Local Economy

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Local Economy

Summer has come to a conclusion and the news coming out of Cape Cod is not all wonderful.  In addition, GAP and others reported a decline on same store sales in September.  In isolation none of it is concerning but taken as a whole it is not providing a clear picture of a recovery in full swing.

While the Cape was very crowded and many of us found it much more congested than in prior years (remember hurricane Sandy destroyed the NJ shore) the dollars did not flow to the service sector.  According to local CPAs and Restaurateurs  volume was down from the previous year.  How this all plays out for your customers and clients we are not sure, but it is clear that folks are not parting with whatever cash remains in their pockets.

Does this mean revenue at supermarkets to Costco picked up the slack.   Very possibly but that does not put cash in the hands of others to spend creating a ripple effect of less dollars in the system.

We are hearing and reading about a slow holiday season. How does that figure into the equation while at the same time I read how trucking and shipping of goods is picking up.  Holiday goods are already appearing on the store shelves and Halloween has yet to occur.

From my perspective it is trying to project the impact on cash flows and inventory levels that is a challenge.  With consumable merchandise produced in foreign lands requiring long lead times means inventory was ordered many months ago and has or will arrive at the stores / warehouses  shortly.  If the retailers ordered based upon an increase in units sold never mind margin it would appear we may have a small inventory glut and less cash to meet obligations.

Things to think about:

  • Is my customer going to end the year with excess inventory?
  • Will the small slow down in sales impact their cash flow and if so by how much?
  • How will gross profit margins be impacted by price cutting to move inventory?  How much will the cash shortfall be?
  • Is my customer following the trends or is their market insulated?
  • Was my customer’s projections for the year based upon an aggressive sales growth?




By | 2017-03-06T12:04:52-04:00 October 15th, 2013|business advisory|0 Comments

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