Xmas "Loss Leader Strategy" Fails

Well, the results are now starting to trickle in and our suspicions as noted in our Blog of November 25, 2011 were quite correct.  As we predicted “The Loss Leader” strategy is failing and the retailers that can’t figure out why are going to die, i.e. Sears (noted a few days ago) and J.C.Penny, Kohls, Gap And Target.  Could your company be next?

From that Blog:

“…As we further progress in these “New Normal” times of the ‘Kondratieff’ Super-Wave, the consumer will eventually become resistant to the Retailers ubiquitous ‘Loss Leader Strategy’ (LLS) as a means by which to get consumers in the door and then hope that they can be persuaded to buy what they never intended to buy in the first place, at retail full prices, thus boosting the top and the bottom lines.

We believe that this Christmas Season may very well prove to be the tipping point for the LLS’s demise.  We will ALL be watching closely the overall retail numbers…  “ 

We have covered all these things in our Market Review in some detail.  But all the ‘bricks and mortar” stores do have one powerful and very effective weapon against the Internet and none of them know what it is.  if you would like to learn what it is, then subscribe to our Market Review. 

Meantime, the Retail Landscape is going to be quickly revamped by forces that – apparently – no one quite understands, just yet!  But they will when the “Kondratieff” surges again after the “Great Deception of 2012!”

J.C. Penney Declines After Fourth-Quarter Profit Forecast Misses Estimates

Bloomberg; By Cotten Timberlake - Jan 5, 2012 4:07 PM ET

“J.C. Penney Co. (JCP), the third-largest department-store chain, fell after cutting fourth-quarter profit forecast, citing declining sales and deeper discounts than anticipated during the holiday season.

The stock dropped 2.7 percent to $33.97 at the close in New York after the Plano, Texas-based company provided the reduced prediction, which fell short (JCP) of analysts’ estimates. The shares rose 8.8 percent last year.

… (JCP is ) lowering the quarterly forecast amid mixed results by U.S. retailers for December, when some stores offered so many markdowns to lure shoppers that they sacrificed earnings.

“The operating earnings reduction was certainly more significant than I anticipated,” Liz Dunn, a New York-based analyst with Macquarie …”

Most U.S. Stocks Advance on Employment Reports, Rally Among Financials

Bloomberg; By Nikolaj Gammeltoft and Ksenia Galouchko - Jan 5, 2012 4:47 PM ET

“...Most U.S. stocks rose, sending the Standard & Poor’s 500 Index (BKX) higher for a third day, as a rally by banks and improving jobs data offset reduced profit forecasts at companies including Target (TGT) Corp. and J.C. Penney Co….Target and J.C. Penney tumbled as retailers (S5RETL) announced mixed December same-store sales results. Gap Inc. (GPS), Target and Kohl’s Corp. (KSS) reported sales that trailed analysts’ estimates after mistiming promotions or running out of inventory during a projected record holiday shopping season.

J.C. Penney dropped 2.7 percent to $33.97. The retailer forecast fourth-quarter earnings of 65 cents to 70 cents a share, less than the average analyst estimate of $1.08 a share. Target lost 3 percent to $48.51. The second-largest U.S. discount retailer cut its fourth-quarter profit forecast to no more than $1.43 a share, below the average analyst estimate of $1.48, according to a Bloomberg survey.

Gap fell 3.2 percent to $18.27, while Kohl’s slipped 1.8 percent to $46.52.

Macy’s Inc. (M) added 3.9 percent to $33.92. The Cincinnati- based retailer reported a 6.2 percent increase in same-store sales, topping the 4.6 percent estimate...."

The following is a prime example of the MSM’s PORE technique of crafting the investor response to news.  The bad news for these retailers was hidden in this much longer article, while the MSM’s PORE shifted the “Sheeples” gaze to good things.

In effect, after creating a total concentration of the ‘Sheeple’ on the Christmas selling season and since it ain’t going to be that great, the MSM is NOW focused on reporting the story line that they are setting up for the “Great Deception of 2012." 

They do this by citing alleged improvements on the economy and failing to really highlight exactly how very dismal was the Holiday Season for the retailers as a whole.  This is effected by burying the bad news with developing “Rosy Scenarios,” which the economists are always happy to give, since they cannot see the Tsunami Super “Kondratieff” Long-Wave bearing down on them.  So the above article was given the correct positive tone by including the following observations that we are certain will prove false after the VERY last buying–surge of the DCBF’s in late 2012 to early 2013!

Are you and your company getting ready for the economic implosion to follow that?

“...We’re starting to see better data in the U.S. as opposed to the obsession with Europe that we’ve seen all of last year,” Donald Selkin, the chief market strategist at National Securities Corp. in New York, said in a telephone interview. “People are seeing that our economy will definitely not fall into the recession. (No, my friend, we are already in a depression, if the correct numbers were being reported, that is) Now you can see that there’s a separation between what’s happening here, which is better, and Europe, which is still projected to go into recession.”

The S&P 500 closed at a two-month high yesterday and the Dow Jones Industrial Average reached its highest level (INDU) since July after gaining during the first two trading sessions of the year on signs of manufacturing growth and improving sales at carmakers and retailers. ….

Fourth-quarter earnings reports from the largest U.S. banks should include some “encouraging signs” (While Matt is missing all the discouraging signs!)

Including accelerating loan growth, higher mortgage revenues and improving credit, Deutsche Bank analyst Matt O’Connor said in a note to clients. …

“On the surface these are positive numbers ahead of tomorrow’s jobs report,” James Gaul, a money manager at Boston Advisors LLC in Boston, said in a telephone interview. …”