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Goldman's Proof Of A Retail Rebound: Spanish Tourists Filling Their Luggage With A&F Hot Pants
Page 17 of the latest Adrienne Shapira/Goldman Sachs retail cheerleading report finds the smoking gun of the end of the recession: A "group of Spanish tourists made the trek to fill their luggage with merchandise from ANF and Hollister." Well, if the Spanish tourists are stuffing child porn endorsed trinkets down their carry-ons, then all is well. Where does one buy these retailers who are currently (and far into the foreseeable future) experiencing negative margins thanks to -80%/-90% and, who knows, in many cases five finger, discounts (you didn't think the rampant hustle and bustle this Xmas season was all AmEx and CapitalOne funded, did you).
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Wisely chosen group of individuals.
The vampire squid should start sucking its own ass. Don't forget, sooner or later, the ass gets connected to the mouth!
By the looks of them, they must be Moors
Sure it's not the Moops? :)
I've mentioned this in another reply, but it may be worth repeating (not sure why).
Friend works at Macy's Herald Square, store was filled with shoppers spending Euros and Yen, same as last year. Dollar spending elusive and endangered.
Let the celebration begin!
Uh, doesnt seem like you follow retail much. Discounts this year were smaller across the board vs last year.
This means, while overall sales were flat. Gross margins will be roughly 2x the awful numbers in Q4 08. That's a big improvement and will drop straight to the bottom line.
Further, retail costs are down big. Remember "rent" being down is a big boom for retailers, as are low interest rates which underpin everything from capital costs to trade financing to customer financing.
Im not saying there are not bad retailers, or struturally weak businesses... but you should continue to expect large (+20-50%) expectation beats by the well positioned companies.
Finally -- how bearish was ZH on retail 1-yr ago?
Last 12mons:
LULU = +325%
KMX = +200%
WFMI = +125%
TIF = +100%
... ... ...
But hey, you were long GOLD right...?
It is not popular to speak about markets going up and why, but you can't argue with the results. All the ingredients are in place for more manipulated positive earnings surprises. The components of earnings are more than the sales numbers as you point out. Fundamentals mean nothing at this time. It will all come to a crashing end sooner than later, but till then do not be surprised to see more incredible/unbelievable/unrealistic numbers. Jack be nimbe, Jack be quick - Jack's gonna get a candlestick shoved where the sun don't shine eventually.
Last 36mons:
LULU* = (-2%)
KMX = (-14%)
WFMI = (-39%)
TIF = +15%
XRT (-14%)
GLD +83%
*24 months
You go 36 months... why not 36 years?
GLD -- up say 100% (since 1973)
SPX -- up say 1000%
You says\ the XRT was down 14%... including the WORST downturn since the great depression. That looks pretty managable.
The flexibility of US business and the modern macroeconomic mgmt of the Fed might just be amazingly productive... if we recover from here.
At least say... if we move up from here, I'll have to give credit?
Stop making up numbers.
POG is up 3200% since gold was allowed to float. I don't know about the S&P, but I'd wager that it is up less than you say.
Hmmm better that last year. The worst in 4 decades (-9.7% from December 2007). With how many trillions thrown out the economy since December 2008? Of course 2009 numbers will beat. But the question remains becomes what will the Q1 2010, numbers look like (with a close to 18% un/underemployment number).
One only need to look at the recent Consumer Credit numbers to fully appreciate how the retail consumer is NOT levering up to buy their 4th flat screen.
LULU reminds me of AMZN. Can't figure out the popularity of a company that primarily sells $85 yoga pants to an obese population that doesn't exercise. It is as perplexing as AMZN selling $250 kindle's to a population that doesn't read.
hey...i read...can't do math...but i read!
lizzy...in the case of AMZN, I think the P/E of 78 is simply viewed as the value play of the century lol!
@Anonymous
If you know all this stuff, why don't the WS analysts, who are paid anywhere from $1 million to $15 million, know this, too? How can what is so well known (cheaper rent, wider margins, lower i rates) "beat expectations" by 20-50%?
So the current retail business model is: have less traffic, make fewer transactions, have lower average sale transaction amounts, but lose less per transaction, lay off most employees, order less merchandise to bankrupt manufacturers, pay less rent to bankrupt REITs, turn off lights, rinse - repeat?
Retail fundamentals have nothing to do with the runup in retail stocks, they're totally dislocated.
Yes, made some great option trades using GLD.
While not direct good news for Americans it
is nice to see foreign workers spending. If our
mercantilist trading "partners" suddenly
begin spending their enormous trade surplus
this could ignite the long awaited and now
UNEXPECTED recovery. Perhaps they will
realize this about their dollars - use them
or lose them.
With that kind of research, no wonder they need Govt support to exist
Don't ya think GoniffSachs just issues these research reports so they can continue the charade that they are an investment bank? They are a hedge fund. They make their money in the Caymen Islands. They pay a 1% effective U.S. income tax rate. They pay crumbs of $700 Million in dividends to their shareholders (which was reduced from the prior year). Management pays themselves $23 ba ba Billion in annual bonuses. Who's to blame for this disgrace? We are, the American taxpayers, for allowing this to happen.
This ia way too funny
They're lined up in Venezuela as well:
http://www.reuters.com/article/idUSN096521320100109
Behavioral economics = invent a fake reality + try guide the sheep into the desired path <= the consumer does not have a dime <<< unemployment in spain = 20%
Now if we can just get this report disseminated to all those over extended Wal-Mart shoppers, the next leg in the green poops recovery should steamroll on into 2012. (Please, no pun intended with the steaming pile of poop being rolled out by the Squidbert.)
If the consumer does not have a dime... why is every good nice restaurant packed?
Take a look at basic cash-flow businesses (restaurants, bars, mechanics, broker-dealers, dry-cleaners, etc) business is fine. At the good ones, its excellent.
This -- "there is NO money" -- story is non-sense. I am constantly queuing up for anything I want.
Can you pray tell us the location in which you see all this miraculous economic activity?
Shorter Anonymous 11:36, "Nobu is doing great, so the economy MUST be booming!"
I am rather partial to page 9. Headline: "Lean inventories lead to lower promotions...except at JPC"
Firms that are not JPC had 156 promotions in 2008 and had 161 promotions in 2009...But hey, who's counting?
if they don't even get the english language part right in the analyst certification (p.24), how are they going to get the analytical part right?
maybe because at Goldman, there is an "I" in team....?
If you have ever been to an ANF and seen their hot pants, you will fill your bags too. Spaniards are partial to tight fitting leggings and are easily induced to make purchases by shirtless ANF male models.
Maybe Brooks Brothers needs a similar promotion with some half naked female bankers so Brits can flock and purchase some new wing tips and wool suits.
reminds me of my retail banking days, particularly in the 80s after bank deregulation....i was successful as a sales oriented mgr vs the typical bank mgr at that time and my boss was trying to adopt a sales approach for the bank, a very large savings bank. at every meeting he had where I attended, he would ask about ideas to drive more traffic into the branches to cross sell into. I always said let me run a few offices with topless tellers and platform sales people and I will produce revenue and sales better than anyone!
he finally stopped asking me to those meetings.....
It always looks like a dogs really doing something until he actually catches his tail.
Garden State Plaza? Laughable. You go to the epicenter of Bubbleland for a retail visit? Why don't you venture into the middle of the country, away from the liberal elite?
Spaniards flying to the USA to buy clothes made in China - the global economy must be roaring back...
Nah, the jet lag is just easier when you go all the way 'round that direction...
Lloyd, lloyd, lloyd....
Months ago I told you the kind of PR campaign von praag et.al. were going to run, advised you (for free I might add) that it would not work (i was correct don't ya think??), in fact, it backfired. Now, I know that following any sell side analyst's recommendation is a recipe for disaster (unless one is part of those insider chat things that ZH has written about and Mary Schapiro just doesn't even want to think about going down that road, does she?) but this placing of a picture of a bunch of spanish gals buying up overpriced crap in a NJ mall (you guys pitching to run book for Westfield perhaps?) is pretty tacky for Goldman Sachs.
Lloyd, if someone in your organization says to start putting out Youtube vids of analysts recommendations, please contact me at zhdeadhead at gmail dot com, but i'm not doing this shit for you for free anymore, ok?
I've got a thought on the AIG thing as well but it's gonna cost.
Europeans coming to America to buy products made in China.
Rather circuitous.
I believe that they are buying mostly high quality European goods, they are cheaper here than in Europe.
Similiar to when Americans used to go to Germany to buy a Benz, less expensive including the entire vacation and the cost of shipping the Benz back to the states.
I called a hooker 5 times yesterday and the line was busy each time... Yup, I think the spending sprees have begun...
and all the while sales tax receipts continue to fall, go figure!
hookers don't charge sales tax.
oops, wrong comment for my reply.
I wonder how those Spanish tourists traveled to Garden State Plaza, which is at the triple junction traffic hellhole of Route 4, Route 17, and Garden State Parkway. I doubt they used public buses. Did Goldman Sachs do missionary work and give the Spanish tourists a limousine ride to the Garden State Plaza mall?