Discretionary Spending is "DOA"

You've got to hand it to Howard Davidowitz. He doesn't pull his punches. Here's MSNBC's take on December sales with quotes from Howard. Also, based on December sales, Wal-Mart has now cut its outlook.

“Discretionary spending is DOA — dead on arrival,” declared Howard Davidowitz, chairman of retail-consulting and investment-banking firm Davidowitz & Associates.

“You've got consumers with 101(k)s instead of 401(k)s. Exploding unemployment. Consumer bankruptcies exploding,” Davidowitz said. “You can't have this wealth destruction and think it's going to get fixed.”

Retailers' same-store sales fell 0.9 percent in December, according to Thomson Reuters, compared with a gain of 0.5 percent a year earlier.

Wal-Mart delivered the biggest surprise, reporting its same-store sales rose 1.7 percent last month, well shy of the 2.8-percent increase expected, and slashed its fourth-quarter earnings forecast.

Davidowitz said Wal-Mart's customers have really taken the brunt of the economic pain.

“You gotta look at the weakness of the Wal-Mart customer,” Davidowitz said. “Twenty-percent of them don't have bank accounts,” he said of the 150 million people who shop in Wal-Mart stores each week.

“And where is this unemployment coming from?” Davidowitz asked. “The Wal-Mart customer. Who are these people being pushed from full-time to part-time work? Wal-Mart customers. Who are the customers with subprime mortgages? Wal-Mart customers.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.