Tag Archives: retail stocks

The Consumer Is Broke: “Restaurant Sales Worst Since July”

At -1.3 percent, disappointing restaurant sales growth in November was the ninth consecutive month of negative same-store sales; and the worst sales growth since July…Same-store sales for third and fourth quarters, at the end of November, are both -1.1 percent.Black Box Intelligence

That’s the restaurant industry.  Here’s a retail sales report from Dollar General, which would represent about 40-50% income and spending demographic:

Interestingly, we talk to our consumers each and every quarter through panel data as well as we bring them in and talk to them in general and I can tell you as late as mid third quarter, they were telling us that their sentiment – feeling – is even more dire than it was in previous quarters in early 2016  – Dollar General CEO in response to an analyst question on the quarterly earnings conference call.

Granted, DG’s core customer is low-income. However, as more Americans slide into the “low income” segment, it will affect overall retail sales, especially with regard to disposable income. My point here is that, despite the sense of “hope” signaled by the “Trump rally,” in general the average American is not feeling optimistic about the economy and I believe this will translate into a poor holiday season for both retailers and the overall economy. – Short Seller’s Journal, Dec 4 issue

Retail sales this holiday season are going to be abysmal.  Everyone with whom I’ve chatted who’s been out holiday shopping – I mean everyone – has commented on how eerily quiet the stores are this year.

The Census Bureau and the National Retail Federation will issue phony sales reports that will be contradicted by the actual sales reports from and guidance from retailers.  This report written by NY Post editor, John Crudele, outlines the methodology by which the Census Bureau manipulates the monthly retail sales reports:

Halfway down the page is a listing for Health and Personal Care Stores. It had a 7.6 percent increase in October. But underneath that calculation, there are no data, only an asterisk. That’s explained in the footnote to mean “advance estimates are not available for this kind of business.”

So how did Census determine that there was a 7.6 percent increase in Health and Personal Care Stores when the only category listed doesn’t provide data? “Furniture and home furnishing stores” also had a 3.4 percent sales increase. But, again, Census came up with a calculation despite no data.  – John Crudele on October retail sales report

If you pull up the actual retail sales report issued by the Census Bureau, you’ll see that several categories are “asterisked,” meaning the CB imputed its own estimate for October retails sales for that category.  In other words, about half the reported headline number is made up.

Restoration Hardware’s earnings report yesterday is an example.  The stock is down 18% after missing Wall Street’s earnings estimates – badly – and issuing dismal guidance on holiday sales and its outlook for 2017.

The point here is that the average household real disposable income is declining. As such, the average consumer is choking on debt, Obamacare premium increases, and the spiraling cost of everyday living – especially those households with children.

Despite a stock market that is going parabolic and in the final stages of a blow-off top, several of my stock picks in the weekly Short Seller’s Journal have provided profitable trades since August (some have not, to be fair).   One retailer in particular dropped 20% after I presented it in August and is now back up to the price at which I recommended shorting it.  I will be discussing this stock as a great short idea in this week’s issue.  You can access the SSJ using this link:  Short Seller’s Journal.

Payment terms are monthly and you can cancel at any time.  The SSJ issues are weekly and delve in-depth into economic data and analysis that you will not necessarily find on in the mainstream or alternative media.

It’s Official: Black Friday Sales Plunge 10% From Last Year

Total sales in the US on Black Friday fell 10% to $10.4bn this year, down from $11.6bn in 2014, according to research firm ShopperTrak.  – The Guardian

Store-based sales dropped $1.2 billion, while online sales increased $150 million.   The media is going to highlight the increase in online sales.  But remember, online sales represent only 6% of total retail sales.  The plunge in brick-and-mortar sales was nearly 10x greater in total dollars than was the increase in cyber sales.

The bottom line is that consumer is dead on arrival.  Stagnating nominal wage growth, decline real (inflation-adjusted) median household income and skyrocketing non-discretionary expenses are eating the middle class alive.  Throw in the huge increase in Obamacare premiums and it’s like throwing gasoline into a bonfire.

The retailer stocks are going to get crushed, regardless of what happens with the five stocks used by the Fed and the banks to keep the overall S&P 500/Dow indices propped up (Facebook, Amazon, Netflix, Alphabet (Google) and Disney).

BlogLOGO_retail

 

 

Click on the image or here – Short Seller’s Journal for two great ideas to short the retail stock sector

Another Retail Stock Bites The Dust On EPS/Revenue Miss

Update: This stock closed down 15.8%. Anyone who read my retail short report and set up a short in this stock yesterday made a quick 15.8%, minimally. The stock was down over 20% at one point.

Untitled

As my 2-stock retail report details, there’s plenty of downside left in this stock and the other company reports on December 3.

You can access this report here for a special price:  Two-Stock Retail Report

Not every stock pick will perform like this but the retail sector is going to get hammered from a middle class consumer that is out of disposable income – a situation that will be made worse as the new Obamacare premiums start to take affect…the stock market is not even remotely pricing in this reality.

BlogLOGO_retailThe 2nd stock in the report close up a bit today, along with the SPX, and is setting up nicely for a short-sell opportunity ahead of its earnings on 12/3.   If the demographics of company attached to the stock above is getting pinched – which it is – the demographics of the 2nd company is really getting squeezed.

Click on the image to the left to access my report.