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Quick Hits: Shoppers Just Say No


Brief scrutiny of today's headlines.

Retailers reported dismal sales in November as consumers hunkered down in a deepening recession.

Consumer spending generates about two-thirds of the nation's GDP so dismay caused by weak consumer sales extends well beyond the mall. Worse, there is no turnaround in sight as unemployment continues to increase.

Sales on Black Friday, the traditional kickoff to the holiday shopping season on the day after Thanksgiving when many stores become profitable for the first time each year, were up slightly, but not enough to offset weak sales throughout November.

Consumers are looking for bargains, but so far Wal-Mart (WMT) is the only mass retailer to consistently report good sales during the downturn. It's done so by cutting prices on selected items and pushing special items.

The world's largest retailer said same store sales, or stores open at least a year, increased 3.4% in November. Sales at Sam's Club, a membership warehouse chain, were up 3.5%. The totals exclude gasoline sales.

Wal-Mart expected November's sales to increase 1% to 3%.

But rival Costco (COST) said sales fell 5%, or about twice what Wall Street analysts expected. Excluding gasoline sales and currency fluctuations, the company said it would have reported 3% overall growth, including 1% domestically and 6% internationally.

Target (TGT), a Wal-Mart rival, said sales dropped 10%, continuing the company's struggles.

The Gap (GPS) said sales were off 10% - almost good news, because analysts expected a 17% drop.

The Buckle (BKE), a chain with about 370 stores in 38 states pitching mid- to higher-priced casual clothes to 12- to 24-year-olds, broke the pattern by reporting a 15% increase in November same store sales, or about double Wall Street's estimates. The company has reported double-digit growth for more than a year. The company is an outlier in retail sales because most kids probably ask: what recession? The wonder is that parents don't enlighten them.

But for those who live in the real world, price matters. Wal-Mart's continuing success underscores its marketing savvy and clout with suppliers.
No positions in stocks mentioned.
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