Tuesday, January 15, 2008

Forbes Advisor Soapbox: Retail On The Rocks

Now that the sales tallies are in from retailers for the critical holiday selling season, it is apparent that the Grinch did steal Christmas. The market knew the figures would be bad; just take a quick glance at the S&P Retail Index, which is hovering near a four-year low and attempting to find terra firma.

According to the chain-store sales data released Jan. 11, specifically specialty apparel and department stores, consumers reined in their purchases of discretionary goods. The International Council of Shopping Centers, a retail trade association, estimates that combined November-December holiday sales rose 2.2%, well below their initial 3.6% estimate and the slowest rate of growth since 2002.

Although shoppers jammed the malls on Black Friday, they undoubtedly withheld their gift purchases extremely close to the Christmas holiday, as evidenced by double-digit percentage traffic declines logged at most retailers earlier in December. When they did decide to spend, particularly in weeks three and four of the month, savvy consumers were extremely price-sensitive, causing retailers across all sectors to hastily bite the bullet on fourth-quarter margins to keep inventory turning. As a result, there were material downward earnings revisions for the fourth quarter, centralized in the specialty apparel sector.

Article Continued: http://www.forbes.com/personalfinance/2008/01/15/retail-aeropostale-target-pf-ii-in_bs_0115soapbox_inl.html