Friday, November 21, 2008

Linens N Things Goes Away Forever

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So many retailers are closing their doors forever. Circuit City is going away, Linens N Things too. Probably many more chains will announce bankruptcy plans before this challenging year is over.

But within a couple of weeks, I expect that huge markdowns will spread to nearly every retail firm, online as well as off. Deflation is going to be with us till 2009, yet the race is on to get prices as low as possible before Christmas and Hanukkah so stores can capture some share of holiday sales and avoid being stuck with inventory.

Even retailers who eventually report a .5% increase in same-store sales won't be talking too much about their lower profit margins--the real result of deflation that begins at the consumer level and spreads back into the supply chain.

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