From Fruits and Huts to Taxes and Deficits

The latest monthly revenue for the State is out and it is not good.  Really not good.  If it weren't for Apple stock sales front running the cap gains increase it would be fiscal emergency sized not good.  
Here's the snapshot:

Things to notice.  
• Corporate taxes running 30% below estimates.  
• Personal income taxes on budget but 11% higher than last year.  
• Retail enough lower that the Prop 30 revenue is unlikely to meet goal.

10% of all sales tax revenue is gasoline.  Falling prices and declining consumption are going to be a permanent drag on that component.  Total employment is generally flat as well.  Corporations are not just fleeing the State with their mobile assets and employees but they are running down what assets they leave behind.  We are increasingly trying to extract more and more from a shrinking base.  

My guess is that we get the draconian cuts that Prop 30 was supposed to forestall.  The Republicans in the legislature should take the principled stand in the budget process and not participate and vote present. Next I will have a post discussing the 800 lb gorilla in the budget.  Local "support" is running way above projections.  

Shopping Interlude

Shopping has been a breeze.  Plenty of stock, short lines.  Probably because prices aren't that great and the "recovery" is overhyped.  So, what have I bought?  A few DVDs for $1.88.  A few more for $2.25.  Big items?  Only two; an HP Laserjet 400 for $349 and a Samsung WB150F camera for $89.  No LED lights, no doorbusters.  I did go to Fry's for their Black Thursday deals with rebates.  $19 for a 600w power supply for the upcoming supermegahackintosh build, 8Gb RAM for the hacklaptop an nVidia 1Gb video card.  Little stuff.  Yesterday I also got a 1Tb laptop HD for $59.

The stores are empty of customers.  I don't know if it is local but it is palpable. 

Sears the REIT

Sears Holdings:
KMart 1,321 discount stores, averaging 92,000 square feet
KMart 47 Super Centers, averaging 166,000 square feet
Sears 929 broadline stores averaging 133,000 square feet
Sears Essentials/Grand 73 stores averaging 115,000 square feet
Specialty stores 1,233 averaging 8,700 square feet

Grand total: 272 million square feet of retail space. Monuments fall.


This on the recent news of so many REITs exploding on stock values. Suckers.

Riverpark Parked

HT to "w" but face it, we all saw this one coming years ago.
Economy delays RiverPark retail center in Oxnard

Ventura County Star reports:

Work on The Collection — which will include a 50,000-square-foot Whole Foods Market, a 16-screen Century Theatres cineplex and an REI store — has slowed, reflecting the pace of the economy as a whole, said Colm Makem, president of Shea Properties, the developer.

“We’ve moved the opening to the fall of 2010,” Makem said Monday. “Basically to reflect the slowdown in the economy and that’s why you’re seeing a slowdown in the construction.”

The company, which has other commercial and residential developments in California, Arizona and Colorado, has had to adjust work on those projects as well. The hope is the opening of The Collection will correspond with the upturn in the economy.

“We own a lot of real estate and we’re trying to pace the development with the economy,” Makem said. “Most economic forecasts are showing a turnaround in 2010.”

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Another Oxnard Albatross. Backgrounder from 2003 ArchNewsNow.

Well Equipped

It isn't just about having the right equipment. There's timing and location and leverage. Seems Sports Chalet (SPCHA is having trouble with the later. From the LATimes article:

With all of its stores in California, Nevada, Arizona and Utah, Sport Chalet "can hardly have been in a worse geographic location to weather the housing crisis," said Sean McGowan, an analyst at Needham & Co. "They're just right in the cross hairs."

Recession effects aside, Sport Chalet has made some missteps of its own. Analysts questioned the placement of several of the chain's latest locations, such as stores opened last year in Menifee, Calif., and Queen Creek, Ariz.

"Those are stores that were driven by the fact that there were a lot of new homes being built in that area," Mintz said. "And now that's the area where homes are standing empty and being foreclosed on."

More paintball and indoor flying model clubs coming soon.

HMS Walmart Warns

StreetInsider reports on Walmart December sales. I will grant one excuse I usually dismiss. The weather was bad in some regions. Of course I've yet to hear good weather given any credit for increased sales.

"Due to the difficult economy and severe winter weather in some regions, the holiday season was more challenging for retailers than expected," said Eduardo Castro-Wright, vice chairman, Wal-Mart Stores, Inc. "We are pleased that we had positive traffic for the third month in a row and that Walmart performed relatively well given the environment."

EPS guidance $1.06 Nov 13th versus $0.91-$0.94 Jan 8th. The morning futures and the stock tanked in pre-market trading.

More evidence of containment not being contained. The talking heads were all inventing unsupportable theories of moving downscale or grabbing market share or I don't know, Princess Ponies pooping pillow mints.

It can only be hoped that bad news actually shows up in the markets. We've been disconnected for far too long. Otherwise we'll all be in the urinal:

Who's Next?

Good morning. Looks like Circuit City shorted out before Best Buy and they are choosing the Mervyn's/Linens'n'Things model for dissolution.
Reuters article.

The company's advisers are trying to line up additional financing but so far lenders have shown little interest, the paper said.

"The management team, board of directors, and its strategic financial advisers are conducting a comprehensive review of all aspects of our business to determine the best methods of accelerating our turnaround," Circuit City spokesman Bill Cimino told the paper without giving details of the plans.

Let the Mauling of America commence. Yes we need half the retail space we have but the potential danger is in serial failure. How'd you like to be Best Buy? At first blush you are losing a competitor but what about selling this holiday season into the teeth of a recession with CC going through the 25%-60%-90% final sale clearance cycle? And let us not forget the problem of real estate. You remember, real estate. These stores who aggressively expanded have very high cost basises that don't go away just because they close a store. In the cases where the own the footprint they'll be forced to mark to market and undoubtably trigger loan covenants. They in turn will take down strip owners and often municipalities who also invested in the hopes of covering their costs of infrastructure with sles and property taxes. Oooops. And just like CSI and CSI: Miami and CSI:NY there's even a theme song. No, not "Who's Next?" rather "The Song Remains the Same."