The consensus from the Washington Post, Business Week, the Associated Press and about 2,941 other media outlets was that November sales in the U.S. retail industry were "disappointing." According to the media headlines, the only things more disappointing than November's sales comps were the Ultimate Fighter finale, the release of James Cameron's Avatar video game, and, of course, Tiger Woods' abdication of his throne in Squeaky Cleandom.
When looking at a complete November same store sales list, there seems to be plenty to be disappointed about. Twenty-three major U.S. retail chains saw their same store sales decline from November, 2008. Last November was not the start of a jolly holiday shopping season by any standard, so it was hoped, assumed, and expected that it would not be difficult for U.S. retailers to outperform themselves and show some positive year-over-year progress.
The progress, though, wasn't obvious, so the headlines declared the retail industry to be a disappointment. Upon closer examination, there are some disappointing aspects of the retail sector in November, but really not enough to justify the blanket characterization of disappointment found in the media headlines. Who really was all that disappointed with November's same store sales results?
BJ's and Buckle are not disappointed because when you look at a comparison of November same store sales figures, these two chains are the only two major U.S. retailers that have had positive same store sales growth for the past four Novembers in a row. BJ's and Buckle havn't had much reason to be disappointed all year, but they have had a reason to be confused. They still can't figure out what this recession fuss is all about.
Aeropostale, Ross, TJX and Walgreen shouldn't be too disappointed because their November 2009 same store sales gains exceeded the losses they suffered in the cataclysmic November of 2008. That's quite an accomplishment considering how very few things about the U.S. retail industry have rebounded completely from last year's meltdown.
The nine other chains that don't have a minus sign in front of their November same store sales numbers can't be all that disappointed, even if they had hoped and expected more from themselves. Even flat results were positive because as we all know too well, things could have been, and certainly have been, a lot worse.
Macy's, American Eagle, Neiman Marcus, Bon-Ton, Duckwall-ALCO, JC Penney, Stein Mart, Target, Wet Seal, and Zumiez are probably not thrilled to have negative same store sales percentages, but at least the numbers behind their minus signs are smaller than they were last November. That represents positive movement for these ten chains, and it's difficult to be disappointed about anything moving in the direction of stabilization.
So if these 25 major U.S. retail chains aren't disappointed in their November 2009 same store sales results, where is all the disappointment that the headlines are screaming about?
Well, it's never good to be the one at the bottom of the monthly same store sales list, especially when you're a chain that derives much of your brand identity from looking down your noses at everyone else. So, of course, Saks (SKS) is disappointed that the affluent elite didn't cash in more of their recent stock market gains and exchange it for material evidence of their fame and fortune in November. Saks is especially disappointed that luxury rival Neiman Marcus didn't join them in their double-digit disgrace. Apparently the Limited Edition Jaguar in the 2009 Neiman Marcus Christmas catalogue is moving better than the $2,350 Christian Loubitin No 1 Pure Perfume for men at Saks. There's just no accounting for bad taste.
The Gap (GPS) should be disappointed because for the fifth year in a row it wasn't able to return a positive November same store sales figure with its namesake chain, even with an aggressive amount of advertising this year. Those dancy-rapping cheer-chanting kids in the current Gap TV ads are certainly attention-getting enough. (And really - "how cute are those boots?") Apparently, though, even Black Friday week commercials every 15 minutes didn't help the chain sell enough of the stuff that their junior pitch squad was doing back flips about to keep it from sliding back to 2003 sales levels. This actually is probably more surprising than disappointing to the Gap execs.
If same store sales is a true reflection of the number of shoppers and the prices they're paying year-over-year, then the Gap's five-year November struggle may be revealing the gap between what the chain's buyers are buying and what the consuming public thinks are the right products at the right prices. The thing that the Gap is probably most clearly illustrating for the retail industry is that you can't really make up for merchandising misses with marketing. Lucky for the Gap, though, (and particularly lucky for the Gap advertising agency) they can usually find a plausible way to blame the weather or the calendar or the economy for just about any of their November retailing missteps. If it wasn't for (fill in the blank with a convenient excuse), those Gap Kids $98 Stella McCartney "comfy sweaters" would be flying out the door.
Abercrombie & Fitch (ANF) is another retail chain that should be disappointed with its November same store sales because on top of the 28% decline they saw in November 2008, they underperformed themselves by another 17% this November. Seventeen must be the chain's lucky number because November 2009 marks the 17th month in a row that Abercrombie & Fitch has returned double-digit negative same store sales figures. And if that's not disappointing enough, Abercrombie should be disappointed that its third quarter profits fell 39%. It's doubtful, though, that Abercrombie will ever actually admit that it is disappointed with anything related to its performance. Honest self-evaluation doesn't really seem to be one of Mike Jeffries' leadership values.
Dillard's (DDS) is another chain that can be included in the disappointed retailers club because its November sales have been on a downward slide for the entire decade. The $438 million that Dillard's cash registers rang up in November, 2009 was only slightly more than what was handed to them by their customers in November, 1993. It's got to be disappointing to have regressed 16 years in your business results.
If the retail industry was a game of Chutes and Ladders (and really, if you think about it, it is), and Dillard's is one of the players on the game board, then its brightly colored plastic game piece landed on that dreaded space #87 back in 2001. And since then, the chain has been on a decade-long ride down the biggest chute on the game board.
It's not clear whether Dillard's has actually reached the bottom of the chute yet, or if it will continue to slide until it falls off the board completely. There are some experts who have predicted "game over" for Dillard's already. Obviously, though, Wall Street is betting that the chain has bounced off the bottom of the chute and is ready to roll the dice and proceed with play since Dillard's "disappointing" November sales numbers actually created a rise in its stock prices.
In fact, nearly half of the retailers with same stores sales declines in November saw an immediate lift to their stock prices after reporting their negative results. How does that compute?
The answer to that, of course, is profit - either real in the present or imaginary in the future. Even if the strength of the chain has decreased, which is what same store sales is supposed to be showing us, if the chain still manages to find a way to turn a profit, or even if it looks like the chain has the promise of finding a way to turn a profit in the near future, Wall Street rewards it. This is exactly what happened this month with Dillard's. Even though its same store sales revealed a dismally digressed state of affairs, its profit trumped everything and it received analyst praise and a subsequent lift in stock prices.
After Wall Street rewarded so many of this month's decliners, it leaves me wondering why we go through this same store sales exercise every month if the financial community is going to ignore the results anyway. Then again, my overall opinion that same store sales is a misused and grossly misinterpreted measurement leaves me bewildered about the same store sales game just about every month.
So, from the perspective of proving that the time, effort, and energy devoted to the same store sales game every month is time, effort, and energy misspent, November didn't disappoint.
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