The Financial Media May Not Be Right
Over the past few months the financial media has been dominated by stories about sub-prime loans and their potential ripple effect through the economy. More recently some of the financial pundits have started to speculate on how the ratcheting up of adjustable rate loans has negatively impacted the consumer and curtailed retail spending.
As is normally the case, whenever you make a blanket statement it is usually wrong. It would be naive not to recognize that what is happening in the mortgage market will affect some group of consumers. In some cases, the impact will be significant and people will reduce their spending or, in the worst case, lose their homes. As always, the questions are how large a group will these factors affect, which retailers will be impacted and to what degree?
The chart below shows the trend of a cross-section of retailers in different channels, comparing their July results with their previous 90-day trend. Before you read the numbers let me provide this caveat: July is particularly difficult to assess this year due to the fifty-third week in 2006 and the ensuing calendar confusion. For most retailers, this year’s July Fourth week fell in June, which is significant for consumables-dominate retailers. The first important week of back-to-school selling moved into July, positively affecting apparel-dominant and school-supply retailers. Further confusing the numbers is the movement of school openings one week later in some parts of the country.
With that said, the numbers do not indicate a cutback in spending by consumers in a wide range of retail channels over the past 30 days, in spite of the doom and gloom reports from some of the experts featured on the cable shows. Rather, the July results indicate that retailers that continue to improve their assortments and better serve their core customers outperform their peers in any environment.
To view The Gordman Group’s complete Trending Report, go to www.gordmangroup.com.
Comp-Store Sales Trend
|July 2007||Previous 90 Days|
|Wal-Mart U.S. Stores||1.3%||–0.7%|
|Longs Drug Stores||1.7%||0.6%|
Robert Gordman is the president of The Gordman Group, Denver, and is the author of “The Must-Have Customer—7 Steps to Winning the Customer You Haven’t Got.”
Sears Holdings ceo unhappy with 2Q
HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $176 million, or $1.17 per diluted share, for the second quarter ended Aug. 4, compared with net income of $294 million, or $1.88 per diluted share, for the second quarter ended July 29, 2006. The company attributed the decline in its second quarter results from the same quarter last year to lower operating results at both Sears Domestic and Kmart, which were partially offset by improved operating results at Sears Canada.
“We are disappointed with our second quarter results. Our gross margins came under pressure from sales declines and increased promotional activity, and as a result, our net income was significantly below last year and our expectations,” said Aylwin Lewis, Sears Holdings’ ceo and president.
Sears Domestic’s comparable-store sales declined 4.3% for the quarter, while Kmart’s comparable-store sales declined 3.8%. Total domestic comparable-store sales declined 4.1%. The company reported lower sales across most merchandise categories at both Kmart and Sears Domestic, partially offset by increased sales of women’s apparel at both Kmart and Sears Domestic, as well as within consumer electronics and footwear at Sears Domestic. For the quarter, total revenues declined $0.6 billion to $12.2 billion in fiscal 2007, as compared to $12.8 billion for the second quarter of fiscal 2006.
Lane Bryant pres. joins Christopher & Banks
MINNEAPOLIS Former Lane Bryant president Lorna Nagler will join Christopher & Banks as president and ceo effective Aug. 31. She will replace Matthew Dillon, who resigned from his position as president and ceo and as a member of the board of directors today. Nagler has also been elected as a member of Christopher & Banks’ board of directors effective Aug. 31.
Nagler most recently served as president of Lane Bryant, a division of Charming Shoppes. Before joining Charming Shoppes in April, 2002, Nagler served as a senior vp and general merchandising manager for apparel and jewelry at Kmart Corp.