US Retailer Hell In One Chart

Tyler Durden's picture

The chart below from the WSJ, summarizes perfectly the hell that US retailers find themselves in. In brief: sales down and inventories soaring, means liquidation sales have to surge, while profits and cash flows crater.

From WSJ:

 Simeon Siegel, an analyst with Nomura Equity Research, looked at the inventory carried by those and other specialty-apparel retailers at the end of the third quarter and compared it with his projections for the chains' fourth quarter sales. He found that in most cases inventory growth far outpaced sales growth. Normally, the two should be growing about the same. "The ratios are the worst we have seen in quite a while," Mr. Siegel said.



"The worry now is about demand falling, not going through the roof," Mr. Johnson said.


Abercrombie ended the third quarter with inventory up 22% from a year earlier. Yet Mr. Siegel of Nomura predicts the retailer's sales will fall 14% in the fourth quarter.



Marshal Cohen, the chief industry analyst for the NPD Group, said he spotted signs throughout the weekend that stores were overstocked, including goods

stacked high up on shelves and ample merchandise in storerooms.


"When the most common sizes of popular items don't sell out, that's a problem," Mr. Cohen said.

Yes, it is - it means the consumer is fully tapped out courtesy of Bernanke's 5 year (and ongoing) wealth transfer experiment from the middle class to the 0.1%.

Gap and L Brands have had strong years, with their shares up more than 30%. But apparel sales have been suffering as shoppers direct their attention elsewhere. Many consumers, when they are spending at all, are plowing money into their homes and buying new cars.

They don't call it "fun-da-mentals" for nothing. And with Uncle Sam providing all the car loans one could ever need, why buy clothes when you can live naked (or simply rent clothes as they do in Europe) in their NINJA loan purchased (thanks to the government's generosity) Government Motors.

Finally, don't worry about any of the above: surely there is a weather excuse for all of it.

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TruthInSunshine's picture

No problem, retailers and etailers can just rent out excess inventory, like Mud Jeans in Europe is doing (crotch crabs not included if one is lucky).


A Cash-Strapped Europe's Latest Craze: Rented Clothes

Meet Anouk Gillis who is just such a person. As the WSJ reports, Anouk Gillis often sports a pair of organic-cotton jeans she ordered online. But she doesn't actually own them. Rather than buying the pants, which retail for around €100 ($135), Ms. Gillis signed a 12-month lease with their designer, the small Dutch fashion label Mud Jeans. The terms: a €20 deposit and monthly installments of €5.


Popo's picture

So how long before Obummer bails out Abercrombie & Fitch?

TruthInSunshine's picture

The Obamas are more of an Old Navy family.

Grinder74's picture

I thought it was J. Crew--which is funny because they rarely have any black twigs, er models, in their catalogs.

Vegamma's picture

The timing of the bailout is uncertain, but it helps to remember the sequence of events.

1. CEO sees writing on the wall, negotiates bonuses for board, which in turns pays CEO special bonus to retain him, cover story is JCPenny is trying to lure him away.

2. Paulson lays out the plan for the connected ones who first buy stock.

3. Obummer floats "bags for rags" stimulus which offers bags of cash for hipsters to trade in old clothes for new A&F only. Stock soars, the connected sell.

4. Obummer switches plan to higher clothing tax to pay for Obamacare. Stocks and bonds crater.

5. Connected ones buy debt at 20 cents on the $.

6. Bailout, consisting of full payout to bondholders and handing equity to an Italian company is announced.

7. Wash, rinse, repeat.

NotApplicable's picture

Surely Maduro can help out with that inventory problem.

Never One Roach's picture

Retailers need to convert themselves into Big Banks, cry "it's the End of the World" hire a Hank look-alike and beg for another TARP.

Freddie's picture

I got spam email from Aeropostale, US whatever - one of those young hip clothing stores like Old Navy.  I forget which one.  I had no interest but wanted to see if they were panicking and giving stuff away.

They had flannel shirts for $39.99!  A relative called wanting to buy me almost the same shirt at WMT for $6.99. I said no thanks.  I have a lifetime of shirts.   Who the hell buys cheezy flannel shirts for $39.99?  Trust fund hipsters in Bushwick/Williamsburg? 

Big business supporting Obama and now the Repubs going back to talking about amnesty?  F all of them.

dick cheneys ghost's picture

so let me get this straight...............a relative called you and asked you if you wanted a wal-mart shirt for $6.99? and this was the exact same shirt that you got spammed in a email??

damn fred, you are watching to much TV........

you already admitted you shop at walmart in a previous thread.......I think I will stick with that are just a walmart serf shopper


Deo vindice's picture

For several years my wife and I have purchased much of our clothing at a very well-run second-hand store. Often they have brand new clothes with the tags still on them for a small fraction of the price.

The whole "designer clothes" industry is just another insidious way to part a fool from his/her money.

When people brag about how much (as in high price) they spent on some clothing article, they fall into the category of 'fool'.

RSloane's picture

I bought a pair of designer linen shorts at Goodwill for .50$  which were selling in stores for 95$. They had never been worn and the original tag was still in them. I checked online when I got home and sure enough that was the price they were being sold for. I also bought several pieces of clothing for my newborn at a church bazaar, knowing full well that whatever I bought would be quickly outgrown. I got an entire stack of brand new newborn T-shirts for a dollar.

Grats to you and your wife, Deo, that's the smart way to shop.

DaveyJones's picture

I thought designer clothes were a good way to increase the odds of children getting burned in a factory 

Hedgetard55's picture

The hipsters are in Sunnyside and Astoria now.

Charles Nelson Reilly's picture

wtf... I thought the adjusted jobs report by ADP fixed everything?!?

NoDebt's picture

It did.  It did.  You can stop reading now.  All fixed.

101 years and counting's picture

the bulls have been cheering bad....without taking a second to think of the consequences.  they want bad, they're gonna get it.  shoved right up their ass.

Jumbotron's picture

Somebody from the Hedonics Department will clean ALL this up in a jiffy.....**poof**  .....   well......WHADDAYA KNOW ??   Best retail figures since 2006.

Murf_DaSurf's picture



I can't even come up with a witty snarc on this.

Grande Tetons's picture

"When the most common sizes of popular items don't sell out, that's a problem

I am guessing they have plenty of double extra large hanging around. 

Singelguy's picture

You forget we live in an upside down world. Now all the XL and XXL have been sold out to the FSA.

RSloane's picture

Yep. That's exactly right. Try to go shopping for petite clothing that does not look like it was designed by a high school cheer leader. Yet there are aisles of clothing designed for the 200 pound + crowd.

NM I just saw your name, Singleguy. My bad.

threeputting's picture

The government shutdown is to blame.

toady's picture

George Bush hates black people.

falak pema's picture

He should never have painted Laura in black !

Jimmy Carter was right's picture

Bring the taper bitcheez, gold to 1000, speed up the reset.

max2205's picture

Blizzard of 2013 coming just in time for the exuses for misses.    How do they do that?

crazyroadlizard's picture

Don't forget the shortened shopping season with Thanksgiving so late in the month - even though Black Friday started on Wednesday!

Chupacabra-322's picture

The sound of an Empire deflating.

mess nonster's picture

Deflating is right. This is what deflation looks like.

Bobbyrib's picture

Stagflation. With deflation prices actually go down and the consumer would have more buying power. Bernanke is setting (through QE/creating inflation) higher prices for products people need.

screw face's picture

Hyper Stagflation is baked in .......Dudes

Variance Doc's picture

Wrong!  Deflation is a consequence of a contraction in the money supply (and "velocity").  DO NOT confuse this with deleveraging, which is a different thing!

Singelguy's picture

But the money supply IS contracting for the average consumer. Higher taxes, higher health insurance premiums, lower wages. If the consumers have no money to buy, prices must drop, or businesses will sell less and will ultimately have to close. Money supply is only growing for the banks who are pumping stock prices higher.

Variance Doc's picture

Great - retarded Econ 101.  You'll have a lot of students in the USSA.

Nigh Eve's picture

True.   Regardless of what the correct terminology is, a weaker currency (a consequence of QE) works against any growth in the average person's disposable income.   

falak pema's picture

Biden loves chop suey; maybe we should too.

madcows's picture

The collapse of nations occurs at a rather slow rate when viewed against a human lifespan.  However, as national collapses go, I'd say this is on the order of the dude's crash from the car racing movie, release 52 or whatever it is.  I'll have to go ask the neighborhood tweens what the name is, but in general, rather fast and fiery.  In fact, I think this collapse is so cataclysmic that it will leave a sonic boom (depression) around the world.

buzzsaw99's picture

Other retailers I see not jack shit for inventory and thus declining top line is imminent. Trying to buy shoes for a bunch of kids, looked at every store, found very little in any of their sizes so zappos here we come. brick and mortar is dead. sales tax revenue will suffer, thus munis not such a good bet either.

TruthInSunshine's picture

Some of my best pairs of casual shoes and boots were made in the UK or US.

Their equivalents today (even same brand) are made in China.

It's like going from cow hide to dog skin (or more likely, rubbish synthetic material), and it shows, and the new pairs last a year or even less if used heavily, while you can't wear the old pairs out.

Even Dr. Marten & Red Wings now have some of their "top tier" products made in China.


buzzsaw99's picture

very true for adult shoes. kid shoes never fit for more than 6 months in any event.

MachoMan's picture

Reminds me of the pair of vasque sundowners I got in the late nineties...  arguably the best hiking boots ever made...  quality craftsmanship full leather construction from italy.

Fast forward a few years...  they're now made in china and subject to more than a few negative reviews.  oops.

PT's picture

Aside from your gold stash and your gun stash and your silver stash and your food stash, it may be handy to have a leather stash and a wool stash and a cotton stash and spare boot making / clothes making machines laying around.  After Uncle Sam decides to bomb the Chinese clothing factories, that stuff may be hard to come by, as will finding anyone who knows anything about manufacturing.  Don't forget to keep the moths away from your wool stash.  Coming to think of it, a Chinese made clothing / shoe stash might be "cheaper" ...

NotApplicable's picture

Boots I can see, but buddy, there's enough clothing already in the US to keep us from being naked for decades.

"I'ma gonna pop some tags..."

Uncle Remus's picture

I've heard the same about Vasque. I haven't had a pair since I left the moutains, but they used to be excellent.

mt paul's picture

 Macho man ,,Have to disagree with you a bit

i have used Vasque Montana block

3 quarter steel shank hiking boots for years [ 40+]

they are the best of the vasque line...

the sundowner is a nice all around hiking boot 

but not really ridged enough for hard mountain work...

resoled my first pair 2 times

broke my heart when i had to retire them 

the company rep gave me a pro deal on my present pair

the best boot on earth...

stop at the top

J Pancreas's picture

I'm an Allen Edmonds convert. Great quality, US made, matching belts.


Frye boots for the wife, also US made were an easy buy when comparing similar priced made in China Ugg leather boots.

screw face's picture

+1 munis


yup ..... that's how it looks over here in #Nucleartracktown, lot's of stinking 'PAPER'.