The New York Times reports Retail Sales Edged Up in December After Stores Cut Prices Sharply
Sales at stores open at least a year at major retail chains rose 3.4 percent compared with December 2010, according to data compiled by Thomson Reuters, just above the 3.3 percent that analysts had expected.
But the cost of propping up sales was high. Profits “were a mess” for many retailers, said Paul Lejuez, an analyst at Nomura Equity Research. Consumers were buying less than retailers had expected, and stores had to mark down inventory to get it out the door by Christmas.
“Retailers came in with pretty conservative assumptions, and they were hoping to blow them out of the water — they really didn’t,” said David L. Bassuk, managing director and head of the retail practice at AlixPartners, a consulting firm. Retailers were resorting to promotions like “ ‘50 percent off our whole store,’ ‘60 percent off our whole store,’ which is when you can see times are tough,” he said.
Thursday's Retail Earnings Announcements
- Target reduced its fourth-quarter earnings expectations to $1.35 to $1.43 a share from prior estimates of $1.43 to $1.53 a share.
- Kohl's reduced its fourth-quarter earnings expectations to $1.70 to $1.73 per share, from $1.93 to $2.04 a share.
- J. C. Penney reduced its fourth-quarter earnings expectations to $.65 to $.70 from $1.05 to $1.15 a share.
- American Eagle reduced its fourth-quarter earnings expectations to $.33 to $.35 per share from $.40 to $.44 cents.
- Macy’s raised fourth-quarter earnings expectations to $1.55 to $1.60 a share, up from $1.52 to $1.57 a share.
Much of the chatter from Black Friday on was more hype than reality. The bottom line - profit - looks anemic at best at many major retail chains.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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