Non-Store Retail Sales: The Next Leading Sector?

Since one data point does not make a trend, the financial markets largely ignored the retail sales figures; however, the markets have overlooked the fact that watching Paula Abdul hawk jewelry on TV is becoming a bigger part of our economy. Non-store retail sales increased, and continued its trend of becoming a larger part of total retail sales. Non-store retail sales are the tally of all sales that do not involve going to a mall or stores; it measure sales from mail order catalogs, the internet, door to door vendors, and telephone sales (i.e. watching Paula Abdul on HSN and dialing in your order).

This category has held up better than general retail sales, and is doing better then it did during the 2001 recession. From peak to trough non-store, retail sales fell 12.27% during 2000-2001, while during this recession they have fallen only 7.5%. Total retail sales have fallen 11.20% from the June 2008 peak to the December 2008 low. Interestingly, in December of 2000, non-store retail sales were 5.98% of total retail sales and by November 2001, they had fallen to 5.18%. However, during the current recession non-store retail sales have increased as a percentage of total sales. In December 2007 (the NBER official start of the recession), non-store sales were 6.87% of total sales, while in January 2009 non-store sales increased to 7.49% of the total - an all-time high.

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Source: Census Bureau

This leads to a developing investment theme that Web 2.0 will lead the recovery. This bodes well for firms like IAC/Interactive (IACI), which owns the Home Shopping Network. The most recent earning report suggests that given an economic catalyst the company could be a big winner in a recovery. Despite falling have been increasing.

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Source: Gridstone Research

Unfortunately, we are in a market where fundamentals are not working. P/E ratios and margins have been boxed up, and placed next to the eight-track tapes. However, when rationality does return, this could be a leading sector.

Disclosure: No positions.

Comments

[bminfo247:]

September is leading up to be the most important sales month for women's merchandise. Yahoo Finance has the information:
finance.yahoo.com/news...

Sep 11 10:43 AM