25 Random Things About Retailers

Highlights include Big Lots (BIG - Analyst Report), Wal-Mart (WMT - Analyst Report) and GameStop (GME - Analyst Report).

1. Retailers reported dismal sales results for the 2008 holiday season, but the reaction to stock prices was somewhat muted.

2. This could indicate that the weak holiday season was already discounted in retail stock prices.

3. We may be setting up for a short-term rally in retail stocks thanks to the federal government stimulus package.

4. After a decent stock market rally that lasts longer than most expect, I expect to see new lows for retail stocks as the market realizes that the second half of 2009 will be no better than the first half.

5. Consumer attitudes toward debt and spending have changed.

6. It's saving over spending.

7. It's frugal over spendthrift.

8. It's discounts over full price.

9. There is still too much capacity in retail. That means too many stores and too much retail square footage. We are going to see additional store closures for some time.

10. Would it be surprising to see another major retailer go out of business?

11. Accountants call those products from suppliers that do not make it a retailer's point of sale "inventory shrink." Most of us would call it theft. With shoplifting on the rise, look for inventory shrink to rise and negatively affect profit margins.

12. "Gift-card breakage" refers to income generated by unused gift cards, and it provides a nice boost to earnings during leaner quarters.

13. Consumer Reports estimates that consumers did not use $8 billion worth of gift cards in 2006. I'm guessing that consumers did not leave $8 billion on unused gift cards in 2008.

14. Is anyone still saying "Don't bet against the American consumer?"

15. Inventory levels are coming way down, as retailers adjust to consumers spending fewer dollars in their stores.

16. Lower inventory levels should help reduce the need to discount merchandise, but smaller inventories reduce sales per square foot (productivity) at the store level.

17. Where's the outcry for the hundreds of thousands of retail workers who have lost their jobs?

18. Some retailers are still opening new stores. In this environment?

19. Year-over-year comps will be easy in 2009. I think they will be even easier in 2010.

20. People are still trading down to cheaper alternatives. In 2008, this worked great for Big Lots (BIG - Analyst Report) or Wal-Mart (WMT - Analyst Report). But this year, consumers won't need to change stores to trade down; most retailers will offer lower-priced merchandise.

21. Video games are still going strong, and I continue to like GameStop (GME - Analyst Report).

22. Are you watching the Zacks Retail Spotlight Video Segment with yours truly?

23. Retail sales in the first half of 2009 will be worse than the 2008 holiday season.

24. If you fear losing your job, do you care if you are offered 0% financing on a $2000 HD-TV or $5000 furniture set?

25. Where did all those department store credit card offers go?

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