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.

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