Futures are flat this morning after what could charitably be described as a "slow" day yesterday. Let's ignore markets for this morning. It's the consumer who really runs this country and we need to put a few mistaken notions regarding shoppers to bed right here, right now.
1. The consumer isn't "weak." Same store sales came out yesterday and they generally crushed estimates. Thompson Reuters does a decent Index on monthly sales reports. Of the 76 retailers they cover the average gain for November was 5.3%, just under twice the consensus estimate.
Gap (GPS) reported 6% overall gains led by an absurd 18% same-store-sales improvement at Old Navy. That Old Navy number is like a 22 pound baby. It's impressive at first glance but simply too dang big to be healthy. Old Navy underestimated demand. But that's their problem. In bad economic times you can't give away merchandise at any price. Obviously customers are showing up for bargains.
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2. J. Crew, which is run by Mickey Drexler, not coincidentally the same guy who created the modern version of the Gap, wrote down a huge chunk of the goodwill associated with its store base. That's a wonky accounting metric, but the point is that this is the year retailers are finally accepting the decline of stores and embracing the reality of shopping everywhere. It's about time. While online is still a small portion of all retail, mall-based chains like American Eagle (AEO), Urban Outfitters (URBN) and Lululemon (LULU) are going to get more than a fifth of holiday sales from online, according to UBS. Good on them.
"Black Friday" is dead. Don't cry for that absurd, made-up stampede. The Saturday before Christmas has been the biggest shopping day of the year for 91 of the last 100 years and ShopperTrak says it will be again in 2014. Good.
Santa Claus, God and merchants want the Saturday before Christmas to matter. This is personal to me. Growing up my dad and I would go out to Dayton's department stores in Minnesota on Christmas Eve every year. Nothing made my dad happier than seeing nearly empty shelves minutes before closing time on the last day before Christmas. See, that's the goal in retail. The goal is to drop prices to exactly the point at which customer demand exists. If you sell your last teddy bear at the exact moment the store lights get turned off it means you did your job as a retailer. 2014 isn't that good but it's closer to that capitalist ideal than we've been in years.
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