The Financial Media May Not Be Right

Over the past few months the financial media has been dominated by stories about sub-prime loans and their potential ripple effect through the economy. More recently some of the financial pundits have started to speculate on how the ratcheting up of adjustable rate loans has negatively impacted the consumer and curtailed retail spending.

As is normally the case, whenever you make a blanket statement it is usually wrong. It would be naive not to recognize that what is happening in the mortgage market will affect some group of consumers. In some cases, the impact will be significant and people will reduce their spending or, in the worst case, lose their homes. As always, the questions are how large a group will these factors affect, which retailers will be impacted and to what degree?

The chart below shows the trend of a cross-section of retailers in different channels, comparing their July results with their previous 90-day trend. Before you read the numbers let me provide this caveat: July is particularly difficult to assess this year due to the fifty-third week in 2006 and the ensuing calendar confusion. For most retailers, this year’s July Fourth week fell in June, which is significant for consumables-dominate retailers. The first important week of back-to-school selling moved into July, positively affecting apparel-dominant and school-supply retailers. Further confusing the numbers is the movement of school openings one week later in some parts of the country.

With that said, the numbers do not indicate a cutback in spending by consumers in a wide range of retail channels over the past 30 days, in spite of the doom and gloom reports from some of the experts featured on the cable shows. Rather, the July results indicate that retailers that continue to improve their assortments and better serve their core customers outperform their peers in any environment.

To view The Gordman Group’s complete Trending Report, go to www.gordmangroup.com.

Comp-Store Sales TrendNote: The information contained in this report has been obtained or developed from sources which we believe to be reliable, including but not limited to information published by the companies named in this report; but we disclaim responsibility for the accuracy of such information or for any use of such information by a reader of this report.Source: The Gordman Group

	July 2007	Previous 90 Days
Gottschalks	–3.9%	–4.5%
Neiman Marcus	8.3%	4.7%
Nordstrom	9.4%	3.6%
Saks, Inc.	14.9%	12.1%
Kohl’s	0.0%	–2.3%
J.C. Penney	10.8%	–2.7%
Family Dollar	0.5%	–0.1%
Target	6.1%	1.2%
Wal-Mart U.S. Stores	1.3%	–0.7%
Costco U.S.	6.0%	5.9%
Ross Stores	1.0%	–0.4%
TJX	5.0%	3.2%
Longs Drug Stores	1.7%	0.6%
Walgreen Co.	7.2%	6.9%

Robert Gordman is the president of The Gordman Group, Denver, and is the author of “The Must-Have Customer—7 Steps to Winning the Customer You Haven’t Got.”