Kohl's And The Rest Of The Retailers Are In Deep Trouble

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform

Kohl's And The Rest Of The Retailers Are In Deep Doo Doo

“Facts are stubborn things, but statistics are pliable.” ? Mark Twain

I never believe government manufactured numbers. They will always be adjusted, massaged, and manipulated to achieve a happy ending for the propagandists attempting to control and fleece the sheep. Yesterday, the government produced retail sales numbers for August that were weak and the corporate MSM propaganda machine immediately threw up bold headlines declaring how strong these numbers were. Positive stories were published on the interwebs and Wall Street hack economists were rolled out on CNBC, where the bubble headed bimbos and prostitutes for the status quo like Jim Cramer and Steve Liesman declared the recovery gaining strength. Woo Hoo.

If everyone else is whipping out that credit card, why aren’t you? Credit card debt has reached a new post recession high. They tell me consumer confidence is soaring. Forget about the 92 million working age Americans supposedly not in the labor force. Forget about real household income hovering at 1999 levels. Forget about median household net worth still 30% lower than 2007. Forget about what you see with your own two eyes in malls, strip centers and office parks as you motor around our suburban sprawl empire of debt. Those Store Closing, Space Available, and For Lease signs mean nothing.

I didn’t get a chance to peruse the commerce department drivel until this morning. They put out unadjusted data and adjusted data. Shockingly, the adjusted data is always rosier than the unadjusted data. I wonder why? I can understand the rationale for adjusting month to month data due to holidays and calendar events. But I still don’t trust the adjustments. There should not be a major difference when comparing year over year data. The adjusted data should reflect the same relationship to the unadjusted data on a year over year basis. Well guess what? It appears our friendly government drones may be pumping the current data to give the appearance of recovery. Here are my observations after taking a look at the government propaganda report:

  • The unadjusted retail sales were only 3.2% higher than last August. Considering government reported inflation of 2%, that is a pretty shitty result. But have no fear. The “ADJUSTED” retail sales for August were 5.0% higher than last August. WTF? Guess which number gets reported to the sheep?
  • Hysterically, your government drones consider lending deadbeats $40,000 for seven years with no money down to drive away with a GM deathtrap SUV as a retail sale. The billions in subprime auto loans led to an 8.8% YoY surge in “ADJUSTED” auto sales. It seems the unadjusted number only went up 5.3%.
  • When you back out the Federal Reserve/Wall Street pumped auto sales, which will ultimately result in billions of written off bad debt (you’ll pick up the tab), unadjusted retail sales were only 2.7% higher than last August. With real inflation of 5% or more, real retail sales are negative on a year over year basis.
  • Despite financing deals of 4 years with no interest, furniture and electronics retail sales were flat versus last August. If there really is a housing recovery and 2.1 million more Americans are employed versus last August how could these discretionary sales be flat, and negative on an inflation adjusted basis?
  • Grocery store sales were up only 2.1% over last year. Even the government is reporting 2.7% food inflation in the last year. We all know it is closer to 10%, so people are actually reducing the amount of food they are buying. That is a sure sign of an economic recovery.
  • Clothing store sales were flat and department store sales were negative versus last August. So much for the back to school storyline. I do believe August is back to school time. The Sears and JC Penney Bataan Death March trudges toward bankruptcy.
  • What did surge was sales at restaurants and bars. They soared by 6.8% versus last August. We already know Darden, Yum Brands and McDonalds have reported dreadful results, so either the government is lying, soaring food prices are being passed on to customers, or people are so depressed by this awesome economic recovery they are drinking themselves into a stupor.

As a side note on the accuracy of this government data, in a previous role at IKEA, when I was a much younger man, I was responsible for filling out the monthly government retail surveys for the Census Bureau. The government drones collecting this data do not check it. They do not require proof that it is right. It is self reported by retailers across the country. Filling out this crap for the government was about as low on my priority list as whale shit. If I was really busy, I’d make the numbers up, scribble them on the form and put it in the mail. The numbers the government are accumulating are crap. And then they massage the crap. And then they publish the crap as if it means something. It’s nothing but crap.

When you see the headlines touting strong retail sales, you need to consider what you are actually seeing in the real world. RadioShack will be filing for bankruptcy within months. Wet Seal will follow. Sears is about two years from a bankruptcy filing. JC Penney’s turnaround is a sham. They continue to lose hundreds of millions every quarter and will be filing for bankruptcy within the next couple years. Target and Wal-Mart continue to post awful sales results and have stopped expanding. And as you drive around in your leased BMW, you see more Space Available signs than operating outlets in every strip center in America.

My anecdotal proof of this relentless slow motion retail trainwreck is twofold. We received our second 30% off discount coupon from Kohl’s in the last three weeks. We are so indifferent to these constant offers that we didn’t even use the first one. I have to wear dress clothes to work every day, so I went over to Kohl’s this morning when they opened at 8:00 am to get some dress shirts and pants.

The parking lot was an oasis of empty spots and there were maybe 5 customers in the entire store. I went to the mens’ section and was shocked to see about two dozen 60% to 80% off racks. There are usually two or three racks. The store was overflowing with summer merchandise. Summer is over. The store should have been overflowing with Fall merchandise. They are clearly in the midst of an inventory disaster. I found excellent dress shirts on the 70% off rack. Everything I bought was at least 50% off, even before my 30% coupon and another $10 menswear coupon.

I live in a relatively upscale suburban area and still this Kohl’s is an absolute disaster. Their gross margin is going to be hammered. Profits are going to implode. Kohl’s has always been a favorite retailer of the middle class. Decent quality at reasonable prices. Their comp store sales were between positive 5% and 15% for years, until the 2008 financial collapse. Their struggles since then coincide with the decline of middle class incomes and the fake jobs recovery. The fact that they are spiraling downward flies in the face of the propaganda being spewed by the government and media.There is no recovery for the average American.

My second data point happened on Thursday. An accident on the Turnpike forced me to take Lincoln Drive and Germantown Pike home from work (1 hour and 55 minutes of agony). I hadn’t taken this route in about six months. Germantown Pike winds through the Chestnut Hill section of Philly. This is an artsy fartsy area with boutique retail, chic outlets, and fancy restaurants. The upper middle class frequents the area. The retail stores were always open, occupied and busy.

Not anymore. I saw dozens of empty storefronts, Space Available, and For Lease signs. The open stores had no customers. The trendy eating establishments had few patrons. Even the yuppie latte drinking areas are beginning to crumble. Every office park I passed had Space Available signs in front. The amount of vacant retail and office space in this country is too vast to comprehend and is being under-reported by the real estate whores whose job it is to rent space. Ignoring the facts and the truth doesn’t change the facts and the truth.

Do you believe the government and the corporate media, or do you believe your own two eyes?

You can ignore the government reported happy talk. When retailers and restaurants report their actual sales and profits, the truth shall be revealed. It will set you free.

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y3maxx's picture

...WHERE IS IT SAFE TO LIVE?

hedgeless_horseman's picture

 

 

I live in a relatively upscale suburban area and still this Kohl’s is an
absolute disaster. Their gross margin is going to be hammered. Profits
are going to implode. Kohl’s has always been a favorite retailer of the
middle class. Decent quality at reasonable prices.

I live in a mid-scale, formally rural area, and have never been in a Kohl's, so I have nothing to worry about?

The local economy in Texas is booming.  Definitely.  Yet, we still manage to overbuild...especially strip malls.  The boom is ugly, but the bust is really going to suck.

In similiar news, here is a photo from The Houston Chronicle of XOM's new headquarters that is now being constructed just south of The Woodlands, Texas. What do they know?

 

http://www.zerohedge.com/contributed/2013-11-05/hockey-sticks-day

 

 

hedgeless_horseman's picture

 

 

If we didn't have empty strip malls, then where would all the unemployed open cross-fit studios?

Speaking of cross-fit, I need to finish my barn work this morning. 

Y'all be cool.  Peace!

NoDebt's picture

"There should not be a major difference when comparing year over year data. The adjusted data should reflect the same relationship to the unadjusted data on a year over year basis."

Putting my economist hat on for a minute, I just gotta say I agree with that statement COMPLETELY.  But only if your intention is to tell the truth, not obfuscate it.  Guess which mode we're in right now.

And don't get me started on CPI calculations and GDP deflators.  Same nasty bag of tricks going on with them, too.

The US economy has not see anything like sustained REAL ACTUAL GROWTH in over 30 years.  

max2205's picture

Philly is a shit hole

 

 

Carpenter1's picture

I live in Vancouver, Canada's San Francisco/Los Angeles, full of Mercedes driving yuppies, and bungalows selling for 1 million+. It's just as he says here. I've lived here my entire life and know what "normal" is.

Big malls are 20-25% empty, for lease signs on entire new developments in upscale areas, for sale signs on retail and office space. Nobody ever sold such great income streams as retail or office space before, and I would know, 18 years I worked as a rep where I was in malls and retail outlets, never saw units for sale, ever.

It's even hit the premium market. Our highest end fashion district is a street called Robson st. That street would have waiting lists for units and rent is $20,000 per month for a small space, upwards of $50,000 for a larger one.

Now there's for lease signs popping up everywhere and I've noticed a drop off in the quality of stores. No more high end retailers necessarily, now you see low end Vietnam style neon lit windows with big ugly tables splayed with cheap fake leather products, $5 Chinese plastic junk, and no rhyme or reason to what's being sold.

AssFire's picture

I live in The Woodlands if any of you want to know what the opposite of this article is like. Hedgeless is right-  everything is packed and lots of construction everywhere. Most people here are oblivious or don't care about the other (especially the blue) areas of the country. Of course, I am for secession.

yrbmegr's picture

Woodlands/Conroe will have another 3 years of growth at the current pace, and then things will start to moderate a bit.  Traffic there is impossible.

Gaius Frakkin' Baltar's picture

The phrase "recovery gaining strength" and its cousins have been used since 2008. The fact they have been used continuously up until late 2014 (and presumably well beyond) is all the evidence you need for it being complete fucking Newspeak BS.

0b1knob's picture

Sort of related, GM stops all sales of the Corvette and orders a recall of all 2015 models.

http://blog.caranddriver.com/little-recalled-corvette-gm-stops-sale-prep...

The Corvette is the high prestige high margin GM product.   And they are f*cking even that up.  Aren't you glad Choomboy "saved" them?

GM chapter 22 within 3 years.  Probably less. 

philipat's picture

Probably within two so that our "Dear Leader" can again screw the bondholders and bail out the Unions as a departing gesture of good will?

flapdoodle's picture

More likely they will stay in business building M1A1 Tanks for the Russian Front.

CrazyCooter's picture

y3maxx, I moved to Alaska. I lived in Texas most of my life prior (born there). TX is a great place, but its a tax haven (wiki used to list this - they don't anymore). Basically any company in the US can drop a fat plus to their bottom line by relo-ing to TX (and a few other select states). Think CA to TX.

That said, TX is in a giant influx of carpet baggers. Folks from somewhere else, with somewhere else values. Destroying the political base (in the sense they are skewing it in another direction).

I suppose AK could say the same about me.

YMMV.

Regards,

Cooter

Shocker's picture

Look at the Job Market... Kinda tells you where retail is heading

Job Situation - http://www.dailyjobcuts.com

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Elvis the Pelvis's picture

Retail is in trouble because no one has an extra dime to spend.  This points to deflation.  I have no idea what the inflationists are talking about.  Despite the effort of the FED, money is disappearing every day.  Deflation.  Learn it, live it, love it.

SeattleBruce's picture

Bouts of inflation and deflation will curse us into the reset.

disabledvet's picture

I had no idea I was telling so many people from Texas to drop dead. Anyone here from Ohio?

The9thDoctor's picture

Large shopping malls with anchor department stores are an outdated business model. It's peak was in the early to mid 1990s. eCommerce replaced it.

In Phoenix, malls are decaying rapidly, yet in the last decade the land surrounding Deer Valley Airport and Scottsdale Airpark is booming with development, even in this "recovery". Lots of small, internet-based startups are occupying these spaces and they are selling their goods and services online.

These businesses advertise on facebook, twitter, craigslist, backpage, google adsense, etc.

Why Sears, Penneys, and Radio Shack exist even into the 2010s is perplexing. They should have been toast along with Wards in the year 2000. The only thing I can think of is they are front organizations for something bigger going on.

walküre's picture

The mall killed all that was great about main street shopping in America. It killed decent stores with knowledgeable staff owned by family operators who gave a shit about their customer. The malls are occupied by big corporate nationwide or even global brands where the staff is AT THE MOST just good enough to sort the red shirts from the green pants and put those back in the shelves.

Every dollar spend at the mall is 98 cents spent on leases and Wall Street profit margins (shareholder value), 1 cent for staffing and 1 cent for product.

When malls die, America has a chance to come back. Small to midsize private businesses are the key to turning America around. Starve the banks, starve the shareholders and starve Wall Street.

It's very simple, folks. There is no free lunch and the parasites had their free ride for far too long.

fallout11's picture

Unfortunately for any brick and mortar store, of any size, technology and interconnectivity (i.e. the internet) are rapidly rendering the previous business model obsolete.  When you can order any shoe or shirt on earth, in any size, and have it delivered to your door within 5 days or less at competitive (or less) cost (saving on inventory, real estate, clerks, parking, traffic/travel/crowds), why would you bother with driving around town trying to find it instead?
Except for items that are needed in less time or do not ship well (groceries, convienent stores, services), and "boutique" goods, physical retail will be dead and gone within 15 years, in much the same way that video rental stores already are.

fallout11's picture

Car & Driver's hand selected review model Corvette blew an engine, during their test drive.
http://bizbeatblog.dallasnews.com/2014/09/corvette-in-car-and-driver-long-term-test-fleet-blows-engine.html/
GM makes garbage. 

RockyRacoon's picture

Thanks to you folks for letting me know where I DON'T want to be when the collapse gains momentum.

I kinda like it here in my "rural" state.  Lots of folks within an hour's drive who have self-sufficient farms and lots of fresh water, ponds with fish, lakes with cheap water-front lots.   ...and they have extended a welcome should I decide to join them.   I'll just pull my fair share of the load.  I've slopped pigs before and I can do it again.

The Big Ching-aso's picture

On a long enough timeline we're all broke, tired, fucked, disillusioned, mindless, soulless, enlivened, numb, drained, skeptical, naive, wizened, artful, compassionate, passionate, lukewarm, fanatical, empirical, loving, hateful, envied, pitied, and partially semi-conscious out of a standard blissfully boring day.

The rest of the fruitfull time we're sitting here scratching our ass waiting to die.

Binko's picture

Great comment. You just described the default human condition. Most people spend their entire lives running frantically, bickering and fighting and elbowing for advantage just so they can enjoy the temporary pretense of escaping their humanity.

I re-joined the gym after a few years away. Gyms used to be social places. Now 95% of the patrons have their precious phones strapped to them while exercising and the earphones always in. Also there are dozens of TVs everywhere you look. Everybody is in an electronic bubble within another electronic bubble and there is virtually zero human interaction.

Vullsain's picture

Just got back from the gym myself and what you describe is absolutley correct. Many of them will sit like zombies on a weight machine staring at their smart phones. I actually timed one of them today for a reference, 2 weak ass sets in 45 minutes on a chest machine until someone finally cut in.

 

zorbathefreak's picture

You timed someone for 45 minutes at a gym?

TeethVillage88s's picture

This is English Culture.

We follow the English Empire in this Business Office Culture. We are to be Empty Suits, Bureaucrats. We are to be too busy with work or device to be human.

In London you can see these guys in Suits. They might have been in the Military for all the personality they have. They don't pay any mind to anyone and see to be living through some trauma of some sort. Could be that Office work makes you into this introverted machine. Could be if you allow your inner world to be controlled you lose your humanity.

If you work in a large organization you notice this too. People are odd in order to avoid having real conversations since anything personal can be use against you.

It is both competition & Management and a kind of fascist tattle tailing that occurs. Aanything personal can be use against you.

- Machines we are
- Losing Humanity we are
- Serving an Evil Organization we are
- Losing our time and our freedom too
- It is Enslavement

TeethVillage88s's picture

Actually what is the difference from Communism, ...except for Perception. Which means = Mind Control, Voluntary Indentured In-servitude.

SHRAGS's picture

Currently reading Robert Anton Wilson's 

Illuminatus! Trilogy - You have just described Hagbard Celine's "Don't Whistle while your pissing" Robot to a tee.

Its actually a fantastic managemnt book with a heap of laughs: https://web.archive.org/web/20140816230525/http://www.cs.utexas.edu/user...

tarsubil's picture

I went kayaking with a bunch of people this weekend and everyone had a fun time. We went to dinner and half the people were glued to their phones. God help us if we get water proof phones. There will be no escape.

Charlie hustler's picture

You ain't kidding about that electronic bubble friend.
I take it hand in hand tho. There's alot of good deals to be found these days too.
I got a great discount on a hooker the other day and didn't have to pay extra to bare-back her but, yep, she talked/surfed her smart phone the whole time I was laying that pipe to her.
A good deal is a good deal tho.
I take it all in and live pretty easy. I figure I'll be dead soon enough anyway.
You guys need to stop playing pussy and get yours before it's allllllll gone.

Long live the republic

hedgeless_horseman's picture

 

 

I live in The Woodlands...

...but you must be browsing from Internet Free Texas, because I am pretty certain that TWT Politburo blocks ZH inside The Bubble.

AssFire's picture

Haa, the Bubble.. the term is now complete as the ladies tell me since Nordstroms moved in there is no reason to ever leave the bubble.

I am never on an interstate, but do leave the bubble to go to Magnolia (also very white- but kinda trashy) where my office is.

The Woodlands has been paying the city of Houston extortion money to keep from being annexed and to keep public bus transportation out- that would be a bubble popper. Houston is 3rd world- when it was just the illegals it was bad, but since Katrina- well you know.

Vampyroteuthis infernalis's picture

Hello fellow Texans, I live in the DFW area in North Texas. The Dallas area seems to be schitzophrenic in nature. The well-to-do areas like Uptown, Preston Hollows and etc are doing well. Once you leave those posh areas, it is nothing but miles of "For Lease" everywhere you go. Good luck trying to find Americans in many of these places.

disabledvet's picture

Drove north from DFW to Oklahoma once. Had to be the longest strip mall on the face of the earth. I swear it was at least 100 miles long and lasted almost to the border.

Son of Loki's picture

Take a drive through Garland or Mesquite just outside of Dallas and the picture is quite different. Huge vacant malls sit almost idle. I stopped at one just for kicks and the only 4 friggin stores open out of the dark dozens closed down included a pizza place, “authentic antique Chinese vase” store selling these ‘antiques' for $28/vase [ I had to restrain my gf] and a wedding dress place with sparkly velvet gowns of all colors including “amarillo, morado, y azul,” and  starting at $18 [“cash only” the sign in the window says].

 

The pizza guy said as the neighborhood became “more diverse” … crime rose, stores closed down due to theft, zero foot traffic, and so on. House values plunged and [employed] consumers moved further out.

 

Depends on the neighborhood in Texas same as anywhere else.

 

My cousin lives in an area called Sugar Land and seems to like it there [after all, I read that’s where Delay lives]. He echoed what you said about The Woodlands being nice as well as Cinco Ranch and Fulshear areas outside of The Big H.

 

I'd like to drive down to Galveston and Corpus some day and see what they're like these days post-hurricane...anyone know?

 

TuPhat's picture

Bay City, about half way to Corpus from Houston on 35 is booming.  A Tennaris pipe plant is being built and several chemical companies are adding capacity.  Of course all the typical unemployed still can't find work and never will.  Rent for an apartment has gone way up, close to Houston prices, and traffic is bad.  Takes 15 to twenty minutes to get across town on the one road.  Walmart was crowded yesterday but it is the only place in town to shop.  I don't recommend moving here or any place further south if you don't speak spanish.  I figure english will continue to be spoken in Bay City for another 5 or 6 years maybe.

JamesH's picture

Corpus looked dead when I was there in February

 

tvdog's picture

Sugar Land is supported by many hospitals and other outposts of the medical industrial complex.

americanspirit's picture

My daughter-in-law has a MS in environmental Science and is currently in a PhD counseling program at UT Corpus Christi. She told me of a city-wide study just completed that pegs the median non-verbal IQ of the entire K-12 school system at 87. She says that in the past three years the bay has gone from marginal to toxic - people who fish in the bay and eat their catch are flooding emergency rooms with strange rashes and neurological symptoms. The Oil & Gas industry is booming and destroying the ecosystem top to bottom in the process. Gangs are flourishing - whole neighborhoods are no-go zones for single police cars. Housing is expensive because O&G workers can afford to pay $2000/month for a POS shack, and they do.

I don't know anything about the retail sector in Corpus but with that median IQ of 87 I would guess that there's not a lot of high-end activity. On the other hand, WalMart and Dollar store are probably doing OK. And GM dealers of course.

HobbyFarmer's picture

Americanspirit, I don't know if I should up or down arrow you.  Your post is so sad for the future of this nation.

Something tells me I'll never read about that study....can't let the truth out.

unitwar's picture

Galveston is booming.   Cruise ships and oil rigs everywhere.   Galveston is nicer now than it has ever been.   

fallout11's picture

Large swaths of Atlanta and surrounding core suburbs are in similar shape, this article nailed it pretty well.

Jack Burton's picture

"but since Katrina- well you know."  My god, I can only imagine what the areas those folks moved into have become. The Jungle?

CCanuck's picture

The "WeRobb'n-Ya" Hood

Hurricane Harry's picture

Once again I feel compelled to give thanks for the many great contributions of the NOLA refugee community and their culture to our society.

Their peaceful and generous nature makes them ideal neighbors, lending testimony to their exceptional family values and parenting skills unrivaled by any other culture.

Their commitment to academic excellence enriches our schools and serves as an example to all who strive for cultural prominence as a people. Real Estate values are fueled by the influx of these noble people into an area due to their caring and respectful nurturing of these communities. They serve as a shining example of enthusiasm for self-improvement through hard work, and a self-reliant can-do nature.

Without their industrious and creative drive, we would be so much poorer as a city, nay state.