A Costco Analysis-Especially for DemonDoug
As you know, I am the SELF PROCLAIMED bad boy of CAPS. In addition I fantasize myself as the watchdog of facts. Whenever I post something factually wrong or even creating an inference of improper interpretation, not only do I encourage correction I applaud it.
DD, I know you think you are more bearish than I am, but I assure you it ain't even close. But debating who is more bearish than the other is like two canines trying to prove who is more dog. It really doesn't matter in the end.
To be fair, Costco is my favorite store and it is where I and my family do much of our shopping. I am unware of a better retailer anywhere in the world.
You posted: Costco was up a whopping 9% same store sales. That is absolutely huge for a company that size. ...there are people like me who are stickler for facts and fundamentals.
I appoligize for not making the following point clear in my earlier post... My bearishness is primarily focused on America so when I do a blog, it generally focuses on the American operations of the companies I reference.
So here is an excerpt directly from the Costco release and not something tainted by the mainstream press or Wall Street which may have its own motivations for printing headlines or writing stories:
The U.S. comparable sales figure includes, among other things, the effect of gasoline price inflation, with the average sales price per gallon of gasoline up 19% for the four-week month of May, as compared to the year-earlier May. Excluding gasoline price inflation, U.S. comparable sales would have been up 5%. In addition, foreign exchange rates, primarily in Canada, positively impacted international comparable sales results.
I hope this clarifies my basis for my 5% number on Costco. As an avid shopper of Costco, I know a big percentage of their sales comes from tires and groceries.....tires being a petroleum based product whose price has risen significantly and groceries....well we all know about that.....the 5% SSS number just is not that impressive factoring inflation and customer canibalization. Sorry, that is just my point of view and a similar conclusion can be drawn for WalMart for a different type of customer.
Now as far as this comment from you:
"And as far as most of the other retailers their sales are down 5%-10%......and that is AFTER heavy discounting to make their numbers."
because this is a patently false statement. You know I love you alstry, and in fact, in general I might argue I am more bearish than you, but please, if you make statements that are just flat-out incorrect, the authority of your statements diminishes greatly, at least in my eyes.
Gap's same-store sales dropped 14%
J.C. Penney reported comparable-store sales decreased 4.4%
Kohl's posted 7.2% decline in May
American Eagle posted a 9% drop
Limited reported comps were 6% below the same month in 2007
Just based on my reading the headlines this morning, it seems like most retailers had negative SSS. 5-10% seemed like a good ballpark on a brand name weighting. Remember, in May, retailers were discounting like crazy. I know this because I am connected in the industry. So a neg comp, or even a slightly positive comp factoring inflation, discounting, and stimulous checks sucks on a good day and blows in reality.
I hope this clarifies my previous post for you a bit better. And as far as who is the bigger bear....just keep reading.
PS Thanks to you and anchak for the input.