Retail Industry Trends

[HenryTo]

Retailiers already bracing for the worst. The $64 billion question is, as always, how bad will this get and how much of this has already been factored into retail stocks?
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Retail Holiday Season May Be Modest
Tuesday October 30, 5:15 pm ET
By Betsy Vereckey, AP Business Writer
Sluggish US Economy May Weigh on Holiday Sales for National Retailers

NEW YORK (AP) -- U.S. retailers are bracing for a difficult holiday season, some industry watchers say, as higher gas prices and a sluggish housing market are expected to continue crimping consumer spending.

At a conference on Tuesday hosted by the Retail Marketing Society, a membership-based organization focused on the retail industry, some industry executives said holiday sales may be sluggish.

"This holiday season will be somewhat Grinch-like," said Carl Steidtmann, chief economist at Deloitte Research.

Steidtmann said retailers are preparing for the worst, especially given tightening credit and problems in the housing market. Steidtmann said it will be at least 18 months to two years before the housing market bottoms.

Merrill Lynch analyst Jaime Sheinheit said higher energy costs will weigh on consumer spending, noting that retailers have had trouble getting customers in the door. However, it's hard to tell whether the sluggish traffic is related to softening consumer spending or warm weather, Sheinheit said.

"Cold weather may spark shopping," she said.

In the luxury sector, Sheinheit said handbag maker Coach Inc. has warned of sluggish traffic in its U.S. stores. The company recently issued a fiscal second-quarter same-store sales outlook it called "conservative." Same-store sales are sales at stores open at least a year, and the industry metric is considered a key barometer of a retailer's health.

David Wolfe, creative director at Doneger Group, a buying office, said Coach has reached its saturation point with aspirational customers, who may not have the money to spend on these handbags but still want quality at a price.

Meanwhile, wealthy customers may help other luxury retailers this season, like Tiffany & Co., as spending patterns among the affluent tend to stay the same, regardless of changes in the economy.

Sectors that might fare better include teen retailers, Sheinheit said, noting that the income of their main customer, teenagers, usually stays the same. Companies in this sector include American Eagle Outfitters Inc. and Abercrombie & Fitch Co.

One company that may emerge stronger, Sheinheit said, is AnnTaylor Stores Corp., which has leaner inventory and a new product assortment at its lower-priced Loft division. In August, the company said it increased markdowns to reduce inventory heading into fall seasons at both its Ann Taylor and Loft stores.

"There is a lot of opportunity for Loft to improve margins this holiday season," Sheinheit said. "As always, what it comes down to is having the right product."

[HenryTo]

S&P Retail Index up 3.7% today.

[rffrydr]

Retail Breakdown



Bullish

· WTSLA has weak comps down 5.7%, but said gross margin is up and EPS comfortably above consensus

· URBN has comps at +11%. Sales numbers better than expected

· HOTT stronger than expected comps and EPS guided upward

· COST comps are 7%. 6.5% expected

· ANN comps are unchanged. -3.5% expected

· GPS comps are -2% vs. -6% -- guides EPS higher

· BJ has comps of 7.8%. 4.5% expected

· TJX guides higher. Comps are 3% vs. expectation of 4%

· JCP EPS to the higher end of the range. Sees $1.65 to $1.80. Estimate is $1.65. Comps -2% vs expectation of -6%

· ROST is guiding EPS up



Bearish

· PLCE comps +6%. +3% expected

· KSS guides to lower end of the range, but this is not out of line with consensus. Comps down 8% in line.

· CHS has comps down 22%. -11% expected.

· LTD comps are -8%. -7.5% expected. Revenues fall slightly short of estimate

· TLB has weak guidance

· JOSB comps are -1.2%. 1.0% expected.

· AEO has weak sales

· CBK comps are -6%. -3% expected. EPS taken down

· NWY weak numbers

· TGT comps are -1.1% -- slightly less than expected -0.5%

· WMT comps are 0.5% 2% expected. Ex-fuel up 1.4%. Sees EPS of EPS of $.99 to $1.03. $1.02 expected. Feb sales expected flat to +2%
Notes gift card use lower than expected and being used for food.
Weather hurt sales

· JWN misses sales -6.6%. About -.5% expected

· DDS comps are -12%. -5% expected

· ARO looks a bit light on EPS



Neutral

· PSUN has weaker than expected comps down 7.4% (1.5% expected), but guides EPS upward

· GYMB confusing. Guides up for current quarter, down for coming quarter, and up for FY 2009.

· ANF in line comps although overall sales are light

· FDO reports comps about in line. Sees Feb flat
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Two hours ago, if you had told me that AEO would be up 8%, BBBY up 6%, CC up 5%, HD up 8%, and SHLD up 12% this morning, I would have sent for the doctor. And yet, here it is.

Many active managers are still heavily underweight retailers and consumer discretionary stocks (and overweight energy and materials) relative to their benchmarks and they are probably panicking right now.

[HenryTo]

BBBY now in positive territory. I have to say: Mr. Konrad is definitely one of the best value analysts out there.

We also got some luck as well, as the stock had been upgraded just this morning.

[rffrydr]

Cards or no cards, worst Christmas since 2002.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

I'm seeing alot of people looking for something to spend their gift cards on Amazon. And I'm not seeing much on sale.

"The real season starts tues.":

http://www.mercurynews.com/breakingnews/ci_7933122?nclick_check=1
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Best Buy to kick off same store sales reports this Friday. Speaking of CC, note that it had a one-day reversal this morning on bad sales numbers, closing up 2.14% for the day. That is a "flier." Other stuff I like is AEO and BBBY (Bed Bath & Beyond).
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Many US chains expected to post softer Dec sales
Tue Jan 8, 2008 8:09pm EST

By Karen Jacobs

ATLANTA, Jan 8 (Reuters) - Many U.S. retailers are expected to report disappointing December sales later this week, hurt by everything from the challenging economy to unfavorable weather to the calendar, which shifted more holiday sales to November.

Though media reports say apparel sales picked up after Christmas, analysts said some retailers' quarterly earnings estimates are at risk as higher gasoline prices and recession fears in the face of a still-weakening housing market weigh on consumer spending.

"We do believe that traffic was lighter compared to last year and also promotionally driven," Credit Suisse softlines retail analyst Paul Lejuez said on Tuesday during a conference call previewing December sales.

"We really do question what is likely to drive the consumer through the mall to shop for apparel this spring," he added.

Expectations for December sales at stores open at least a year were further dampened by weak sales trends from Target Corp (TGT.N: Quote, Profile, Research) and Talbots Inc (TLB.N: Quote, Profile, Research), controlled by Japan's Aeon Co Ltd (8267.T: Quote, Profile, Research). Talbots said last week it plans to close 78 stores focused on kids' and men's apparel.

On Monday, Circuit City Stores Inc (CC.N: Quote, Profile, Research) offered more bad news when it said December same-store sales fell 11.4 percent despite strong demand for fancy TVs and video games.

The market was rattled again on Tuesday when the CEO of AT&T Inc (T.N: Quote, Profile, Research) cited softness in consumer phones and Internet services, stunning investors who figured telecoms would be shielded from a U.S. economic slowdown.

Electronics sector leader Best Buy Co (BBY.N: Quote, Profile, Research) is due to report same-store sales on Friday.

But Credit Suisse analyst Gary Balter said Circuit City's sales woes were mainly of its own making, since the chain let go its most experienced staffers last year.

"Don't take (the Circuit City report) and say this is bad for Best Buy," he said.

Many hope the electronics sector was a key destination for gift buyers over the holiday season.

"We saw some very good numbers from electronics and e-commerce over the holiday season," said Kamalesh Rao, director of economic research at MasterCard Advisors.

But Rao said same-store sales is a retail measure that is more heavily focused on department stores and apparel chains, two subsets that were weaker holiday performers.

Retail leader Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) is expected to post low-single-digit-percentage same-store sales growth for December, likely outperforming rival discounter Target, which cut its monthly same-store sales view last month.

Retail chains expected to post the strongest December sales include Pacific Sunwear of California Inc (PSUN.O: Quote, Profile, Research), Aeropostale Inc (ARO.N: Quote, Profile, Research), Costco Wholesale Corp (COST.O: Quote, Profile, Research) and TJX Companies Inc (TJX.N: Quote, Profile, Research), Lazard Capital Markets said in a research note.

CALENDAR SHIFT

Department stores such as Macy's Inc (M.N: Quote, Profile, Research) and Saks Inc (SKS.N: Quote, Profile, Research) warned last month that their December sales would weaken from November, hurt by a shift in the retail calendar that added selling days to the prior month.

JP Morgan this week cut quarterly earnings estimates for women's apparel retailers such as Cache Inc (CACH.O: Quote, Profile, Research) and Coldwater Creek Inc (CWTR.O: Quote, Profile, Research), citing the macro environment.

C L King & Associates analyst Mark Montagna lowered his fourth-quarter profit estimate for Limited Brands Inc (LTD.N: Quote, Profile, Research) by 7 cents a share, citing declining traffic and an expected December same-store sales decline of 6 percent.

Analysts have warned that other retailers could lower their earnings forecasts as increased promotions failed to yield higher sales during the holiday month.

Higher fuel prices and rising unemployment likely led to lower same-store sales at value chains such as Fred's Inc (FRED.O: Quote, Profile, Research) and Family Dollar Stores Inc (FDO.N: Quote, Profile, Research), said Ivy Jack, a Lehman Brothers analyst.

Family Dollar cut its full-year forecast on Tuesday, saying customers were cutting their discretionary spending.

"It has been difficult for the dollar stores to drive traffic given the increased promotional activity of competitors, and the low-income consumer remains financially stretched," Jack said on Monday. (Editing by Braden Reddall)

[rffrydr]

So I've heard that it's 10% of top money-earners who account for 60% of retail sales? That's why Nordstrom's came as such a shock to the sector. Retailers are now off the requisite 20% to qualify for bear.

Many are picking Best Buy for the turn. Ideas?
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Just checked Best Buy's ads for next week. Looks like they're holding the line and rolling those giftcards into retail prices.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Not bad beginning of second Christmas seson:

http://www.cnbc.com/id/22477111/for/cnbc/
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Is this a "Christmas gift"? They add it up like one:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aUUA267YeSfw&refer=home
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Folks are now hoping the post-holiday sales will save the day, but given the tremendous discounting we've seen over the last few weeks and the extended store hours, one definitely needs to wonder how much profits the retailers have been sacrificing over the last few weeks.
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Retailers look for post-holiday bump By ANNE D'INNOCENZIO, AP Business Writer
44 minutes ago

NEW YORK - Retailers opened earlier than ever on the day after Christmas on Wednesday and slashed prices with hopes of salvaging a holiday season that is falling short of already modest expectations.

Merchants are trying to lure post-Christmas bargain hunters and gift-card splurgers that could provide a much needed boost during this crucial period. Gift card sales, which have been increasingly popular in recent years, are not recorded until shoppers redeem them.

"My son gave me gift cards for clothes, and I get up with the birds, so I figured I'd get the most with my money," said Susan Depetris, who was loading pants and sweaters into her cart at Kohl's in Medford, Mass. She didn't plan on looking for gifts for anyone else. She had just one person on her mind while she shopped — herself.

"I was the first one in the door, so it was nice," said Shirley Vilhauer, of Bismarck, N.D., who was shopping at a local Kohl's and spent less than $25 on ski pants for her grandson and a baby gift for her niece's young son.

The International Council of Shopping Centers said Wednesday that same-store sales, or sales at stores opened at least a year during the November-December period, appear to be coming in just below slim projections for a 2.5 percent gain, though it said that a post-Christmas buying could help restore the shortfall. That contrasts to a more upbeat assessment from its chief economist Michael P. Niemira, following the weekend's spending surge, who predicted that holiday sales could at least meet forecasts.

Target Corp. warned late Monday that its same-store sales might decline for December, while a broad gauge of consumer spending released by Mastercard Advisors, a division of the credit card company, which includes estimates for spending by check and cash, reported on Tuesday an increase of 3.6 percent from Thanksgiving to Christmas. That compared with a 6.6 percent gain in the year-ago period. The 2007 holiday figure is at the low end of its 3.5 percent to 4.5 percent range. Excluding gasoline and auto sales, that figure was 2.4 percent.

"The ingredients were not there for a blockbuster season," said Michael McNamara, vice president, research and analysis of MasterCard Advisors. "And retailers in many respects got the most out of the season that they could based on the environment."

Higher gasoline prices, an escalating credit crisis and a housing slump made shoppers cautious about buying holiday gifts. Still, as McNamara and other experts said, the season is not the disaster that some feared. Turnout is turning out to be reasonably in line with the weakening sales growth seen throughout the year, McNamara said.

Still, stores had to step up discounting to spur sales, raising concern over stores' profit picture during this crucial period. The holiday season accounts for up to 30 percent of annual stores sales. For toy sellers, holiday business accounts for as much as 50 percent.

Retailers' woes are only good new for shoppers, who are being bombarded with even more generous discounts in the after-Christmas period. Toys "R" Us Inc., which threw open its doors at 8 a.m. on Wednesday, two hours earlier than last year, offered 40 percent price cuts on all MP3 and iPod accessories. Macy's Inc. marked down cashmere sweaters anywhere from 50 percent to 75 percent off, while Saks Fifth Avenue cut prices on fur coats by 40 percent to 60 percent.

In Lisbon, Conn., Maggie Challinor joined about 20 shoppers huddled for warmth in the vestibule of Kohl's department store for a 6 a.m. opening. Challinor, of Norwich, Conn., planned to buy a coat with a Christmas gift card she received from her husband.

Gift cards helped the family keep to their Christmas budget, she said. "We spent less. We really watched for sales."

Samantha Williams, with her bundled 7-week-old daughter, arrived early Wednesday at Kohl's to exchange baby clothes. Waking early was better than fighting lines later, she said.

Barbara Gagne of Griswold, Conn., found a $55 blouse marked down to $11, which she bought after returning two pairs of pants.

"I'm here for the bargains," she said.

Lili Leavell-Hayes of Indianapolis was shopping at the city's Castleton Square Mall for "things that Santa did not deliver."

She had hoped for even more discounts on such items as shoes, clothes and boots.

"I think they could be doing better," she said.

The post-Christmas season has become more important with the increasing popularity of gift cards. According to the National Retail Federation, consumers were expected to spend a total of $26.3 billion in gift cards this holiday season, up 42 percent from $18.5 billion in 2005.

ShopperTrak RCT Corp. said that the week after Christmas accounts for about 16 percent of total holiday sales.

"This is going to be a more important chunk of business than most people realize," said Scott Krugman, a spokesman at NRF.

Marshal Cohen, chief industry analyst at NPD Group Inc., a market research firm, agreed, noting that when the industry looks at the holiday results, they need to include January business.

"When we take a look at the results of this holiday retail season, it will be important to remember that the rules have changed and so should the way we read the success of the holiday," Cohen said.

[rffrydr]

CNBC now calling it a "Blue Christmas"

http://www.cnbc.com/id/15840232?video=615645993&play=1

Amazon UP Macy's DOWN
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Here is the update from the WSJ, and courtesy of Mastercard:

http://online.wsj.com/article/SB119859964475049505.html?mod=googlenews_wsj

[rffrydr]

AP likes it:

http://biz.yahoo.com/ap/071225/holiday_last_minute_shopping.html

Though Target comes through disappointingly.
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Today is the Tomorrow you worried about Yesterday!