Thursday, May 15, 2008

Another Pillar of Retail Strength

Kohl's Net Falls; Shares Drop on Profit Forecast (Update1)

May 15 (Bloomberg) -- Kohl's Corp., the fourth-largest U.S. department-store company, said earnings dropped 27 percent and forecast profit that trails some analysts' estimates as consumers facing record gasoline prices slowed spending on clothes.

Trailed some analysts' estimates? I find that hard to believe. Surely the analysts saw this coming.

Sales at stores open at least a year fell 6.7 percent. Shoppers have curbed spending on clothing and home goods as housing values decline and costs for food and fuel surge.

Pillars of Retail Strength don't concern themselves with same store sales though (see link below).

``We're facing a downturn led by the consumers, and there is no visibility today as to when this is going to get better,'' Richard Jaffe, an analyst at Stifel Nicolaus & Co., said in an interview on Bloomberg Television. He recommends buying the shares.

The retailer ``is really running a very tight ship in a very tough environment,'' Jaffe said.


Looks to me like it is analogy time.

First Mate: We can't slow the ship. We've hit yet another iceberg. The water keeps coming in through the hull creating somewhat of a downturn. There is no visibility due to the fog.

Captain: Get China on the radio. Tell them we've rethought their offer. We're willing to sell them our ship at the agreed upon price.

``We do think there's a chance to get some of that stimulus money with an aggressive marketing campaign,'' Mansell said.

Retailers are specifically targeting some of the "free" money sent to us by using expensive money ("aggressive marketing campaigns"). I'm not arguing that they shouldn't. I'm simply suggesting that inflation causes malinvestments. That's the theory. In my opinion, here's the practice.

See Also:

Our Pillars of Retail Strength

4 comments:

Anonymous said...

I helped my neighbor tonight, a guy who is 64 and has been on disability for about 10 years move his stimulus into his house tonight. A 32" digital TV. His old one was 16 years old. He also had to cough up a couple hundred bucks for new tire on his hoopy which had a blowout when he went down to pick up his new boob tube. Didn't take hom long to blow that.

Stagflationary Mark said...

Anonymous,

Free money gets spent a tad faster than earned money it seems.

8 lottery winners who lost their millions
http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/8lotteryWinnersWhoLostTheirMillions.aspx

It was a hell of a good ride for three or four years, but now he lives more simply.

Anonymous said...

"It was a hell of a good ride for three or four years, but now he lives more simply.:

I knew a guy that won 3.4 Million in the early 90's, He did the same thing, blew it all and had to go back to work. I also know a guy that won twice but not as much, He kept working although he did spend some he invested wisely and is still working but only when he wants to not because he has to.

Kevin

Stagflationary Mark said...

Kevin,

I also know a guy that won twice but not as much...

I'm reminded of this tidbit.

http://www.fool.com/personal-finance/retirement/2005/02/04/rats-i-won-the-lottery.aspx

Evelyn Adams, something of a statistical freak, won the New Jersey lottery twice, in 1985 and 1986. (Notice that she hasn't won lately? She must have learned something and stopped playing.) Her total take was $5.4 million. What does she have to show for it now? Zippo. She lives in a trailer and recounts that, "Everybody wanted my money. Everybody had their hand out." Her own hand was out, too, at gambling venues.

I can't help but think that winning the lottery the second time is actually a lot easier than the first time. You simply reinvest your winnings and dramatically increase your chance of winning. Nothing quite like the thrill of scratching a million lottery tickets in hopes of duplicating your success. Sigh.

By the way, scratching a million lottery tickets is possible I believe.

http://wcbstv.com/watercooler/Lottery.Long.Island.2.238324.html

RIVERHEAD, Long Island (AP) ― A sobbing lottery addict convicted of stealing $2.3 million from her employer to fund her habit screamed at the judge that prison won't cure her.

The former bookkeeper for a doctors' office admitted she stole the money. Prosecutors said she spent as much as $6,000 a day playing Lotto and scratch-off games.

You know you have a gambling problem when you steal $2.3 million in hopes of striking it big in the lottery.