One on One with Dana Telsey of Telsey Advisory Group
Wednesday, November 11, 2009
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SUSIE GHARIB: Joining us now with more analysis of the retail sector, Dana Telsey, CEO of her own research firm, the Telsey Advisory Group. Hi, Dana, nice to see you.
DANA TELSEY, CEO, TELSEY ADVISORY GROUP: Nice to see you too, good evening.
GHARIB: Dana, let's start off in just getting your overall prediction for holiday sales.
TELSEY: I think holiday sales for 2009 will be a profitable season. I think sales will be flat with a slight upward bias. I think we're seeing retailers priced very competitively. Inventory levels are lean and comparisons are very easy.
GHARIB: We've been hearing a little anecdotal stuff about how luxury sales are picking up. Could the luxury market, luxury retailers lift it for all retailers, lift the numbers?
TELSEY: I don't know if they lift it for all the retailers, but certainly we are seeing improving trends in luxury goods. We saw the biggest declines in luxury goods last year in the fourth quarter compared to many of the other retail segments. So some of the companies having been down 30 percent, there certainly is a rebound happening and even their opening price points have gotten sharper this year than they were last year.
GHARIB: Dana, tell us about your expectations for Wal-Mart tomorrow, not only on earnings but also will it be the big winner this holiday season in terms of sales?
TELSEY: Certainly what we're seeing out of Wal-Mart so far, they're being aggressive in terms of being all about price, for holiday 2009. They're going to have a better growth margin. I think they're being competitive on the expenses and overall we're looking for them to generate a slight increase in same store sales in the third quarter, just a little bit less than a half a percent type of increase. A nothing better than that could certainly show some share gains.
GHARIB: We're hearing from a lot of retailers, not just Wal-Mart, about special discounts, longer hours, other gimmicks. Is this what's going to separate the winners from the losers this season?
TELSEY: I think you're going to see retail try everything they can to get customers to shop early. I think their inventories are light and the closer you get to December 25 a lot of times the bigger the markdown. Markdowns this year can't be as big as last year because retailers just don't have the inventory. But it's always a more profitable sale at a full price than it is at a markdown price.
GHARIB: Dana, I'd like to get your analysis on Macy's. It's said that its store sales were down, but its online sales surged. Is it doing better than we think?
TELSEY: I think what we're seeing out of Macy's so far is given the combination with the mine Macy's initiative, where you had 1600 employees all located into new jobs, the fact that they're seeing an improvement in their same store sales trends should certainly be seen as a positive. The competitive environment and the exclusive product that they've put in place is leading to higher margins so I think, overall the trend of Macy's is showing improvement. Always Wall Street sometimes wants more than what these companies deliver at a particular point in time.
GHARIB: Tomorrow besides the Wal-Mart earnings, we're also going to hear from Nordstrom and Kohl's. What are your expectations there?
TELSEY: I think for Kohl's overall we are looking for an improvement in their guidance for the fourth quarter and for the year. For Nordstrom what we expect to see is continued improvement in their gross margin. For Nordstrom what we expect to see is continuing improvement in their growth margin. I think for Nordstrom the rack business will be one of the key drivers as that's where the square footage growth is coming from. I think what we're going to see out of Kohl's, a lot of their exclusive product lines. I think there could be some more square footage growth there too. So for both of those reports I think we could see the luxury goods and high end aspect of Nordstrom's leading to some improvement.
GHARIB: Finally, I know you spend a lot of time walking through stores, talking to shoppers. What are you hearing? What's the mind set of the consumer?
TELSEY: I think the mind set of the consumer is, it's been like this for almost a year now, I need to replenish and replace and if it's at the right price I'm going to open my wallet and buy. But it's more for basics than for novelty. Show me the price, show me the quality and I'll open my wallet. I think that's the theme.
GHARIB: It's all about the price. Dana, thanks a lot. Appreciate your being on the program. My guest tonight, Dana Telsey of the Telsey Advisory Group.
