Economic Reports 11/14/06
Wal Mart & Home Depot Warn
Wal Mart posted a better than expected rise +11.5% in Q3 profit, helped by strength in its international business.
Wal Mart commented that, at U.S. stores open at least a year, Q3 US sales growth were lackluster and softer than hoped for, but "deep discounts" as part of an "aggressive pricing strategy" would drive holiday sales.
The world's biggest retailer, gave a Q4 profit forecast that was at or below Wall Street expectations.
Meanwhile, Home Depot reported a -3% drop in Q3 profit that missed Wall Street estimates while sales at stores open at least a year fell -5.1%.
HD sharply cut its forecast for earnings and sales growth this year as the U.S. housing slowdown crimps spending.
Retail Sales -0.2% vs revised down prior -0.8% Full Report
Inside the number: Ex auto retail sales -0.4% vs prior -1.2% the 2nd straight decline.
However, ex gasoline (-6%) shows retail sales +0.4% demonstrating a modest increase in consumer spending for the essentials or basics.
Demand for durable goods weakened, sales at general merchandise stores -0.3%, the largest decline in 11 months, furniture stores -0.7%, appliance and electronics stores were flat, and department store sales -0.7%.
Oct PPI -1.6% vs prior -1.3% Full Report
Inside the number: Core -0.9% vs prior +0.6% the largest decline since Aug 1993, prices of crude goods -10.5%, Good news?
Bad news, the decline was due to falling energy -5% and vehicle prices, trucks -9.7%, cars -2.3%, this demonstrates PRICING weakness.
Witness Core PPI ex auto RISING +0.1%, and the Core is +0.6% over the last year.
Ex food and energy, intermediate prices are +5.9% in the past 12 months, while crude goods are +20.1%. Slowing housing? Housing supply sales -10.6% annualized.
Sept Business Inventories +0.4% vs prior +0.6% Full Report
Inside the number: Sales fell -2%, as retail inventories excluding motor vehicles +0.1%. Inventories -0.7% in the retail auto sector, while sales +0.7%. For the year, business inventories +7.6%, while sales +4.9%.
Summary: Home Depot misses and lowers forward guidance due to the slowing housing sector, Wal Mart lowers forward guidance and cuts prices aggressively to stimulate lackluster US sales.
Retail sales outside of the essential basics are falling. Inflation is alive and well with a rising PPI Core, along with rising intermediate and crude goods prices.
Business inventories continue to grow, this along with the PPI numbers exacerbate the fear that there is underlying weakness in producer pricing.
Riddle me this Batman, what if price cuts in retail, (like those taken so far in housing) don't give the necessary stimulus to sales?
Wal Mart posted a better than expected rise +11.5% in Q3 profit, helped by strength in its international business.
Wal Mart commented that, at U.S. stores open at least a year, Q3 US sales growth were lackluster and softer than hoped for, but "deep discounts" as part of an "aggressive pricing strategy" would drive holiday sales.
The world's biggest retailer, gave a Q4 profit forecast that was at or below Wall Street expectations.
Meanwhile, Home Depot reported a -3% drop in Q3 profit that missed Wall Street estimates while sales at stores open at least a year fell -5.1%.
HD sharply cut its forecast for earnings and sales growth this year as the U.S. housing slowdown crimps spending.
Retail Sales -0.2% vs revised down prior -0.8% Full Report
Inside the number: Ex auto retail sales -0.4% vs prior -1.2% the 2nd straight decline.
However, ex gasoline (-6%) shows retail sales +0.4% demonstrating a modest increase in consumer spending for the essentials or basics.
Demand for durable goods weakened, sales at general merchandise stores -0.3%, the largest decline in 11 months, furniture stores -0.7%, appliance and electronics stores were flat, and department store sales -0.7%.
Oct PPI -1.6% vs prior -1.3% Full Report
Inside the number: Core -0.9% vs prior +0.6% the largest decline since Aug 1993, prices of crude goods -10.5%, Good news?
Bad news, the decline was due to falling energy -5% and vehicle prices, trucks -9.7%, cars -2.3%, this demonstrates PRICING weakness.
Witness Core PPI ex auto RISING +0.1%, and the Core is +0.6% over the last year.
Ex food and energy, intermediate prices are +5.9% in the past 12 months, while crude goods are +20.1%. Slowing housing? Housing supply sales -10.6% annualized.
Sept Business Inventories +0.4% vs prior +0.6% Full Report
Inside the number: Sales fell -2%, as retail inventories excluding motor vehicles +0.1%. Inventories -0.7% in the retail auto sector, while sales +0.7%. For the year, business inventories +7.6%, while sales +4.9%.
Summary: Home Depot misses and lowers forward guidance due to the slowing housing sector, Wal Mart lowers forward guidance and cuts prices aggressively to stimulate lackluster US sales.
Retail sales outside of the essential basics are falling. Inflation is alive and well with a rising PPI Core, along with rising intermediate and crude goods prices.
Business inventories continue to grow, this along with the PPI numbers exacerbate the fear that there is underlying weakness in producer pricing.
Riddle me this Batman, what if price cuts in retail, (like those taken so far in housing) don't give the necessary stimulus to sales?
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