Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Misery Loves Company

By

PrintPRINT

Normally the pre-Christmas price cuts by retailers are a subtle, almost stealthy thing. The tension in the merchant's soul boils down to the need to create Holiday "Buzz" vs. the simple idea that "'tis the Season when demand is highest; if you can't charge full price now what on earth are you going to do in July when stores are empty". What's more, nobody wants to be seen as cutting prices too early, lest they subject themselves to downgrading axes (the gist of the Ann Taylor (ANN:NYSE) estimate cut this morning).

Heck, this old timer can remember back when retailers would hold out until Christmas Eve prior to marking anything down (remember the now-quaint notion of "After Christmas Sales"?).

I agree with the notion that Wal-Mart (WMT:NYSE) "isn't the Wal-Mart we used to know". They aren't performing up to their traditional standard and they are finally running out of places to grow. The problem for other retailers isn't that Wal-Mart is still great; the problem is that Wal-Mart sells over a quarter of a trillion dollars of goods per year and they've expanded into everything from groceries to high-end televisions.

Wal-Mart "blinking first" by using the press to announce what amounts to a massive Sale matters to the rest of retail. To take one (book talkin' but not advising or suggesting) example, you can worship at the altar of Best Buy (BBY:NYSE) as an operator. You can correctly offer that customers prefer to buy electronics at BBY vs. WMT. What you can't reasonably assert is that the world's biggest retailer going scorched earth on margins with one month to go before Christmas isn't going to hit BBY should WMT opt to focus promotions on their nascent electronics biz.

If I ran a specialty chain I'd be shvitzing as I waited for the next WMT circular; praying to the Ghost of Sales Future that the giant picks a different segment to destroy, margin-wise. As an investor I'll be paying attention for different reasons; whichever segment Wal-Mart chooses to use for their re-energized "Lowest Prices" effort, the competition in that space is going to be hard-pressed to hold the line on margins.
position in bby

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE