Panic is about to set in at America's retail head offices. Get ready for some great sales out there this holiday season - markdowns will likely be starting right about... NOW!
Just like homebuilders trying desperately to clear dead inventory, retailers seeing October numbers know they way overbought, and if the dead inventory doesn't start moving soon, they're screwed.
The over-leveraged, maxed-out American consumer is finally toast. And now so are the retailers. Don't be deceived by any good sales numbers that do funnel in in November or December either. It's profitability that's about to go out of the window as retailers go nuts with markdowns.
There should be no surprises HP'ers during this part of the post-bubble cycle. Everything is simply playing out according to script - just as it always does, just as it always will.
US retailers gloomy after weak housing market dents sales
Fears are mounting of a dismal Christmas for America's shopping malls after a slew of poor trading updates from leading retailers including Wal-Mart, the clothes chain Gap and the discount store Target.
Wal-Mart, the world's biggest retailer, told Wall Street yesterday that its like-for-like sales rose by a modest 0.3% last month and that it expected its November figures to be "approximately flat". It intends to cut the price of toys and electronics to stimulate festive sales.
Its downbeat tone was replicated by many of its rivals, fuelling concerns that consumers are feeling the pinch from a rapidly weakening housing market.
Richard Iley, senior US economist at BNP Paribas in New York, said: "This is an economy slowing down rapidly as the housing market loses pace." He said there could be some "short-term tailwinds" from falling petrol prices but further ahead, the outlook was dark: "The tectonic plates of the economy are shifting and that spells very gloomy news for the American consumer."