Retail round up

Now that we have made it through the first push in Holiday spending we should take a look and see what kind of damage we, as a spending nation, did. I expect the results to continue to be OK from downwardly revised expectations. This is one of my favorite Wall Street tricks: lower expectations then create excitement when the expectations are beat. Despite the shenanigans we are constantly led to believe, these expectations are what create stock's value. Prices will move to account for all known information, as well as expectations (a phrase the efficient market folks leave out). There for beating lowered guidance is a valid excuse to increase share value. I expect too much pessimism has been priced into the retailers going into the holiday season. Longer term I think we will see some weakness, but for the immediate future there are some opportunities out there. Stores are busy for now but the real test will be in the bottom line. Sure sales may be up, but sale will undoubtedly come at the expense of normal margins. This should be just as exciting as unwrapping the gifts themselves, at least for some the retailers.

Without further comment, lets see the spending scorecard.

The New York Times reports...Bargains Draw Crowds, but the Thrill Is Gone

American consumers flooded stores yesterday on the traditional first day of the holiday shopping season, but the irrational exuberance of the Black Fridays of the last five years has been replaced by pragmatic restraint.

With an uncertain economy, a slowdown in the housing market and high gas prices hanging over their heads, consumers flocked to discount chains like Wal-Mart, Target and Best Buy, brandishing bargain-filled fliers.

In a reversal from years past, they largely bypassed more expensive retailers, including such powerhouses as Nordstrom, Coach and Abercrombie & Fitch, according to shoppers and merchants interviewed around the country.

This shift has prompted industry analysts to christen this the “trade down” holiday season......