Starbucks: $2 Special
I've been meaning to post something on this for a while, but today's "discount" finally did it for me.
As you may have heard, Starbucks has canned their DVDs and CDs. At a recent visit, I picked up Juno (which I have been meaning to see), and for Mrs. Big Picture I grabbed The Kite Runner -- for $7.95 each. They also had the new James Hunter CD (Official site, Amazon, NPR interview) and the latest John Mellencamp disc (Official site, Amazon) were also $8.
But the big thing that caught my eye was their $2 special. Bring your receipt in from any purchase in the am, and after 2pm any Grande Cold drink is just $2.
Value maximizers may want to go for the Iced Frappucino Double Chocolaty Chip Frappuccino Crème at $4.80 but it weighs in at 510 calories. Or, the Java Chip Frappuccino is 460 calories. I went for the Iced Caramel Macchiato, which cost less, but is practically dietetic at 230 calories.
I cannot recall Starbucks being this promotional since . . . well, ever.
Anyone else raising their promotions to move some product ?
‘The US banking system is sound…’
Well, not really.
As William Engdahl notes at Global Research in Canada, "behind the reassuring statements from Paulson and others that the "worst is over" the reality of the credit collapse since August 2007 is a deepening economic contraction."
Now, I am not in the camp that believes this will surpass the Great Depression of the 1929-1938 period. But I will note that the increasing number US department retail store closures is a bit disconcerting. Considering that consumer spending is over 70% of the US GDP, this is particularly worrisome.
Note the scale of the following store closings across America in recent weeks:
Ann Taylor closing 117 stores nationwide
Bombay Company: to close all 384 U.S.-based Bombay Company stores. Cache, a women’s retailer is closing 20 to 23 stores this year
Disney Store owner has the right to close 98 stores.
Dillard's Inc. will close another six stores this year.
Eddie Bauer to close more stores after closing 27 stores in the first quarter
Ethan Allen Interiors: plans to close 12 of 300 stores to cut costs.
Foot Locker to close 140 stores
Gap Inc. closing 85 stores
Home Depot store closings 15 of them amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world's largest home improvement store chain has ever closed a flagship store.
J. C. Penney, Lowe's and Office Depot are all scaling back
Lane Bryant, Fashion Bug, Catherines closing 150 stores nationwide
Levitz - the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.
Macy's - 9 stores closed
Movie Gallery – video rental company plans to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to the 520 locations the video rental chain closed last fall as part of bankruptcy.
Pacific Sunwear - 153 Demo stores closing
Pep Boys - 33 stores of auto parts supplier closing
Sprint Nextel - 125 retail locations to close with 4,000 employees following 5,000 layoffs last year
Talbots, J. Jill closing stores. Talbots will close all 78 of its kids and men's stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women's and J. Jill
Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.
Wilsons the Leather Experts – closing 158 stores
Zales, Piercing Pagoda plans to close 82 stores by July 31 followed by closing another 23 underperforming stores.
I know Linens & Things just went belly up, and Steve & Barrys recently filed for bankruptcy protection and sale.
Did we miss any others?
Use the comments, and I will add them to the master list . . . .
The Real State of the US Economy: Henry Paulson has lost the control over US finance
William F. Engdahl
GlobalResearch, August 2, 2008
PPI, Retail Sales
Tax-rebate-goosed June Retail Sales rose less than forecast, up 0.1% headline and 0.8% ex-autos. Consensus was for gains of 0.4% and 1.0%. Ex-autos and gasoline sales rose 0.2%. Strip out food and beverages -- up 0.7% -- and Retail sales were flat.
In other words, despite the tax rebates, Retail ex-inflation was flat to negative. . .
PPI rose 9.2% year over year -- the highest since June 1981. It was 0.5% more than consensus expectations. Core rate was 0.2% less than expected year over year but remains elevated at 3%. This is the highest since 1991. (See charts below)
Helping suppress price gains was the decline in truck prices. Had Americans not abandoned SUVs and Pickups in such large numbers (courtesy of $4.50 gasoline), PPI would have been even worse.
PPI in the pipeline rose 2.1% month over month -- its up a brutal 14.5% year over year. Employment though fell to the lowest since July '03 and Prices Paid and Received went to new highs.
Charts via Jake
For Those About to Rock, We Have Always Low Prices*
Last year, we noted that the Eagles had "Disintermediated the Major Labels" by selling the CD to consumer via Wal-Mart -- no label necessary.
How did that work out? Not too shabby: The Eagles’ double disc, “Long Road Out of Eden,” sold 711,000 copies in its first week and three million since, according to Nielsen SoundScan. Ironically, the disc is available used at Amazon ($7.98) or in MP3 format for $10.98 -- but if you want a new CD, its Wal-Mart or nothing.
Up next: Veteran rockers AC/DC. Via the WSJ, we learn:
"Wal-Mart is expected to pull out the stops to promote the AC/DC album, the band's 16th studio release, which is to come out in the fall and hasn't yet been titled. Such a push -- including prominent displays of CDs in stores and heavy advertising -- could yield blockbuster sales, in an environment in which blockbusters are increasingly rare. Columbia Chairman Steve Barnett, reached by telephone, declined to comment. Wal-Mart spokeswoman Melissa O'Brien didn't respond to requests for comment about AC/DC.
But even as it strikes novel deals with a handful of artists and labels, Wal-Mart is preparing changes in its approach to selling the vast majority of music. It is unclear what the upshot of those changes will be, but one likely scenario involves cuts in the number of music titles the chain carries.
Wal-Mart executives, frustrated by perennially declining CD sales, have been quietly exploring changes in their approach to selling music. The company has described different versions of its potential new strategy to different players in the music industry."
What's noteworthy about these deals is that they all involve dinosaurs who's best days are long behind them, going to Wal-Mart for their promotional muscle. Now if Wal-Mart cut a deal with any band that wasn't cranking out albums in the 1960s, '70s, or '80s, I might think there was something very interesting afoot. Say, a Radiohead or a Coldplay or Sarah McLachlan.
But no. The newer bands are going to the internet, rather than WAL-Mart. Their fans skew younger, and are more comfortable on line; Many of them are quite international, and domestic US sales matter less. Lastly, there is something decidely unhip about Wal-Mart that simply doesn't call out to Beck.
Eagles Disintermediate Major Labels, ITMS (November 2007)
AC/DC To Wal-Mart
As CDs Decline, Wal-Mart Spins Its Strategy
Chain Signs Latest Exclusive Album -- And May Cut Titles
WSJ, June 9, 2008; Page B1
For Some Music, It Has to Be Wal-Mart and Nowhere Else
NYT, June 9, 2008
* For you young 'uns, the title refers to a 1981 AC/DC album: For Those About to Rock We Salute You
Where Your Rebate Check Goes
Our Friday afternoon digression comes via Mark Faber's Doom, Gloom & Boom report, this has to be the funniest thing I've read all week:
"The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy.
The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part, and I thank you for your help"!
>-Eliot Spitzer (former Governor, New York)
Is eBay "Broken" ?
The Consumerist thinks so: They note that it is now Completely Impossible To Sell A Laptop On Ebay.
Then there is Paypal, the eBay subsidiary. Paypal may very well have the worst customer service of any major internet firm (thus bypassing Dell).
My experience trying to get changes made with them as a corporate partner was a trip into Alice in Wonderland. To say they were awful does not begin to explain it: I picture their office as filled with people walking around in big floppy shoes, huge red noses, car-pooling to the office 20 at a time in a really tiny car.
We were long EBAY earlier this year; I am glad that position is now closed.
I am curious: What are people's experiences with eBay/Paypal? Does anyone have any stories you want to share?
Go to town:
April Retail Sales
Retail Sales were rather unimpressive: Gasoline, Groceries, Food & Beverage were up, while pretty much everything else was flat to down.
If you want to get rid of the Easter factor, compare March/April 2007 with March/April 2008.
Perhaps some chart porn might be instructive:
click for larger charts
Retail Sales vs. March CPI
(sales versus inflation)
Retail Sales vs. Consumer Discretionary Sector
courtesy of Bespoke Group
Retail Sales Versus Past Recessions
courtesy of CEO Economic Update
What Does Boating Tell Us About the Economy?
Growing up on an island, I've always been intrigued by the boating world.
Many friends and neighbors have boats, and while I've spent time sailing and powerboating, I've never owned one. Mrs. Big Picture grew up with sailboats, as both her dad and two brothers liked to sail lightnings -- affordable, family fun. I, on the other hand, don't have that out of my system.
I don't know a single boat owner who has been able to justify the costs of ownership. And yet, there is a two year waiting list at any of the local marinas for slips (but moorings are available 100 yards from our home).
Why all of this boating chatter? I am tracking two interesting data points regarding recreational products: Sales and financing. We know that Boating sales began slip as far back as Summer 2006, when Oil prices were in the $50 - $70 range. Those with existing boats, however, continue to enjoy their usage. Even with Marine gasoline at $5, its only a marginal price increase relative to their total sunk costs.
Peter Greenberg -- the TODAY’s show Travel editor -- notes the schism between two groups of boating enthusiasts: those who already own, and those who want to:
"If you already own a boat or an RV, chances are good that you're planning to put your boat in the water and you've made plans for road trips in your RV.
That would seem counterintuitive, but the numbers speak otherwise. While retail sales for recreational boating topped $39 billion in 2006 — an increase of nearly six percent from 2005 — the last two years have not been as buoyant. In 2007, the industry saw a drop of 14 percent in unit sales, and nine percent in dollar sales. And this year will be worse. In fact, at the recent Miami boat show, many new boat dealers were downright depressed. "See that brand-new boat over there?" said the president of one upscale boat manufacturer. "I've sold it four times this week."
Translation: The prospective buyers couldn't close financing."
And indeed, that is what we see from several capital lending firms that used to finance boat purchases. The most recent firm to exit the business? None other than GE Capital:
"General Electric Co's (GE) decision this week to no longer lend consumers money to buy motorhomes and boats was more bad news for the recreational vehicle and boat industry.
While the move by GE Money is likely to prompt the many other lenders in this sector to tighten credit standards and push borrowing costs higher, analysts say it won't significantly worsen the industry's admittedly dismal fundamental outlook.
Even before GE, which operates one of the country's biggest and most sophisticated finance companies, announced its intention to exit the retail RV market, rising gasoline prices, falling home values and tightening consumer credit had taken their toll on motorhome and boat sales."
File this under obscure economic indicators: Boating is (obviously) a nonessential activity. This is only one tiny aspect of the enormous US economy. But how Americans spend our leisure dollars, speaks volumes about the availability of credit, as well as the overall economy.
Stay tuned . . .
UPDATE: May 20, 2008 8:13AM
Today's NYT has an article about Repo Man:
Boating was traditionally the pastime of the well-off, but the long housing boom and its gusher of easy credit changed that. People refinanced their homes and used the cash for down payments on a cruiser, miniyacht or sailboat. From 2000 to 2006, retail sales for the recreational boating industry rose by more than 40 percent, to $39.5 billion, while the average loan amount more than tripled to $141,000.
Last year, as real estate faltered, the gears went into reverse. The number of boats sold fell 8 percent. Many boats are fuel hogs, and rising gasoline and diesel prices meant a weekend jaunt could cost hundreds or even thousands of dollars. Owners found they could not sell a boat for what they owed and could not refinance either.
Our Local Marina
Morgan Park, donated by J.P. Morgan
UPDATE: May 12, 2008 9:14am
On the train in this morning, I chat with Bob -- whose 42 footer is moored off of Centre Island. Bob notes that there are two boating worlds -- bigger than 100 feet, and everything else. The > 100 foot world is doing just fine, thank you. Even more amazing, there have been more 300+ footers sold over the past 3 years than in all of previous history.
GE exit from boat lending bad, but won't sink sector
James B. Kelleher
Fri May 9, 2008 12:23pm EDT
WHY THE POWERBOAT INDUSTRY IS SINKING
Slate, Tuesday, July 18, 2006, at 4:55 PM ET
Even with pricey gas, travelers won’t abandon ship
Boaters and RV’ers don’t plan to retire their gas-guzzling toys this summer
TODAYShow, 5:12 p.m. ET, Wed., May. 7, 2008
Except at Gas Pump, Not Much Spending Going On
Today's chart porn is courtesy of the NYT's Floyd Norris:
"AMERICANS are cutting back on purchases of things they do not have to have, sending retail sales down sharply at many types of stores.
Those cutbacks, which now seem to be worse than at any time since the 1990-91 recession, are helping to slow the economy and to spur calls in Washington for more fiscal stimulus even before the government starts to send out money to most taxpayers next month.
Those checks could provide at least a temporary stimulus, but until they arrive, the slowdown in spending appears to be nationwide.
In its beige book report on economic conditions released this week, the Federal Reserve said that surveys by the 12 regional Federal Reserve banks found that “consumer spending was characterized as softening across most of the country.” The Fed said that in 10 of the 12 districts, spending on things other than cars was down, while car sales were generally reported to be flat or declining."
courtesy of NYT
Except at Gas Pump, Not Much Spending Going On
NYT, April 19, 2008
Retail Sales Rise on Gasoline Prices
Real Retail sales dropped in March, driven lower primarily by durable goods and automobiles.
Nominal sales -- non-inflation adjusted retail sales -- surprised to the upside. The 0.2% gains were due mostly to increases in essentials -- food, gasoline, and heating oil. Sales at Gasoline store were up 1.1 %, while food & beverage stores up 0.4%; nonstore retailers (home heating oil) was also strong. Outside of these basics, Consumer spending was less strong. Declines were in building materials (down 1.6%), and general merchandise (down 0.6%).
On a year-on-year basis, March Retail sales softened to +2.0% from +2.9% last month.
Bottom line: What little strength we saw last month was narrowly based, and due due to higher prices. In real terms, sales were negative. The impact of Retail Sales on Q1 GDP will be to pull it down further.
chart courtesy of Barron's Econoday
ADVANCE MONTHLY SALES FOR RETAIL TRADE AND FOOD SERVICES FOR MARCH 2008
MONDAY, APRIL 14, 2008, AT 8:30 A.M. EDT
ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES 4.14.08 .pdf
April 14 Release
U.S. Retail Sales Rise on Gain in Gasoline Purchases
Bloomberg, April 14 2008