Georgi Stankov, August 17, 2015
The American (and Canadian) consumption is in a total meltdown as it should be because the western economies are hit by the Greatest Depression since the Industrial revolution beginning in 2008. This fact can no longer be hidden by the ruling cabal, notwithstanding the gargantuan fraud with official statistics that makes out of real unemployment of 40% for all eligible for work Americans a mere 5% unemployment by juggling with virtual numbers and variables in order to conjure a rabbit out of the magician’s hat – Rabbit Redux.
The alleged recovery of the US economy is the greatest scum of all times and the impoverished Yankees should have revolted long time ago if they were not veritable Zombies in their overwhelming majority. The situation is indeed so dire that even the US census Bureau website can no longer procrastinate the collapse with rigged statistics. The crash is happening now and it will obliterate the remnants of illusory welfare this fall when all negative factors and trends will come together and superimpose to a mighty tsunami wave that will wipe out, according to the law of destructive interference, all human illusions keeping the Orion overlay alive on this uppermost mother planet.
Let us have a closer look at the facts as they perspire through the widening holes of crumbling governmental propaganda.
The US government issued the monthly retail sales this past week and four of the biggest department store chains in the country announced their quarterly results. The year over year retail sales increase of 2.4% is very low in an economy that is supposedly in its sixth year of economic growth with a reported unemployment rate of only 5.3%. The year to date numbers are even worse than the year over year numbers. With consumer spending accounting for 70% of the GDP and real annual inflation rate higher than 10%, it is pretty clear that the Americans are experiencing the Deepest Depression, despite the propaganda data circulated by the government and Fed and despite the huge slump in all commodities prices that should lead to deflation and not to the statistically hidden, but very real inflation my American readers observe in the malls and all other stores, as we do here in Canada too.
The only people not experiencing the depression are corporate executives who enrich themselves through stock buybacks, Wall Street bankers who use shamelessly free Fed “toilet paper” bucks printed out of thin air or a computer click, while rigging electronically the markets in their favor, the politicians who reap their bribes from billionaire oligarchs as Donald Trump recently revealed, and the media sycophants who dispense the Deep State approved agenda to keep the ignorant masses dazed, confused, and endlessly distracted by Cecil the Lion, Ferguson, and other daily shootings of innocent citizens by police terrorists – the only real terrorists in the USA.
If all of these jobs have been created since the 2008 crisis as Bombama, the Liar, boasts, why aren’t retail sales booming? Because the real employment rate in the USA is lowest since the Great Depression and the malls are now dying like dinosaurs after a deep impact.
You won’t hear CNBC, Bloomberg, the Wall Street Journal or any corporate mainstream media outlet reference the fact that nominal retail sales growth (including inflation) is at the exact same levels as when recession hit in 2008 and 2001. With a real inflation of more than 10% per year you have a fair assessment of the scope of the Greatest Depression of all times as the actual purchasing power of the people has dropped year after year exactly by the annual rate of inflation. The hideous job of the MSM presstitutes is to regurgitate the governmental lies of economic recovery and confidence in the future, which has, by the way, dropped to its lowest value in July since October last year, despite the overwhelming and very painful evidence to the contrary, as the 50 million paupers in the USA (below the poverty limit) and roughly 90 million unemployed people eligible for work would confirm.
Retail sales are actually far worse than the 2.4% reported number in the statistics. When we exclude the subprime debt fueled auto sales, which are already imploding and fueling the incoming crash, just as the subprime mortgage crisis triggered the 2008 financial crash, retail sales only grew by 1.3% in the last year. The automakers are practically giving vehicles away as their lots are stuffed with inventory. The length of auto loans and the average amount of auto loans are now at all-time highs (estimated several trillions $). The percentage of subprime auto loans is surging to record levels as defaults begin to rise. The percentage of vehicles being leased is also at an all-time high. To call these “auto sales” is a mockery. These people are either perpetually renting their vehicles or just driving them until the repo man shows up.
The relatively strong year over year furniture sales is also driven by the fact that the buyers can finance the purchase at 0% interest for seven years. All is well for the Ally Financial, GE Capital and the myriad of fly-by-night subprime lenders until the defaults skyrocket and the credit crunch ends this new Ponzi scheme. Then their bloated debt ridden balance sheets will explode in an avalanche of defaults. This time there will not be another taxpayer bailout to save the financial Ponzi-scheme, as most of the Americans are already “indebted up to the ears” ( A German saying).
The crash in oil and other commodities prices was supposed to relieve the strained budgets of the Americans and result in a huge spending splurge, as promised by the media talking blockheads. You don’t hear much about this storyline anymore. The talking blockheads are now worried that oil prices are too low. The loss of $1.3 trillion in the oil shale industry and the tens of thousands of layoffs that obliterated the latest Wall Street financed fraud is easily offsetting the $10 per week in gasoline savings for the average driver.
With real median household income at 1989 levels, real unemployment north of 25%, a massive level of under-employment, young people unable to find a well-paid job and buy a home – saddled with $1 trillion of student loan debt, middle-aged parents struggling to take care of their aging parents and struggling children, and boomers who never saved for their retirement, the mood of the crumbling Empire of Evil is decidedly dark and getting darker by the day. The rise of Trump and Sanders in the polls is an indication of this dissatisfaction with the existing social order, but much more unrest is bound to come very soon.
The part of the retail report flashing red is the sales of General Merchandise stores, and particularly department stores. This category includes the likes of Wal-Mart, Target, Costco, Sears, Macy’s, Kohls, and JC Penney. General merchandise sales fell 0.5% in July, with Department store sales dropping by 0.8% with a very high inflation rate. Sales at these behemoth retailers have barely budged in the last year, with overall sales up a dreadful 0.3%. The dying department stores have seen their sales plummet by 2.7%. The talk of a retail revival is dead on arrival. Wal-Mart and Target muddle on with lackluster results, while JC Penney and Sears continue their Bataan Death March towards the retail graveyard as we witness this also in Canada.
The false narrative of economic recovery is blown to smithereens by the historical data on the Census Bureau website. Their time series data goes back to 1992. The retail sales at the nation’s biggest retailers has been virtually flat for the last eight years with a double-digit inflation for the same period. Does that happen during an economic recovery? – No! What these rigged numbers actually tell us is that we now experience the Greatest Depression of all times – in the Empire of Evil and in its northern vassal, where the clone Harper has nothing better to do but to revise WW2 history as to whitewash his Ukrainian Nazi supporters?
The department store data is almost beyond comprehension. July department store sales were the lowest in the history of the data series. Sales of $13.8 billion were 22% below the July 2007 level of $17.6 billion. They were 28% below the peak level of $19.2 billion in 1999. Real department store sales are 36.5% BELOW where they were in 2007, and Wall Street shysters have had buy ratings on these stocks the whole way down. These worthless hucksters remove the buy rating the day before these dinosaur department stores declare bankruptcy. Excluding the debt driven auto sales, real retail sales are flat with 2008 levels at the height of the financial crisis
The data from the Census Bureau has been more than confirmed by the absolutely atrocious financial results reported by Macy’s, Kohls, Sears and J.C. Penney. Retailers do not report results this poor during economic recoveries. The results clearly point to an ongoing depression for the middle and lower classes who do the majority of working and spending in this country. The rich continue to spend their stock market winnings at exclusive boutiques and high-end retailers like Nordstrom, but the average American is being sucked into the abyss by rising food prices, rent, home prices, tuition, the Obamacare driven health insurance and skyrocketing medical costs. With declining real wages, the Americans have less and less disposable income to spend, buying cheap Chinese crap at their local mall department stores.
Here is a glimpse into the results of department store dinosaurs headed towards extinction:
- Overall sales fell 2.6%, while comparable store sales fell by 2.1%, as Macy’s continues to close under-performing stores. News flash: there are many more stores to close.
- Profits crashed by 25.7% as gross margins declined and expenses rose.
- Cash flow from operations has declined by a staggering 46% in the first six months of this year.
- The bozos running this sinking retailer have burned through mind-boggling $787 million of cash, while adding $452 million in long-term debt to buyback their own stock. Executive compensation is stock based, so wasting close to $1.6 billion in the last year as sales and profits fall, is considered prudent management by the CEO.
- The long-term future for this retailer gets bleaker by the day as their long-term debt, pension liabilities, and other long-term obligations total $10.4 billion, while their declining stockholder’s equity totals $4.8 billion.
- To show you how far Macy’s has come in the last nine years you just need to compare their results from the 2nd quarter of 2006 to today. They registered sales of $6.0 billion versus $6.1 billion today. On a real, inflation adjusted basis, their sales have fallen by 16% over the nine-year period. They had profits of $317 million in 2006, 46% more than the $217 million in the 2nd quarter of 2015. They had $13.6 billion of equity and $8.2 billion of long-term debt.
- And now for the best part. Despite generating 46% less income than they did 9 years ago, Macy’s stock sits at $63 per share, while it traded at $36 per share in 2006. A company with declining revenue, declining profits and a bleak future should not be sporting a PE ratio of 16. When this recession really takes hold, their 2009 price level of $9 per share will be challenged on its way to Radio Shack land – $0 per share.
- Overall sales were up a pathetic 0.6% after last year’s 2nd quarter sales were lower than 2013. Comp store sales were up only 0.1% after being down 1.3% the previous year.
- Profits fell precipitously by a mere 44% versus the prior year, down by $102 million. Margins fell while expenses rose.
- In the lemming like behavior of corporate CEOs across the land, this struggling retailer thought it was a brilliant idea to go $330 billion further into debt, while buying back $543 million of stock in the first six months.
- While sales are essentially flat, the executives of this company ratcheted up their inventory levels by 9% in the last year. Flat sales growth and surging inventory levels leads to plunging margins and profits. I guess that’s why I got a 30% off everything coupon in the mail last week.
- Cash from operations has crashed by 52% in the first six months. You would think prudent executives would be using a half a billion of cash to buy stock and boost their compensation packages.
- Another comparison to yesteryear provides some perspective on how well Kohl’s is performing. During the 2nd quarter of 2007 they generated $3.6 billion of sales and $269 million of profits. Their overall sales are up 19% (3% on a real basis) even though they have increased their store base by 38%. Profits in 2015 were 52% lower than 2007.
- Sales per store is 14% lower today than it was in 2007. And even more worrisome for their long-term survival, inventory levels are up 59% compared to the 19% increase in sales.
- Again, the stock price peaked in 2007 at $76 and earlier this year reached a new all-time high of $79. Despite deteriorating financial conditions, poor management, plunging cash levels, and nothing on the horizon to portend a turnaround, the stock trades at a PE ratio of 13.
- Sears hasn’t reported their 2nd quarter results yet, but pre-announced that same store sales crashed by 10.6% versus last year. They are truly dead retailer walking, as Eddie Lampert’s (Sears CEO) real estate maneuvers attempt to hide the coming bankruptcy from unsuspecting investors is nothing but smoke and mirrors perpetuated by Eddie and his Wall Street shyster bankers. Excluding his desperate real estate schemes, they will lose another $300 million.
- In the last four years, during an economic recovery, Sears has seen their sales crater from $43 billion to $31 billion, and still falling. They have managed to lose $7.4 billion in just over four years and their stock still trades at $25 per share – proving there is a sucker born every minute.
- They continue to close hundreds of stores and still can’t stop the hemorrhaging. Here in Canada all Sears stores are closing one by one in the Vancouver area. The decade of using financial gimmicks rather than investing in his stores is coming home to roost for Eddie “the next Warren Buffett” Lampert. Of course, he will arrange matters in a way where he wins, while the stockholders lose when the bankruptcy papers are filed.
- The balance sheet is a disaster. They have generated a negative cash flow from operations of $1.4 billion in the last twelve months. They have burned through $556 million of cash. They have $8.4 billion of long-term debt and other liabilities, with equity of $1.2 billion.
- Sears may be the worst run business in America, and its chances of going bankrupt are 100%, but the Wall Street hype machine has its stock price at $25 per share, 20% higher than it was in late 2008. For some perspective, Sears’ 2nd quarter 2008 revenues totaled $11.8 billion and they made a $65 million profit. Sales in the 2nd quarter of 2015 will be approximately $6 billion with a loss of at least $300 million. Of course their stock should be higher.
- Their overall sales went up by 2.7% and comp store sales went up by 4.1%, as they continue to close stores. For some perspective on this tremendous sales gain to $2.9 billion, their sales in the 2nd quarter of 2009 were $3.9 billion. When your sales are still 26% below where they were six years ago, maybe you shouldn’t be crowing too much.
- It seems Wall Street and the MSM didn’t really want to focus on the only thing that matters – profits. They lost another $138 million and have racked up $305 million of losses so far this year. They have lost money for 13 consecutive quarters. That is no easy feat. They have managed to lose $3.6 billion in the last four and a half years, while driving their annual sales from $18 billion to $12 billion.
- Their balance sheet isn’t as horrific as Sears’, but it is nothing to write home about. They have $6.2 billion of long-term debt and other liabilities, supported by a mere $1.6 billion of equity. Back in 2011 they had $5.5 billion of equity to support $4.9 billion of long-term liabilities. The deterioration of this once proud retailer is clear to anyone with two eyes and a brain. So that eliminates all CNBC pundits and guests.
- Wall Street pumped the stock 5% higher on Friday to celebrate their $138 million loss. A company that is on track to lose $500 million has seen its stock price rise 32% this year on hopes and dreams. Wall Street has had buy ratings on this stock from its peak of $82 per share in 2007 on its 90% downward path to its current price. I’m sure they’re right this time.
The truly disturbing revelation from the recent Census Bureau retail data and the terrible financial results being reported by some of the biggest retailers in the world is that it is occurring along a storyline of an “official unemployment at 5.3%”, the economy allegedly in the sixth year of a “recovery”, and a Fed who has pumped $3 trillion, the greatest Keynesian stimulating program in the history of this short-lived Orion economy, debt money that actually went entirely to save the bankrupt “to big to fail” Ponzi-banks, while keeping interest rates at 0% for six years. What will happen when the Fed will increase the interest rates in September as indicated and the consumers really stop spending as the credit crunch has drained their cash?
What is revealed here is that the US economy as presented in the official governmental statistics is a complete and utter fraud. The official narrative of Bombama, the Liar, of an economic recovery after the 2008 crisis is nothing but smoke and mirrors, buoyed by subprime auto debt, really subprime student loan debt, corporate stock buybacks, and Fed financed gargantuan bubbles in stocks, real estate, and bonds that have already began to crash and expose the emperor as naked. The four retailers listed above are nothing but zombies, just as their customers are, kept alive by the Fed’s ZIRP (zero interest rate policy) and three QEs as they stumble towards their ultimate deaths in the deluge of the MPR. The coming collapse in this fall will be the end of the Orion economics and the beginning of a new era without fiat or any other form of money.
Data for this article has been taken from http://www.theburningplatform.com/2015/08/15/department-store-results-imploding/