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Five Things You Need to Know: Embarrassed by Thrift? Not Anymore


Excess consumption becoming "disgusting".


Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Hope Now; Reality Later

This seems like good news: This morning HopeNow reported U.S. mortgage workouts totaled 183,000 in April, the highest monthly figure since the program began. Hope Now is a private the alliance of mortgage lenders, servicers and community advocacy groups that is working to voluntarily assist homeowners with their mortgages.

Of course, while Hope Now was able to workout 183,000 mortgages in April, foreclosure filings for April totaled 243,353, according to Realty Trac, the highest since the firm began issuing reports in January 2005.

Hope Now said it has arranged almost 1.6 million loan workouts over the past nine months. For 2007, foreclosure filings totaled more than 2.2 million.

Meanwhile, according to an article on Bloomberg, 73,880 homeowners with privately insured mortgages fell more than 60 days late on payments in April, compared with 39,584 who made it back to on-time.

2. What the DELL?

Last night Dell (DELL) reported fiscal first quarter profit grew 4% led by strong sales gains overseas. Commercial sales in Asia grew 19% and revenue in emerging markets, the so-called BRIC countries, Brazil, Russia, India and China, increased 47%. Revenue from overseas markets beat U.S. revenue for the first time, the company said, reaching a record high 50%.

Dell said it believes the BRIC countries will account for 40% of industry growth over the next five years. For now, however, BRIC still accounts for just 9% of overall revenue. And there was no mention of what might happen should the dollar begin to strengthen.

While Dell's numbers were greeted with enthusiasm by Wall Street, a closer look shows some ongoing issues. First, the company has now axed 7,000 jobs year-over-year, 3,700 in the quarter alone with the promise of at least 1,900 more by the end of the year. Dell insinuated on the call that the number would actually come in higher than that.

As well, Dell said it also "made adjustments" to their compensation plans to bring them more in line with "current market conditions," all part of their cost reduction strategy, not exactly welcome news for existing employees.

Still, while revenue outside the U.S. reached a record high, Dell still has a long way to go to offset a very competitive and relatively low margin U.S. market.

3. Socionomic Datapoint: Excess Consumption Becoming "Disgusting"

As social mood continues to shift, we can expect to see more manifestations of anti-consumption and the rejection of displays of ostentatiousness. This attitude will work its way from consumer to producer/seller, resulting in further reinforcement of the move toward inexpensive fashion.

Take for example this statement from Robert Duffy, president of upscale men's high fashion designer Marc Jacobs. "No one wants to pay $500 for a pair of flip-flops," Mr. Duffy said, sounding more like a consumer advocate than a luxury-brand kingpin. "Sometimes I'll walk past a store and see that, or see rubber boots for $500, and it disgusts me. I know what it costs to make them."

Robert Pini, 47, a film industry executive in New York, told the Times, "I definitely feel like I've traded down in the last year or so. I used to be more into the whole label thing, but I don't think guys are into it as much now."

4. Charity Circuit Feeling Socionomic Shift, Too

Speaking of not being into the label thing, the shift in social mood is showing up on the well-heeled charity gala circuit. A Times article, "Gala Auction Feels a Chill From Wall Street's Slump," notes that while the dollar amount of charitable funds raised for a recent Robin Hood Foundation (how's that for a socionomically attuned name) gala was robust $56.5 million," that was 21% less than last year, and the mood is far different too.

"It's no longer chic to flaunt it," Mr. Sternlicht, the event's co-chairman, said of past displays of wealth.

5. Embarrassed by Thrift? Not Anymore

All the way across the country on the West Coast, the San Diego Union-Tribune is seeing the same shift in social mood and attitudes toward consumption and appearance. "It used to be that people were embarrassed to be seen in a thrift or secondhand store, once considered the retail equivalent of dumpster diving," the article, "Secondhand is now sought-after," notes. "How things have changed."

Adele Meyer, executive director of the National Association of Resale & Thrift Shops, said she expects the number of resale stores to increase this year by 5%. In contrast, the article observes, many traditional retailers of new apparel and other products are curbing expansion plans and projecting a 3.5% increase in retail sales, the smallest since sales grew 3% in 2002.

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