Chris Johnson

'Tis the Season for Retail Earnings

by Chris Johnson   12/09/08

After last week's historic job-loss number, this week has a lot to live up to. And it probably won't.

The main action comes on Friday with the Producer Price Index and November retail sales. Prices are clearly under pressure, and the PPI should give a clear picture of where the Consumer Price Index is headed (which is probably lower).

Some have decried lower prices as being harmful for the businesses and the economy. Maybe I'm being too simple here, but why? Sure, lower prices mean lower revenues, margins, profits, and so forth. But isn't some revenue better than no revenue?

Discounts Make the World (er, Cash) Go 'Round

If lower prices are harmful, why does every store in America have a "Sale" sign in the window? And why are car dealers offering "buy one, get the second for $1" deals?

I was recently in the Scottsdale Mall in Arizona (looking, not shopping). You can't get much more upscale than the Scottsdale Mall -- Tiffany (TIF), Gucci (GUCG), Coach (COH), Louis Vuitton (LVMHF), you get the idea. It's impressive.

But I can't remember one store that didn't have some sort of sale sign in the front window. I mean, when was the last time you saw holiday ornaments and calendars on sale for half-off before Dec. 26?

Deck the Halls, and Sweep the Floors

Speaking of pre-holiday profits (or a lack thereof), that brings me to another important report due this week -- November retail sales.

Actually, I'm not sure whether anyone really cares about November. That's a done deal, and it was probably a lousy month. Investors care much more about December and the holiday shopping season.