Dr. Retail? How About A Rebate?

David Brooks, Op-Ed columnist for the NY Fishwrap, created a brilliant persona in his recent column on the Democrat bloodletting: Dr. Retail. The January sales figures for U.S. merchants were mighty grim, despite all of the rebates. However, does the reality that rebates aren't the answer penetrate the Beltway? Even though Amy Winehouse is singing about her aversion to rehab, her "Rehab" refrain applies to the efficacy of rebates: "No, no, no!" If Wal-Mart and Target can't turn the post-Christmas season around with rebates, what makes Congress and the White House think rebates are going to turn the country away from recession? No, no, no. If this is (fair & balanced) harsh reality, so be it.

[x Dow Jones]
January Retail-Sales Numbers Worse Than Grim Forecasts

CHICAGO (Dow Jones) -- With few exceptions, it was a miserable start to 2008 for U.S. retailers. Many of the biggest names in the sector on Thursday posted January sales numbers that were even worse than already grim Wall Street forecasts.

Judging by the numbers, Americans cut back sharply on their spending last month, pinched by high gasoline prices, the credit crunch and fears that a recession is imminent -- or perhaps already here.

Starting at the top, Wal-Mart Stores (WMT) said unfavorable weather led to a January same-store-sales increase, excluding fuel sales, of just 0.5% from a year earlier. That compares with an average estimate of analysts polled by Thomson Financial of same-store sales -- those at locations open at least a year -- rising 2%.

Still, Wal-Mart backed its fourth-quarter target for earnings from continuing operations of 99 cents to $1.03 a share.

Total sales at the world's largest retailer for the four weeks ended Feb. 1 increased 7.9% to $27.28 billion, up from $25.29 billion. For the current month, Wal-Mart anticipates same-store sales to be between flat and up 2%

Archrival Target (TGT), meanwhile, saw a January same-store sales decline of 1.1%, hurt in part by weaker lawn and garden and jewelry sales. The analyst estimate was for a drop of 0.6%. The Minneapolis-based retailer said net retail sales for the four weeks ended Feb. 2 increased 5.4%. Looking forward, Target is forecasting February same-store sales down 1% to up 1%

Moving upscale, Nordstrom Inc. (JWN) said that its January same-store sales fell 6.6% -- far worse than the 0.7% decline that analysts estimated. And total sales for the four weeks ended Feb. 2 were down a whopping 20.3% to $486.3 million.

At teen-wear retailer Wet Seal (WTSLA), January same-store sales were off 5.7%, versus the analyst view of a decline of 1.5%. And net sales for the month were down to $36.8 million from $43.9 million. But the company did boost its fourth-fiscal-quarter earnings target to between 9 and 10 cents a share, compared with its prior forecast of 6 to 8 cents, primarily due to better-than- expected operating-expense savings and a slight widening in margins.

For Limited Brands (LTD), parent of Victoria's Secret, January same-store sales fell 8% from a year ago, while total sales declined to $625.8 million from $1.06 billion. The Columbus, Ohio-based apparel and personal-care retailer said comparable-store sales for the 13 weeks ended Feb. 3 also fell 8%, while net sales declined to $3.23 billion from $4.03 billion. On average, analysts polled by Thomson Financial had expected January comparable-store sales to decline 6.9% .

On a slightly brighter note, closeout retailer Big Lots (BIG) said its fourth- quarter same-store sales fell 0.6%, with overall sales down 8.5% to $1.4 billion, in line with previously provided expectations.

"It is a really tough time for shopper psychology," considering all the downbeat economic news, said Sarah Henry, a retail analyst with MFC Global Investment management. "And that can be enough to make people stop spending on discretionary items. It is hard to drive sales in an environment like this."

She described overall results as "mixed" but noted that at Wal-Mart, many gift card redemptions were being used for lower-margin food and other consumables rather than discretionary purchases, a "very telling" indication of what consumers are thinking.

That attitude is pinching the department stores, chains like Macy's and Nordstrom, who were already contending with a weak holiday season and in January had to "cut prices pretty urgently to clear out inventory."

Yet there were a few upside surprises, including Costco Wholesale (COST), where January same-store sales rose 7%, with 5% growth in the U.S. and 19% growth overseas. Total sales for the period rose 11% to $5.11 billion. The analyst estimate was for a 6.6% rise in same-store sales.

J.C. Penney's (JCP) same-store sales fell 1.9%, compared with a year earlier increase of 3.6% with total department store sales rose 1.7%, and direct sales up 3.6%. Wall Street was looking for a 6.3% decline in same-store sales. For February, Penney projects February comparable-store sales to be flat, with comparable-department store sales decreasing in the low single digits on a percentage basis. And the company now projects fiscal fourth-quarter earnings to come in at the high end at the high end of its original target range of $1.65 to $1.80.

And the Children's Place (PLCE) said same-store sales increased 6% from the prior year's comparable period, due in part to higher promotional levels -- nearly three times the 2.2% pace Wall Street was looking for. The Secaucus, N.J.-based chain also said total sales for the four weeks ending Feb. 2 fell 4% to $121.7 million from $127.4 million the previous year.

However, Children's Place added that it had gotten a Nasdaq staff determination letter stating that it is not in compliance with regulations because it failed to hold its annual shareholder meeting by Feb. 3. The company said it will request a hearing for an extension, saying the meeting was postponed due to a delay in filing an annual report.

Ann Taylor (ANN) had flat same-store sales in January, versus the expected 4% decline. But total January sales at the New York-based retailer dipped 15% to $ 127.9 million.

Moving back to the red ink, Stein Mart (SMRT) said it would suspend its quarterly dividend in order to provide "more flexibility" to deal with worsening industry conditions. In January, the Jacksonville, Fla.-based retailer's sales fell almost 10% to $81 million, while same-store sales were down 2.5%. For the fourth quarter, Stein Mart forecast a loss in the range of 28 to 33 cents a share. Analysts polled by Thomson Financial had expected, on average, a loss of 44 cents a share for the fourth quarter.

Macy's (M) got the ball rolling in the wrong direction Wednesday when it announced that January same-store sales fell 7.1%, worse than a previously expected decline of 4% to 6%. Total sales for the four weeks ended Feb. 2 fell to $1.28 billion from $1.78 billion a year ago, hurt in part by the fact that there was one fewer week in the January 2008 calendar.

The department-store chain also announced various restructuring and consolidation moves that will cost more than 2,500 workers their livelihoods.

Copyright © 2008 Dow Jones & Company, Inc.

Get an RSS (Really Simple Syndication) Reader at no cost from Google. Another free Reader is available at RSS Reader.

I Have A Lady In The Balcony, Dr. Retail

A weekly radio show (1939 - 1950) of my childhood was "Dr. IQ." The basic premise of the game was very simple. Assistants would wander the theater, looking for audience members to play the game. When the assistant found someone willing to play, he or she would tell the "doctor," "I have a gentleman in the balcony, Doctor!" or something similar. The host would then say, depending on the difficulty of the question: "Two (more or less) silver dollars and a box of Mars Bars (the show's sponsor) if you can answer this!" Then he would pose a general-knowledge question to the contestant. A correct answer would win the stated dollar amount and candy in the first part of the game, and $20 in the second part; incorrect answers would result in a $1 consolation prize. All prizes were paid in silver dollars, as noted by the host. The only game feature that carried over from week to week was "The Lady in the Balcony." A female contestant in the theater balcony would be chosen, and would be asked a series of five questions. She would be allowed five incorrect answers. If she had any misses still available after five questions, she would return the following week to face five more questions with the remaining misses in play. If she was able to survive four weeks without incorrectly answering five questions, she won a jackpot prize. The radio version of "Doctor IQ" did not have a set studio. Instead, it traveled from city to city and was recorded in large concert halls and theaters. Now, David Brooks, a practitioner of the New Journalism, who gave us the memorable "Bobos" (Bohemian Bourgeois) as an alternative to "Yuppies," takes aim on the wacko idea that we can buy our way back to prosperity by adopting the persona of "Dr. Retail." His take on the Democrat bloodletting is guided by market economic theory. Several times, Brooks made me LOL (laugh out loud). If this is (fair & balanced) drollery, so be it.

[x NY Fishwrap]
Questions for Dr. Retail
By David Brooks

QUESTION: Dr. Retail, now that the Democratic presidential race has entered its long, bloody slog phase, I figured it was time to get a fresh perspective. Can you explain to me what it’s all about?

DR. RETAIL: Why do you bother me with simple problems? Listen, the essential competition in many consumer sectors is between commodity providers and experience providers, the companies that just deliver product and the companies that deliver a sensation, too. There’s Safeway, and then there is Whole Foods. There’s the PC, and then there’s the Mac. There are Holiday Inns, and there are W Hotels. There’s Walgreens, and there’s The Body Shop.

Hillary Clinton is a classic commodity provider. She caters to the less-educated, less-pretentious consumer. As Ron Brownstein of The National Journal pointed out on Wednesday, she won the non-college-educated voters by 22 points in California, 32 points in Massachusetts and 54 points in Arkansas. She offers voters no frills, just commodities: tax credits, federal subsidies and scholarships. She’s got good programs at good prices.

Barack Obama is an experience provider. He attracts the educated consumer. In the last Pew Research national survey, he led among people with college degrees by 22 points. Educated people get all emotional when they shop and vote. They want an uplifting experience so they can persuade themselves that they’re not engaging in a grubby self-interested transaction. They fall for all that zero-carbon footprint, locally grown, community-enhancing Third Place hype. They want cultural signifiers that enrich their lives with meaning.

Obama offers to defeat cynicism with hope. Apparently he’s going to turn politics into a form of sharing. Have you noticed that he’s actually carried into his rallies by a flock of cherubs while the heavens open up with the Hallelujah Chorus? I wonder how he does that.

QUESTION: But why would Democratic votes break down so starkly along educational lines?

DR. RETAIL: The consumer marketplace has been bifurcating for years! It’s happening because the educated and uneducated lead different sorts of lives. Educated people are not only growing richer than less-educated people, but their lifestyles are diverging as well. A generation ago, educated families and less-educated families looked the same, but now high school graduates divorce at twice the rate of college graduates. High school grads are much more likely to have kids out of wedlock. High school grads are much more likely to be obese. They’re much more likely to smoke and to die younger.

Their attitudes are different. High school grads are much less optimistic than college grads. They express less social trust. They feel less safe in public. They report having fewer friends and lower aspirations. The less educated speak the dialect of struggle; the more educated, the dialect of self-fulfillment

Did you hear the message of Clinton’s speech Tuesday night? It’s a rotten world out there. Regular folks are getting the shaft. They need someone who’ll fight tougher, work harder and put loyalty over independence.

Then did you see the Hopemeister’s speech? His schtick makes sense if you’ve got a basic level of security in your life, if you’re looking up, not down. Meanwhile, Obama’s people are so taken with their messiah that soon they’ll be selling flowers at airports and arranging mass weddings. There’s a “Yes We Can” video floating around YouTube in which a bunch of celebrities like Scarlett Johansson and the guy from the Black Eyed Peas are singing the words to an Obama speech in escalating states of righteousness and ecstasy. If that video doesn’t creep out normal working-class voters, then nothing will.

QUESTION: Your cynicism is really interfering with my vibe. I don’t think you’re feeling the fierce urgency of now.

DR. RETAIL: Believe me, those of us who bill by the hour completely feel the fierce urgency of now. As John Edwards would say, this is personal with me.

QUESTION: So does this mean the Democrats are fundamentally divided?

DR. RETAIL: Why do you political people always think in either/or terms? No. Safeway and Whole Foods people shop in each other’s stores. They just feel less at home.

QUESTION: So who’s going to win?

DR. RETAIL: Observe the marketplace. The next states on the primary calendar have tons of college-educated Obamaphile voters. Maryland is 5th among the 50 states, Virginia is 6th. But later on, we get the Hillary-friendly states. Ohio is 40th in college education. Pennsylvania is 32nd.

But it’ll still be tied after all that. The superdelegates will pick the nominee — the party honchos, the deal-makers, the donors, the machine. Swinging those people takes a level of cynicism even Dr. Retail can’t pretend to understand. That’s Tammany Hall. That’s the court at Versailles under Louis XIV.

[David Brooks's column has appeared on the Op-Ed page of The New York Times since September 2003. He is also currently a commentator on "The Newshour with Jim Lehrer." Mr. Brooks is the author of Bobos In Paradise: The New Upper Class and How They Got There and On Paradise Drive : How We Live Now (And Always Have) in the Future Tense, both published by Simon & Schuster.

Brooks graduated from the University of Chicago in 1983, and worked as a police reporter for the City News Bureau, a wire service owned jointly by the Chicago Tribune and Sun Times.

His articles have appeared in the New Yorker, the New York Times Magazine, Forbes, the Washington Post, the TLS, Commentary, the Public Interest, and many other magazines. He is editor of the anthology Backward and Upward: The New Conservative Writing (Vintage Books).]

Copyright © 2008 The New York Times Company

Get an RSS (Really Simple Syndication) Reader at no cost from Google. Another free Reader is available at RSS Reader.