To celebrate the holidays, we here at the Fool are devoting extra virtual ink to all things consumer-focused in a special section called "The 12 Days of Christmas." Over the coming week, we'll have our "12 Days of Content" surrounding consumer-focused names that look set to profit or perish from the holiday cheer.
Retailers saw November sales creep up by 1.3% from October, an increase that has led some pundits to wax optimistic on the state of the American consumer as we enter into the all-important Christmas selling season. But I say, "So what? Bah!" And a "humbug" for good measure.
Who couldn't increase sales 1.3% from the prior month, given that retailers such as Wal-Mart Stores (NYSE: WMT ) , Sears Holdings (Nasdaq: SHLD ) , and Amazon.com (Nasdaq: AMZN ) held sales throughout the entire month? In fact, we should wonder why sales increased by only 1.3%.
And that 1.3% increase? That was not a year-over-year figure. It was a sequential figure, meaning that sales were just 1.3% better than an all-right October (sales up 1.4% sequentially) and a completely bludgeoned September (sales off 2.3%). How about some year-over-year figures, so we get some perspective?
To that end, November 2009 did best November 2008, by a substantial margin -- 1.9%, to be exact, or as exact as preliminary measurements allow. That's good, but the absolute dollar amount is still well below even 2006 holiday sales! Consumers are clearly hurting badly, as my Foolish colleague Alyce Lomax has argued, despite the nasty price inflation that has hit those two turtle doves, five gold rings, and 10 lords a-leapin'.
So what happened in the turkey-induced afterglow of all those Black Friday sales? Revenue has plummeted. Weekly numbers in December were off by 18% last week, according to ShopperTrak RCT. That compares with a 14% decline last year, when the economy needed a Federal Reserve defibrillator to stay alive. So absent some pretty dandy sales, consumers seem to be refusing to come out to the stores.
And all that malaise leaves retailers in a pickle. Anyone care to guess who, between consumers and retailers, will blink first when it comes to discounts? Consumers don't have to make purchases to survive, of course. Businesses have to make sales.
And that bodes ill for the margins of many already-struggling consumer-focused names such as Crocs (Nasdaq: CROX ) , Gap (NYSE: GPS ) , and Abercrombie & Fitch (NYSE: ANF ) , the last of which has been remarkably persistent in refusing to lower its prices. (Abercrombie has relented recently, sort of.)
The bright spot in retail has been online sales, which have been surprisingly resilient. Shoppers spent $595 million on Web sales on Black Friday. In addition to Amazon, which has seen sales skyrocket recently, eBay (Nasdaq: EBAY ) has the potential to capitalize on the trend of value-conscious shoppers.
Over the coming week, we'll have our "12 Days of Content" surrounding consumer-focused names. Up next: Fool Rich Smith offers his views on the one retailer to own in this environment, while Alyce Lomax gives you two reasons to love this food retailer.