Friday, April 09, 2010

Meet the “New-Normal,” Same as the “Old-Normal”

It wasn’t merely yesterday’s headlines by which a cross-section of America’s retailers announced the return to vibrancy of the not-long-ago-dead-and-buried consumer that we here at NotMakingThisUp found so striking.

Oh, sure, Kohl’s, Gap, Ross Stores, Aeropostale, Limited, Cato, Bon-Ton, TJX, Stage and Dillard’s each reported comp sales gains anywhere from double to quadruple the expectations of Wall Street’s Finest—a rather mind-boggling set of headlines even for the most jaded Wall Street observer.

More than that, we thought, was the surprise in the voices of the retailers themselves at the sudden return-to-normalcy.

Our favorite such example occurred yesterday during the Pier 1 Imports call.

While we here at NotMakingThisUp make no recommendations on individual stocks, the comments from a company once left for dead—or, more specifically, 11 cents a share just about one year ago—which just reported rip-snorting sales growth like its better-thought-of brethren, are worth calling out.

In particular, it was the CEO’s exuberant response to a run-of-the-mill question from one of Wall Street’s Finest late in the call that caught our ears:

Brad Thomas, KeyBanc Capital:

And then just lastly, anything geographically that seems different…?

Alex Smith, Pier 1 Imports CEO:

YES! Some parts of the country have come back from the dead, which is TERRIFIC. [Exuberant management vocal inflexions recorded by NMTU] We’ve seen an uptick in business in Florida, which we’re pleased with. We’ve seen an uptick in business in California and the West Coast generally, which we’re very pleased with….

Meet the “New Normal,” same as the Old Normal...

Jeff Matthews
I Am Not Making This Up

© 2010 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews, who also acts as an advisor: clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.


Hal Hoeft said...

Except the new normal is missing stores even entire retail businesses that used to exist. Which is good and part of the process. Weeding out the weak players and all.

But since credit is still contracting and employment continues to be weak, I can only wonder. . .

Does anyone make a housing payment in the new normal?

BG said...

The economy is doing great right now, I agree. I hate that phrase, "the new normal."

I do think, as Jim Rogers said the other day, after this cycle the U.S. and worldwide governments have "shot all of their bullets." This boom seems like the booms that happen during war times, except the spending is all happening at home instead of going towards the unproductive task of killing people away from home. Problem is after wars, there has throughout history been depressions. So enjoy the boom while the government spending lasts.

Anonymous said...

There is a strong argument that these sales are being financed by the 7.9 mil homeowners who are no longer making monthly payments (squatters).


DaleW said...

People weren't taking into account the early Easter. The Census Monthly Advance Retail Sales numbers of +5.8% and +5.4% ex autos and parts was closer to reality. People are still underestimating growth, but not by that much. This was a kick in the pants, however -- just in time for expectations to get ahead of reality where expectations have lagged reality for about 12 months.