Thursday, January 8, 2009

Picking Apart the Retail Sales Numbers

The headline news is about weak retail numbers. However, pulling the numbers apart shows a somewhat different picture.

Wal-Mart, for example, said that same-store sales, or sales at stores opened at least a year, rose 1.2 percent. Excluding the impact of declining gasoline prices (which includes a falling price to some degree because of slackened demand for oil from the capital goods sector) the gain was 1.7 percent. And this is before any positive adjustment because of deflationary causing demand for cash that both NBER recession dating chair, Robert Hall, and I would do.

Costco Wholesale Corp. reported a 4 percent decline in same-store sales, but excluding gas sales, U.S. same-store sales edged up 2 percent.

And despite reporting lower sales, shares of Sears Holdings rallied almost 18% as the chain said that its fourth-quarter earnings would top analyst estimates. Urban Outfitters shares bounced 5% after the company said that its November and December same-store-sales fell just 1%.

Many other smaller retailers reported declines of between 20% and 30%, but again based on adjustments for the deflationary demand for cash, they are likely to show break even sales levels or positive levels compared to last year. Further, while sales are overall down, even those that experienced dramatic sales drops, they remain less than those experienced by capital goods oriented sectors, such as, the stock market, housing and the automobile industry.

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