- GE, Vivendi Agree to Value NBCU Stake at $5.8 Billion
- Cutting Jobless Will Take Time: White House's Summers
- White House to Crank Up Pressure on Mortgage Industry
- Treasury Threatens Banks, Not Borrowers
- Dubai World to Restructure About $26 Billion of Debt
- Cramer: Dubai Can’t Sink These 6 Dividend Stocks
- Good Sign for the Economy: 'Greed' Makes a Comeback
- Bove: 26 Banks May Need To Raise More Capital
- The World's Biggest Debtor Nations
- Treasury Threatens Banks, Not Borrowers
- We're Approaching a Market Bubble: Portfolio Manager
- Hershey Shares: What Options Are Saying
- Nov. 30: Unusual Volume Leaders
- Why Careful Shoppers Are Great for the Box Office
- Blue Nile CEO: 'We're Having the Best Cyber Monday Ever'
- Best Online Retailers to Buy Now: Internet Analyst
- ESPN The Magazine’s Body Issue: A Financial Success
- Cyber Monday: The Last Vestige of Dotcom Hype
MOST SHARED
- Timeless and Time-Tested Warren Buffett Watch Predictions
- Goldman Sachs Party Ban: No Gatherings of 12 or More
- Should Homeowners Be Able To Walk Away From Mortgage?
- Dubai World Set to Restructure About $26 Billion of Total Debt
- Nov. 30: Unusual Volume Leaders
- Bove: 26 Banks May Need To Raise More Capital
- Notre Dame Fires Charlie Weis After 5 Seasons
- Blue Nile CEO: 'We're Having the Best Cyber Monday Ever'
- Treasury Threatens Banks, Not Borrowers
- Oil Demand Sees Year-Over-Year Rise, First Since 2007
Text Size 
Retailers are largely reporting disappointing sales in July, with many retailers falling short of analyst estimates, as consumers remain cautious with their spending and are running out of extra cash from their tax rebate checks.
 |
Even discounters such as Target Stores [TGT
Loading...
()
] and Wal-Mart Stores fell short.
Wal-Mart, the world's largest retailer, warned that it was beginning to see the end of the benefit from the tax rebate checks consumers began to receive in May. The retailer said traffic in its stores continues to improve, and it expects it is well-poised to benefit from cash-strapped consumers looking for bargains. However, investors saw the results as lackluster, and Wal-Mart [WMT
Loading...
()
] shares were down about 3 percent before the opening bell.
Wal-Mart was not alone. Of the 33 retailers that had reported same-store sales results before 8:30 am New York time, only 39 percent topped analyst estimates, while 61 percent fell short, said Thomson Reuters.
Not surprisingly, apparel retailers tended to fare with worst, as consumers stocking to buying the essentials.
Children's Place [PLCE
Loading...
()
], Chico's FAS [CHS
Loading...
()
] , Wet Seal [WTSLA
Loading...
()
], and Abercrombie & Fitch [ANF
Loading...
()
] reported the biggest shortfalls compared with Thomson Reuters estimates.
Meanwhile, some of the strongest sales compared with estimates came from Dillard's Department Stores [DDS
Loading...
()
], Aeropostale [ARO
Loading...
()
] and Haverty's Furniture [HVT
Loading...
()
], Thomson said.
Wal-Mart Raises Red Flag
After several months of stronger-than-expected sales, Wal-Mart said its same-store sales rose 3 percent in July when fuel is excluded. That increase fell short of the 3.4 percent gain that analysts, on average, were predicting, according to Thomson Reuters. Including fuel, same-store sales were up 1.9 percent.
"With the end of the stimulus checks, we know consumers are spending more cautiously, and we continue to see a pronounced paycheck cycle at the end of the month," said Wal-Mart President and Chief Executive Eduardo Castro-Wright, in a press release.
Wal-Mart forecast August same-store sales growth of 1 percent to 2 percent, and sees second-quarter sales of $102 billion. The analyst consensus is for revenue of $101.66 billion in the quarter.
Over the past year, retailers have eked out slim sales gains as rising gasoline prices, a crumbling housing market, tighter credit and rising grocery bills have forced consumers to pull back on spending.
Stimulus checks helped spur spending, but that trend will come to an end soon.
"The stimulus checks, the last ones, were issued on July 11, so they definitely were going to come to an end," said Dana Telsey, chief investment officer of Telsey Advisory Group. (For the full interview with Telsey, watch the video above.)
IS CONSUMER SPENDING DEAD?
But Wal-Mart's report also raises red flags about the direction consumer spending is heading.
David Rosenberg, chief North American economist for Merrill Lynch, told CNBC on Wedneday that the U.S. economy is facing the first consumer recession since the early 1990s. (Click here for the full story).
Target said same-store sales fell 1.2 percent in July, missing its own and analyst expectations.
The discount retailer says results were near the low end of its expectations of a 1 percent decline to a 1 percent increase.
Some non-discount chains such as the Gap [GPS
Loading...
()
]and J.C. Penney said they expect earnings will be stronger than expected for the fiscal second quarter, which just ended. But these companies continued to see steep sales declines from the year-ago period.
At the Gap, same-store sales fell 11 percent last month, led by declines at its North American Banana Republic and Old Navy stores.
J.C. Penney [JCP
Loading...
()
] posted a 6.5 percent decline, and predicted a mid-single-digit drop due to the timing of back-to-school sales. A mid-single-digit drop is seen for August.
Meanwhile, the department-store giant sees fiscal second-quarter earnings of 50 cents to 52 cents a share; the firm in May projected around 38 cents a share.
In general, department store sales were weak. From the high-end to the mid-tier, there were sales shortfalls.
Saks [SKS
Loading...
()
] posted a bigger-than-expected 5.3 percent drop, while Kohl's [KSS
Loading...
()
] sales fell 10.4 precent, which was wider than analysts expected.
Print
Email
- Ever wished your cab driver would stop chatting and just get to where you're going? Well, that moment is closer than ever.
- UPS is giving its customers the option to offset its carbon emissions when sending a package.
- Romania's presidential campaign has been rocked by a video that may show the president striking a 10-year-old boy.
- Raising alligators is hard work, and the fickle taste of rich consumers has just made it much harder, says the NY Times.
- A recent issue of ESPN Magazine was one of its top sellers ever, and it only took scantily clad athletes to make it happen.
- The continued real estate boom in China is partially fueled by a generational flood of newlyweds.
Data is a real-time snapshot *Data is delayed at least 15 minutes