meaning "a matter over which human/ human kind has no control". Sort of like hurricanes.

Complaining about the effects of Acts of God on your business is akin to my blaming my personal failures on my lack of Super Powers. In a sense, it's true (I would hit more deadlines had I Super Powers). In another sense, a harsher but more real sense, I am expected to do the best with what I have been given, under more or less the same conditions as others.

I'm not dismissing hurricanes out of hand. I'm saying that a company like Federated (FD) blaming the hurricanes for weak numbers is disingenuous. As it may take a cynic to see a cynic, I'll offer that it is a callous effort to elicit sympathy and draw attention away from FD's troubles.

Dillards (DDS), with just as much if not more weather exposure as Federated, crushed sales estimates. Whether it was because Dillards has "braver or more desperate" customers or for some other reason, I don't know. They didn't talk about weather because Dillards didn't need an excuse the way Federated and other weak performers did.

This. That. Other things.

  • Activision (ATVI) managed to turn last night's after-hours frowns upside down today, moving higher by 4-bits (fitty-cents) as I type. I've trimmed off some more of the calls. I've booked more than the total cost of the trade in gains and am planning to let the rest cook for a while.

  • "It's all about the close" is my Market Platitude of the Day as I watch the Retail Hldrs Trust (RTH) get sucked back towards the pesky 95 level. Similarly, Abercrombie and Fitch (ANF) is giving back some of the love, now up less than $3 for the day. Right about now, those who got all their undies all in a bundle bidding for ANF on the open are now down 5%.

  • Hey, I thought the retail numbers, overall, were solid. No doubt better than I had expected. I respect the price action but a) I want to hear more about margins b) the stocks haven't really done anything but start poking the top of the range, so far.

  • I'm not sure what, exactly, I'll be saying tonight during On the Money at 7pm (East Coast Time) on CNBC. Does anyone know if Lauren Cooks Levitan made her 11th consecutive Chico and the Man reference in a write up on today's sales? That could be awkward for us both...
Position in ATVI

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