Wal-Mart Reports Biggest Sales Decline In 28 Years - Blames Cold Weather in April?

Discussion in 'Economics' started by ByLoSellHi, May 10, 2007.

  1. Retail Sales Drop: What's The Excuse Now?

    Posted on May 10th, 2007


    Barry Ritholtz submits
    : How bad were April Retail Sales today?

    • Wal-Mart (WMT) posted its deepest monthly decline in at least 28 years.

    • The UBS-International Council of Shopping Centers sales tally posted a decline of 2.3 percent, the biggest drop since the index started tracking the data.

    • 80% of retailers that have reported missed comp estimates, according to Peter Bookvar of Miller Tabak

    • When the retailers made their forecasts for April sales, they already knew that Easter was in March. Despite making adjustments for that calendar variation, they STILL MISSED ESTIMATES BY A WIDE MARK.

    Blame it on the weather: A quick reminder of the retailers favorite excuses: The Weather. In April, there was too much rain (you mean it rains in the Spring -- who knew ???)

    To remind y'all about some past exusage, it was "too warm in January, too cold in February, too much static cling in March. The fear for May is the emergence of the 17 year Cicada, which will interfere dramatically with ongoing retail promotions. Also of major concern: German U-Boats off of the coast of New Jersey will be interfering with the Memorial Day sales (We last looked at these less-than-believable excuses in Through The Retail Looking Glass).

    I demand that if you are going to bull me with absurd and moronic excuses, at least have the courtesy to make them entertaining.

    Is there anyone who covers retail that can answer a question honestly? Yes:

    "Aside from scheduling changes [early Easter], several economic factors likely hampered Wal-Mart and other retailers. Consumers did most of their tax-refund spending in March. Gasoline prices have risen 9% in the past month to $3.03 a gallon, further pinching cash-strapped consumers. "Housing market sluggishness has translated into much lower levels of mortgage equity withdrawal in 2006 and 2007 from what we saw in 2005," Retail Metrics President Ken Perkins said. Such withdrawals had been "a significant source of consumer spending."

    Retail Sales drop
    click for larger interactive chart>

  2. I think its simple economics. When the economy is sucking wind, people buy more hotdogs than steaks. When the economy improves, people buy more steaks. In my neck of the woods, things seem to be perking up a little economically...people hiring again and whatnot. They've been bunkering down with Walmart crap, and now they're moving toward quality. Its nice that they can sell a picnic table for $50 or whatever, but people are figuring out that if you spend $100 on one, it will last more than twice as long. Now they have the money to buy them.

  3. Didn't a lot of credit card companies increase their minimum payments lately?
    Some kind of federal law or something?

    I guess those with their Discover Cards, ect., can't afford to buy all of
    that useless junk at Wal-mart, ect., anymore...
  4. It wasn't just Wal-Mart, though - the entire lower and middle class space showed the steepest drop since they've been keeping records:

    U.S. Retailers' April Sales Dip on Earlier Easter (Update6)


    By Heather Burke

    May 10 (Bloomberg) --
    U.S. retailers posted the biggest sales decline on record last month, trailing estimates that were already reduced as the coldest April in a decade curbed sales of lightweight clothing.

    Wal-Mart Stores Inc., the world's largest retailer, said April sales fell 3.5 percent, trailing its forecast for a decline of at most 2 percent. Sales at stores open at least a year dropped at Federated Department Stores Inc. and Gap Inc.

    Temperatures dipped 5 degrees below normal in the Northeast, cutting into sales of shorts and other spring apparel. The results may be further evidence that consumer spending, which accounts for two-thirds of the economy, is slowing.

    ``The consumer isn't dead but I don't think they are itching to open their wallets,'' said Eric Beder, an analyst at Brean Murray Carret & Co. in New York.

    Easter was eight days earlier than in 2006, shifting purchases for the season into March. Analysts said the declines were caused mainly by one-time events, and most retailers maintained their profit forecasts.

    The Standard & Poor's 500 Retailing Index of 30 companies declined 1.2 percent as of 4:15 p.m. New York time. It has risen 3.3 percent this year, compared with a 5.2 percent gain on the Standard & Poor's 500 Index.

    Shares of Wal-Mart slipped 18 cents to $47.75 in New York Stock Exchange composite trading. Federated dropped $1.72, or 3.9 percent, to $42.10 and Gap declined 15 cents to $18.28.

    `Ugly' Month

    Sales at 53 U.S. retail chains fell a combined 2.4 percent, the International Council of Shopping Centers said. The ``ugly'' decline was the largest since the New York-based trade group started keeping records in 1970, said ICSC chief economist Michael Niemira. The ICSC had forecast a ``small dip'' in April.

    March sales climbed 5.9 percent, the biggest gain since April 2006, according to the New York-based ICSC. For March and April combined, rose 1.8 percent.

    A record 80 percent of retailers missed analysts' estimates in April, according to Retail Metrics Inc. Same-store sales are an industry benchmark used to measure the health of older stores.

    Goldman Sachs Group Inc. said its index of April sales, which tracks about 30 retailers, fell 3 percent.

    Last month was the coldest April since 1997 in the U.S. and the snowiest in more than 14 years, according to Weather Trends International, a Bethlehem, Pennsylvania-based firm. Three- quarters of the U.S. had temperatures that were lower than normal, the firm said.

    ``April sales results were a distortion,'' said Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia. ``A lot of retailers planned for the weak April.'' The firm manages $54 billion, including shares of Wal-Mart and J.C. Penney Co.

    Gasoline Rising

    Today's results confirm that consumer spending has slowed down, Niemira said today in an interview. U.S. consumers' confidence dropped to a seven-month low in April as concerns about fuel prices, inflation and home values intensified, according to the Reuters/University of Michigan's final index of sentiment released April 27.

    The average price of a gallon of unleaded gasoline rose to $3.05 for the week ended May 7, the highest since September 2005, the U.S. Energy Department said. The National Association of Realtors this week lowered its projections for both new and existing home sales this year and said prices will decline.

    Discounters' sales fell 4.6 percent in April, the ICSC said. Wal-Mart said cooler weather hurt demand. Sales this month and in the second quarter may rise 1 percent to 2 percent, the Bentonville, Arkansas-based company said today.

    Target Corp., the second-largest U.S. discount chain, said April sales declined 6.1 percent, while analysts predicted a drop of 6.4 percent. The Minneapolis-based retailer said it was ``on track'' to meet its full-year financial goals.


    Federated, the second-largest department store company, said sales at stores open at least a year declined 2.2 percent, missing analysts' estimate for an increase of 1.2 percent.

    Chief Executive Officer Terry Lundgren said sales were disappointing at both its older stores and the former May Department Stores Co. stores it converted to the Macy's name in September. The Cincinnati-based retailer said sales in May would be unchanged to down 2 percent.

    April sales at J.C. Penney, the third-largest department- store chain, fell 4.7 percent. Analysts expected a loss of 0.9 percent, according to Retail Metrics. The Plano, Texas-based retailer reaffirmed its first-quarter forecast.

    Apparel retailers' same-store sales slumped 9.8 percent, ICSC said. Sales dropped 16 percent at Gap, the largest U.S. clothing retailer, missing analysts' estimate for a drop of 7 percent, according to data compiled by Retail Metrics, a Swampscott, Massachusetts-based research firm.

    Limited, American Eagle

    AnnTaylor Stores Corp., which sells to women ages 25 to 55, said April sales declined 12.8 percent and reiterated its full- year profit forecast of as much as $2.25 a share. Children's Place Retail Stores Inc. reported a 2 percent decrease.

    American Eagle Outfitters Inc., a teen-clothing retailer, said yesterday that April same-store sales fell 10 percent. Analysts estimated an increase of 1.4 percent.

    Sales at Seattle-based Nordstrom Inc. gained 3.1 percent, short of the analyst estimate of 4 percent. Neiman Marcus Group Inc. said sales rose 1 percent.

    Saks Inc. said sales jumped 12 percent, helped by women's apparel, handbags and shoes. Results exceeded the 6.8 percent estimate. Saks forecast ``low-double digit'' growth for the second quarter.

    U.S. retailers plan to report May sales on June 7. The ICSC forecast an increase of 2 percent to 2.5 percent. Sears Holdings Corp., the biggest U.S. department-store retailer, doesn't report monthly sales.
  5. Horrifying:

    "Housing market sluggishness has translated into much lower levels of mortgage equity withdrawal in 2006 and 2007 from what we saw in 2005," Retail Metrics President Ken Perkins said. Such withdrawals had been "a significant source of consumer spending."