It's beginning to look a lot like Christmas -- at least according to my local weather report (snow tomorrow), and the piles of thick Christmas catalogs accumulating in the mailbox. In the spirit of the season, retailers Lowe's
This week's sales and inventories report from the Census Department offers a few clues. Let's pull the ribbon, rip open the wrapping paper, and see what's inside:
From a "what have you done for me lately" perspective, the news doesn't look great. Inventories rose faster than sales in September, suggesting that companies are making more stuff than consumers want to buy. Result: Strong earnings, but weak comps numbers at Wal-Mart, and anemic sales estimates going forward for Lowe's and Home Depot.
Yet according to Warren Buffett, everything he's seeing within Berkshire Hathaway's
Will it be a December to remember?
Consider the last two columns up above -- the ones showing changes in sales and inventories between September 2010, and September 2009. Here, we see that sales gains really are outpacing inventory increases. That's generally good news, because as we all learned in Econ 101, when there's more demand for "stuff" than there is stuff to buy, prices rise -- and so do retailer profits.
Breaking down the data by industry, this bodes especially well for building-materials purveyors (like Lowe's and Home Depot), whose sales are up more than 8% against virtually flat year-over-year hikes in inventory. Likewise, clothiers seem to be doing well (as we saw in this week's Urban Outfitters
Foolish takeaway
Pockets of potential peril persist in an overall ebullient market. Maybe this explains why merchants have become a little aggressive recently with stocking inventories pre-Christmas. Maybe they're right to do so.
Got a different read on today's chart? Don't be shy -- tell us about it in the comments section below.
