Home Centers and Mass Retail Trending Alike....

NY Daily News .Com reported the fact that Target and Lowes “have now trimmed their expectations for the year because of slow sales.” I found this of particular interest as these companies represent what I would consider a microcosm of two distinct industries that appear to be trending in the same direct. Lowes cutting expectations doesn’t come as much of a surprise. You would have needed to be in orbit all year not to realize that was coming because of the downturn in the housing market but, Target too!  With the Consumer Confident Index for September reporting its lowest level in two years per the Conference Board there is reason for concern. Target, in my opinion, is positioned as a good measurement of mass retails today. So, we have both Home Center business (they don’t stock toys as you know) and now retailer Target both preparing for less versus more for the remainder of 2007. My experience though very small in comparison to manufacturers is in line with this somewhat pessimistic view the 4th Quarter 07. I am aware of ship dates on purchase orders being move back and quantities adjusted down in some cases. I am not aware of total order cancellations yet but I am sure there is a watchful eye on daily retail sales reports to determine what is a comfortable inventory position going forward. If there is any erosion I am afraid cancellations won’t be far behind for everyone. I have been very surprised by the resilience of our consumer in the marketplace today as they have maintained a strong position thus far but I don’t know how long this can go on and how deep it will affect the balance of 2007 when it does turn. If I had the answers to these questions I would be clairvoyant but I am not so I will only have my opinion based upon the dynamics I know to be true in the marketplace today. Comparable sales “even” with 2006 might be acceptable or even best case for many retailers in 2007.