Friday Roundup at the Bad News Corral
The retail news lately has been so bad I have only just emerged from under my bed.
The Wall Street pattern goes like this: warn, get hammered, warn, get hammered. Abercrombie & Fitch's CFO is leaving and its CEO is working without a contract. Charming Shoppes CEO Dorrit Bern departed after a bruising proxy fight. Steve & Barry's may take some REITs with it when it goes. What's left of Mervyn's is teetering on the brink. Crocs revised guidance, suggesting that it's chosen to work with fewer retailers. That doesn't jibe with what I've heard from retailers -- they're bailing, offended that Crocs is competing with some of their most loyal retailers and opening outlet stores to sell late-model shoes at wholesale prices.
The country's three biggest supermarketers -- Supervalu, Kroger, and Safeway -- all announced they wouldn't meet forecasts. Costco revised its profit forecast downward, as CFO Richard Galanti noted that costs on everything but clothing were rising faster than the warehouse retailer could adjust prices.
"Retailers don't have a lot of pricing power," Love Goel, chairman of private equity firm Growth Ventures Group, told the Wall Street Journal. "Customers are feeling poor because they feel their jobs are at risk and their houses are not worth as much."
I think that analysis falls short. Customers aren't feeling poor. They're acting poor. The stressors of gasoline at $4 a gallon, rising food prices, and large increases in health care costs even for the well-insured (and unspeakable costs for those who aren't) are combining with a creeping sense of dread about our long-term prospects. Middle-class, middle-aged people can be found under beds all over America, wondering what will be left by the time we retire.
A private equity investor who probably has a little bit of money left at the end of the month may not be in the best position to understand this.
Persuaded to do some work by my current editor, I took a Xanax and opened my laptop Friday evening to discover that the Feds had taken over two more banks.
I'm going back to join the dust bunnies. It's all just a bit too much.
Photo by Bob Jagendorf via Flickr, CC 3.0