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Posted
Feb 24 2009, 11:06 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Everyone knew it was going to be tough. But as fourth-quarter results are reported, it's still shocking to see how bad the holiday shopping season actually was.
Deep discounts were needed to encourage sales, which pinched profitability. Macy's (M) revenue fell 7.7% during the quarter as earnings declined 59%. Target (TGT) saw revenue fall 1.6% while profits fell 41%. Sales at Office Depot (OD) were down 15% as it posted a loss of $1.5 billion. The list goes on and on.
This is just the beginning. America's retail industry is shrinking. Store closures, consolidation, and reduced expansion will bring per capita retail square footage back to levels last seen in 2003. As a consequence, millions will lose their jobs, investors in failed retailers will be wiped out, and shoppers will be presented with fewer choices at higher prices.
There are two dynamics at work here: credit and confidence.
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Posted
Dec 29 2008, 12:51 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
The 2008 holiday shopping season looks like one of the worst in history. MasterCard reports that total retail sales fell 5.5% in November and 8% in December compared to last year. The worst affected were retailers of electronics, appliances and luxury goods.
Not even an epic fall in gasoline prices and the resulting boost to inflation-adjusted income could rekindle the acquisitive sprit as American consumers worked to strengthen their financial position.
While we won't know the true extent of the damage until same-store sales are reported next week, big changes are coming as the industry resizes to reflect new realities. Consultants at AlixPartners estimate that nearly 26% of the 182 large retailers it tracks are at significant risk of filing for bankruptcy over the next two years, up from just 4% two years ago.
For investors, all is not lost in this sector.
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Posted
Oct 27 2008, 11:24 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
The consumer's obituary has been written: John Q. Public maxed out his credit card on one too many Abercrombie & Fitch fleeces. He is survived by his flatscreen HDTV.
But my contrarian streak tells me that one type of consumer will rise from the ashes like Zelda when he finds a new shield. Like Super Mario when he eats a mushroom. Like Sonic the Hedgehog when he collects enough chaos emeralds. You get my point: Video games have long been regarded as recession-proof. Though that perception is being tested in this putrid retail environment, it's held true - so far.
According to NPD, US video game sales fell 7% in September from the previous year. However, last year's number was inflated by the monster launch of Halo 3. Through last August, video games sales were 32% ahead of last year's record-breaking revenue, bringing in $10.6 billion in the United States.
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Posted
Sep 10 2008, 12:11 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
In the face of mounting job losses and falling real incomes, Americans are living on borrowed time. So spending on consumer goods is bound to drop, right?
Investors have prepared for this by avoiding, or shorting, discretionary consumer stocks. Top of the list for many were the purveyors and creators of electronic devices -- HDTVs, computers, car stereos, cell phones, and the like.
In fact, spending on these items actually increased between June and July as consumers cut back elsewhere, according
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Posted
Aug 13 2008, 11:47 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Oil prices are now well below their peak of a few months ago, which means gas prices may finally be poised for a decline.
Although the fundamental issues plaguing our economy remain, cheaper gas will surely help consumer stocks pummeled by the "consumer is dead" investing mindset.
So where should we fish for deep-value plays? To help us in the search, a team of economists and equity analysts at Citigroup looked at which sub-sectors had the greatest statistical relationship to crude oil prices.
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Posted
May 23 2008, 10:28 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
I never knew anyone who said, "I want to buy a Zune. I'm going to GameStop to get one!" Actually, I never knew anyone who said they wanted to buy a Zune, but that's another story. GameStop announced today it's going to stop selling the music players from Microsoft, and I don't expect it to impact either company much. Zunes didn't sell as well as GameStop had expected, so it pulled the player from its 4,400 stores. This isn't the death knell for Zunes, which have a 3% share of the digital media player market. But it is a sign that Xbox 360 owners are not predisposed to the Zune. Perhaps if the Zune had broader appeal there might have been some cross-selling possibilities, but that isn't happening.
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Posted
May 16 2008, 09:09 AM
by
Andrew Horowitz
Rating:
Money Blog: Top Stocks Blog - MSN Money
After the recent merger with EB Games, GameStop is by far the No. 1 specialty retailer that focuses on the new and used video game market. The company has a total of 4,400 active stores in virtually every state and in 15 countries.
Revenue has been on the rise as the hot gaming market continues to grow exponentially. The latest editions of Rock Band, Guitar Hero, Halo 3 and the blockbuster Grand Theft Auto IV are all extraordinarily popular on every gaming platform.
But how will Gamestop continue to thrive in the face of significant competition from discount retailers such as Target and Wal-Mart? What’s more, the bulk-retailers are also selling video games in a time when
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Posted
Mar 06 2008, 01:39 PM
by
Robert Walberg
Rating:
Money Blog: Top Stocks Blog - MSN Money
Not skyrocketing energy prices, not the rising foreclosure rate, not even the slowing U.S. economy will stop GameStop from posting monster sales and earnings gains when the company reports its fiscal fourth quarter earnings in less than two weeks.
Bolstered by strong demand for video game hardware systems such as the Wii and Xbox 360, and continued strength in software sales, the world's leading video game retailer is expected to deliver Q4 earnings of $1.12 per share on revenue of $2.9 billion, -- well above last year's results of 82 cents and $2.3 billion.
Normally, a stock would rally into such news. But these aren't normal times. GameStop is down 32% from its December 2007 high, as investors flee any and all stocks tied to the consumer. However, unless you're a gamer or are related to one, you might not understand that GameStop actually stands to benefit competitively from a downturn. Unlike Target, Best Buy or Wal-Mart, GameStop sells used games and game consoles. In fact, sales of pre-owned merchandise now represent about 25% of total sales.
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