It’s Hard Out There For Consumer Discretionary Companies
This morning before the open, used car seller CarMax (KMX) reported a dramatic falloff in sales in June and July. Comparable used unit sales fell by an average of 17% in June and July compared to last year! (KMX Press Release)
That compares to 1% growth in the 1st quarter ended May 31, 2008, 3% growth in the 4th quarter ended February 29, 2008, 0% growth in the 3rd quarter ended November 30, 2007 and 3% growth in the 2nd quarter ended August 31, 2007.
As a result, CarMax has cut inventory, reduced staffling levels and is slowing down its plans for new store growth.
…. the challenging economic environment appears to be negatively impacting our sales.
– John Mackey, Founder & CEO, Whole Foods Markets
Whole Foods (WFMI) yesterday after the close reported the worst quarterly same store sales growth (+2.6%) in its entire history (WFMI Same Store Sales Chart).
As a result, Whole Foods decided to slow its new store opening for fiscal 2009, cut all discretionary capital expenditures not related to new store openings by 50% and suspend its 40 cent per share quarterly dividend (WFMI Earnings Release).
It’s hard out there for consumer discretionary companies – not just pimps.
Disclosure: Top Gun has no position in CarMax (KMX) or Whole Foods (WFMI) shares.