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Thumping From The Road



A hearty, steak-fueled "Hey, there" from the Kansas City Airport Hilton. I've been in town for a board meeting since Wednesday, which made the reports of my appearance on CNBC in yesterday's Buzz as confusing to me as they may have been to some readers. To clarify, I'll be in NYC *next week* and I plan to appear on the "Today Show". Nothing actually "booked" with the show; I'm just going to stand outside the studio with a poster reading "Will Snarkily Discuss the stock market for food and airtime... and I promise not to make fun of Matt or Katie!".

By way of penance for any confusion, we'll be sending MBop Meehan to every Hot Topic (HOTT) in the greater NYC area, posing as me and signing 8x10 glossies for the Goth Babes. MBop, making the folks believe you're me may take some salesmanship on your part. Spend the weekend sounding sincere when you say "The camera adds 40lbs but makes me look 1/2 again as manly".

Some quick market and not-so-much market related thoughts as I get ready to go home:

  • Best Buy (BBY) numbers turn out to be lousy, even without taking into the account the lease adjustments. I don't expect anything remotely good from Circuit City (CC), whenever it is that they actually choose to share the report with investors. With the buyout potential on CC it's unclear if bad numbers will much matter to the street. Regardless, the electronics retail space is only getting more difficult and CC, despite large plans to move the entire chain one store at a time, is ill-equiped to handle what is looking quite a bit like consumers' sated electronics demand.

    Keep an eye on Best Buy's stock today to see how it handles the outlook trim. The lease-accounting stuff simply doesn't matter. The hit earnings will take for options expensing matters a bit more and the slowing growth matters a lot. BBY has plenty of reasons to experience a stock air-pocket here. I'm uninvolved but have a more than passing interest.

  • Taser (TASR) blaming the media for a drop in sales and resulting stock smashing. I'm not sure if the company is unaware that the stock would never have left the low single digits *without* the media or they are simply excuse-making. Either way, the stock seems very much like it should be trading in the sub-hat-size levels. I'm genuinely mad on behalf of shareholders who are still long the stock... particularly the (probably apocryphal) Cop who retired to live on his Taser Stock nest-egg. Shameless and ugly stuff in that stock, both the whole way up and, now, on the way down.

  • My dad was a business-type guy whose work took him on the road quite a bit as I was growing. He must have told me 100 times that missing his family was painful and by far the worst part of his job. It only took me a quarter of a century or so to realize that dad wasn't just being nice when he said it. My little girl told me that she missed me last night... it was all I could do to keep from walking home.

    And, no, I don't think it's at all inconsistent to be a generally harsh, "prickly", type and still have my lower lip quiver uncontrollably when a two-year tells me she's looking forward to making clay Elmo's with me when I get home. It's a male thing, in my opinion. Before we had corporate arenas in which we could fight one another we had to make up fantasies of knights travelling into the world to slay dragons to protect our kingdoms. It's the same idea... we build castles (figurative and literal) around our damsels then seek to go out and prove our devotion through great battles and deeds.

    I'm not sure how generalized this feeling is in the business world but I know that I have a much larger sense of purpose and motivation now that I have my own family and Queen. The battles are fun largely because I have loved ones with whom I can share the spoils and the tales from my journies. Without them, I'm just not sure I could see the larger "point" of all the battles which are generally called "work".

  • Indulge me a bit on the family musings, my aforementioned dad has later-stage Parkinsons. The tapes of the ailing Pope are serving to remind me of family every time I pass a television during my travels. I find it endlessly sad that the Vatican is forcing the Pope to spend his final days in this manner. The man deserves much better and, to be candid, the Catholic church needs and deserves a leader whose body and mind isn't being wracked by this horrible disease.

  • Back to business, the reports of cost inflation on the buying side for retailers are true. Prices for plastic, steel and all the other commodities that have been ramping for the last year plus are finally being seen in higher prices from the Asian suppliers who actually produce most of the stuff you see in a Wal-Mart (WMT) or Target (TGT). The ability to pass those costs on to consumers remains weak. That's a very, very tough combination for discounters and the electronics guys in the news today.

    Where I'm playing retail on the long-side I'm sticking to fashion names, seeking those who are hitting on all merchandising cylanders. Consumers still seem to have money to spend to look good, they're just looking ever less interested in electronics they already have and they don't see the need to pay more for basics than they did a year ago. For what it's worth, I'm long Hot Topic (HOTT), Coldwater Creek (CWTR) and retailers for whom I serve as a director. Because nothing really "goes without saying", I'm NOT reccomending the above names for your portfolio, just sharing the process and thinking.

  • To the latter point, retail sales for March come out next Wednesday night and Thursday morning. We're souping up the ever-improving "Retail Round-up" to give the insta-take on the numbers as they are released. Rember, Easter came "early" this year, pushing sales forward into March at the expense of April's numbers. The market is Supposed to understand the effect of the early Easter but the headline comps figure to look very strong on the surface.

    I think the action of the stocks next week will give us a decent measure of the mood of the market... a good tape would rally the retailers despite the obvious March sales inflation. Suffice it to say that 2005 so far as generally not been a "good tape".
position in hott, cwtr

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