Macy's has had too many losses this quarter on y-o-y growth which was just the way GAP also headed 2-3 years back and Circuit City just before. Time to sink these plebians and get on a new horse. Did anyone bother to look at the itemized April retail sales data yesterday morning before they went to work? Or did everyone just jump on the headline figure, which showed a broad-based decline on the month of 0.4% vs. 0.1% expected? (That disappointment sent the Dow Jones plunging nearly 200 points during the day.) Retail sales data comprises a vast range of goods, from Nintendo (NTDOY.PK) Wiis to Apple (AAPL) Macs to just about everything in Macy’s (M) and more. Normally, that’s a pretty good measure of how the economy is doing. But since the financial crisis began, there are two sectors which matter much more than any of the others: housing and automobiles. While retail sales data for April shows an obvious drop in demand for electronic gadgets and gasoline purchases, viewing that alone presents a gross distortion of the real picture. In fact, it looks like consumers are spending more where it counts. Building material and garden equipment dealer sales - closely tied to home sales and refurnishes - rose 0.3% on the month, to $24.467 billion. Automakers also experienced an upturn in sales, with motor vehicle and parts dealers notching up an extra $108 million in sales to $55.398 billion, while auto and other motor vehicle dealers increased sales by roughly the same amount. Meanwhile Wednesday, investors sold Caterpillar (CAT), which was down around 5.3% towards the market close, while Ford (F) was losing about 2%. The government still hasn’t released the individual figures for new car sales and home furnishings stores yet, but judging by the numbers, when it does they will be much more optimistic than we think. While food and beverage stores saw a $480 million decline in sales, restaurants saw an increase of 0.17%, to $38.161 billion. In other words, while consumers are cutting back on buying groceries, they are eating out a little more. Yet YUM! Brands (YUM) was down 3.7% Wednesday afternoon (read more on YUM! here). And Domino’s Pizza (DPZ) declined 5.2%. It’s hard not to see that as the sign of an irrational market, because the message is impossible to miss. Consumers are spending more money in the areas where it counts, while shunning the gadgets and mod-cons, which have a highly volatile sales fluctuation even in the boom times. That’s not a bad sign of a general economic recovery.
$11.75 (05/14/09)
