I know….It’s bad out there.

Not only are retail sales as frigid as the “Arctic Blast” we are now experiencing, but the rhetoric and the over-reaction have sunk to new lows along with the thermometer.

If one looked long and hard, there were some bright spots in December even amidst this depressing atmosphere: Buckle again proved their concept is impervious so far with a 13.5% comp sales gain, continuing its two year string of double digit same store sales increases ; Aeropostale same store sales gained12%; Hot Topic and American Apparel also showed increases (the question is at what margin cost to each?)

Childrens’ Place was flat; Costco, BJ’s Wholesale, Family Dollar, GameStop and Walgreen’s all posted positive comps in December – which may be expected considering the climate.

But the main market maker is always Wal Mart and they didn’t disappoint as the elephant in the room. They reported a positive 1.7 comp which was, according to analysts, “shockingly” below the consensus of a positive 2.8% that they had pegged and at the lower end of the spectrum of company guidance.

Maybe it is time for the silly practice of providing guidance to be retired. While 1 point of comp sales is significant revenue when one is talking about Wal Mart, it is not a reason to commit hari-kari, which is exactly how the markets reacted to this news. It was ridiculous.

Here is why: Many factors could have contributed to the shortfall in absolute dollars in comp sales for December. It may have had nothing to do with store traffic, the number of transactions, gross margin percentage performance or operations. It could simply have been a consumer anomaly.

For example, when buyers plan a season, they try and guess (although Wal Mart “guesses” less than the average retailer because of the strength of their systems) what the consumer is going to buy, in what quantity and at what price. That is the science and art of the retail game. However, consumers have a mind of their own and they may choose to buy in completely different patterns than the buyers expected. Judging from the game-changing environment we now find ourselves in, some unexpected consumer behaviour may be expected.

So, if the consumers as a group purchase the assortment differently than what the executives expected (read : lower priced items, not necessarily because they are discounted, just because those items sell at retails less than others) , you can get an anomaly in the same stores sales performance. Average retail can have  a large affect on these figures.  Wal Mart, of all the retailers out there, deserves its results to be analyzed further before we all go off on scary tangents.

Wal Mart lost 15% the day it announced its “disappointing” sales. All I am saying is that a closer look is required before we draw such hasty conclusions.

We certainly are hyper-sensitive these days and with good reason. But we need to be reasonable too. This is Wal Mart we are talking about. They are, and continue to be, in great shape.

TheRetailTherapist 🙂

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