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Latest Comments494 Comments
Walmart Has a Black Friday
Another thing that was happening during the Black Friday frenzy is that consumers were looking not just for doorbusters, but also for other deals within the stores. Retailers in this area (Reno NV) responded by having unadvertised manager's specials bulk-stacked in the aisles, salespeople line-selling accessories to customers waiting at register lines, and dedicating 'express checkout' for people looking to purchase only a couple of things.
It seemed to work in some stores, not so well in others.
The CE outlets seemed to do well that day, although no one really knows whether any profits were generated.
the rest of the season will tell whether there will be additional discounts as the shopping days fall away, and inventory doesn't.
Black Friday Traffic Can Be Misleading
It's compelling that major retailers budget LOSSES for Black Friday because so many sales are made at a loss. The companies hope that sales momentum arising from traffic in stores will translate into sales that actually make a profit for the remainder of the shopping season.
So when a retailer reports good sales numbers, don't be fooled, because profitable sales need to take place as the shopping season progresses.
What will tell the holiday tale is whether store traffic drops precipitously after Black Friday. Sales will be harder to get, and discounts may get downright brutal, if excess inventory is in stores the 12th of December.
Black Friday vs. Cyber Monday: Gen X and Y vs. the Baby Boomers
On Dec 01 10:17 AM Just a Hick wrote:
> Who is the silent generation?
The Silent Generation is generally considered the parents of generation x and baby boomers, born between 1925 and 1942. They were a small generation because of economic scarcity arising from the Great Depression, but fought in WW II. Contemporaries include Martin Luther King, all the presidents through Ronald Reagan, and the Beat poets, among others.
Is Starbucks a Bargain? It Almost Goes Without Saying
Then I occasionally stopped in for a short coffee--$1.50+ tax.
Shortly thereafter SBUX stopped advertising it, although you could still get it if you knew to ask.
A couple days ago I 'treated' myself to a frou-frou latte. It tasted bad.
I think it might go lower than $8 before it goes up.
Detroit's Big Three and the Democrats' Economic Illiteracy
The UAW would probably say that this destroys job security, but I would reply that having a company run out of cash because it can't lay anyone off is worse.
This idea is no doubt too radical to merit review by the assembled executives. But everything should be on the table now, if the C word (starts with c, ends with s, two syllables) is real.
[That word will probably be the most overused of 2008. I'm contributing to its demise in my small, silent way.]
REIT Alert: Small but Excellent Land Deals Happening
Great reporting, thanks!
Interesting that Meritage found lots in Phoenix for $60,000/apiece. (I'm assuming these are finished lots, not paper.) That represents a great deal for them, a terrible one for the seller--those lots probably cost $75,000-$80,000 each to develop.
And as far as Prop 201 is concerned--It's almost like Californians are exporting the populist Kool-aid to neighboring states. They did it in NV by limiting property tax increases, and now the state is facing a billion-dollar budget shortfall. (It's hard to make that up when 90+% of the state is owned by the Federal Government.)
I believe the states' economic woes will intensify as unemployment rises nationwide, and state governments add to the misery with layoffs of their own.
The only growth industry I see is bankruptcy attorney.
ATB,
Bill
What Obama Needs to Know about Tim Geithner, the AIG Fiasco and Citigroup
Thanks.
Is Shift Away from Supermarkets, Restaurants Permanent?
I appreciate your commentary, no matter what industry you're covering. It's a pleasure to read your column.
As far as the shift from restaurants to dining in, I've seen that phenomenon in my own circle of friends. A year ago, it wasn't uncommon for several of us to dine out at least once or twice a week, spending around $20/per person per meal (food, drinks, etc.).
When gas prices shot up, that was one of the first things to go. But even since fuel costs are down, we're still eating in more than out. Now, it's a special treat to eat out--birthday celebrations and the like. I'd guess that my contemporaries now eat out only once or twice a month on average--a far cry from 8 times/month.
Now, grocery shopping is more important than the newest restaurant. And Whole Foods in Reno, along with Costco and Sam's Club, are getting the dollars that used to go to restaurants.
We're still reluctant to go grocery shopping at Wal-mart.
But the demand destruction caused by higher fuel prices has translated into a seemingly permanent behavioral change. Which may be the new reality for discretionary spending in America.
ATB,
Bill
Rumors of Best Buy's Demise Are Greatly Exaggerated
The company has continued to open new stores, not because of 'overexpansion' as charged by some analysts, but because the best way to profit from a recovery is to have attractive locations ready to receive new customers. Whether recovery is next year or in 2010, the company will benefit from higher incremental sales as the year progresses.
Home Price Plunge Produces Sales Spikes In Many Cities
Great compilation, thanks for keeping track.
Here in Northern NV, foreclosures were up in October, the median sales price fell 7% (in one month!), and there's a 7 year supply of homes over $1 million--an infinite supply over $2 million.
Median price/s.f. fell to $126/s.f. for existing homes marketing through the MLS. That's less than it costs to build by about $15/s.f.
Demand for new homes is drying up as the existing home market continues to drop.
It may become economically unfeasible for builders to start new subdivisions, since they won't be earning near enough to justify their investment, or even to recover what they spend on land, permitting, etc.
I'm looking for new building permits to fall further, as developers exit the market.
ATB,
Bill
Circuit City Falls Further: 'Bring Out Your Dead'
Pliego has acquired a 28% stake in Circuit City, at an average share price of 24 cents. Which explains the high volume right after the company filed Chapter 11.
He's performing some due diligence (called analysis) to determine whether he wants to take control of the company.
Here's a link:
www.twice.com/article/...
Circuit City Falls Further: 'Bring Out Your Dead'
Pliego has acquired a 28% stake in Circuit City, at an average share price of 24 cents. Which explains the high volume right after the company filed Chapter 11.
He's performing some due diligence (called analysis) to determine whether he wants to take control of the company.
Here's a link:
www.twice.com/article/...
The Humpty Dumpty Economy
The 3-page bailout package morphed into a 450 page bill that was signed without study. Now the intent of the legislation has morphed again, into something that only Paulson's dream interpreter understands.
If the automakers don't get bailout money from Congress, chapter 11 filings would soon follow. That wouldn't mean the companies would go away, and would provide time for restructuring the business model, which as we have seen, has been flawed for many years.
It's true that American cars and trucks have improved in quality since the mid 1980s. Unfortunately, that period alienated an entire generation of car buyers. Now, most people who were burned by a poorly running domestic vehicle during that period are reluctant to even look at US marques. And foreign manufacturers have responded by broadening their product lines, so that a consumer can find most any kind of vehicle from Toyota, Honda or Nissan (even heavy-duty pickups).
Product development needs to change for domestic automakers. Why has the GM Volt taken so long to bring to market? (The Toyota Prius was introduced in 1997--11 years ago!!) By the time you see a Volt at your local Chevy dealer (assuming he's still in business), Toyota will have had a 15 year lead on this technology.
And why are there so many overlapping products? Despite Tiger Woods's Buick endorsement deal, the average Buick buyer is 65 years old. Now, I'm not saying that's a bad thing, but Buicks don't appeal to younger car buyers.
It seems to me that GM could drop the Buick line (like Oldsmobile--even though that was 7 years later than it should have been), merge the Chevy truck division with GMC (identical products, different badges), and spin off Saab to someone in Europe who cares. Limit Pontiac to the big sedans they became known for, and fold the Sunfire line into Saturn (isn't that a Saturn Skye with different badges?).
But that's just me.
Has GE Capital Stopped Lending Entirely?
Thanks for this topic.
It may be a godsend for regional and local banks who have been unable to compete with GECC on terms, rates and structure. GECC typically took the best credits available from the pool of potential borrowers, largely because of its pricing power. GECC could fund credits with run rates 150 basis points less than a typical regional bank, in some cases. Meanwhile, this left regionals with lower-quality borrowers, who in many cases, were weaker credit risks that required more underwriting and monitoring skill for credit management. As a result, interest margins compressed, while back-end costs (monitoring, documentation, and the like) rose.
if this is true, and GECC is not aggressively getting back in the game until next year, it may spell a window of opportunity to pick up good credits at reasonable costs.
Circuit City Falls Further: 'Bring Out Your Dead'
Pliego runs the largest CE retailer in Mexico, as well.
Here's a link:
www.bloomberg.com/apps...