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AP |
On Thursday, the nation's biggest stores will report their same store sales results for the month. Bill Kirk of Weather Trends International expects that results will rank in the top 3 lowest gains of the past 22 years due to weather disruptions, high gas prices and general consumer fears of a recession.
Will it be as bad as expected? Probably not. The problem is that it won't be as rosy as needed either. Here's what you can expect come Thursday's results:
The calendar effect: BAD NEWS:
The department stores will blame the calendar shift for stealing holiday shopping days (remember the additional days worked to their advantage in November - now they're paying back what they gained.) So JP Morgan is predicting that stores from high-end Nordstrom [JWN Loading... ()
] to JC Penney [JCP Loading... ()
The weather: GOOD NEWS: According to Bill Kirk of Weather Trends International, the 5-week retail December ended up the 3rd coldest in 15 years and the snowiest in 7 years. That's a positive for apparel and other cold weather sales.
The consumer: MIXED NEWS:
Low income consumers: Analyst Chuck Grom of JP Morgan is advising that investors avoid dollar stores (FDO, WMT and DLTR) that sell to the low-income consumers who are under budget pressures right now.
Middle income consumers: Midtier discounter Target [TGT Loading... ()
A bright spot: Analyst Eric Beder of Brean thinks that Aeropostale is[ARO Loading... ()
High-income consumers: Christmas did come to the upper income shoppers but even Saks [SKS Loading... ()
Inventory levels: MIXED NEWS:
There are some overlooked success stories when it comes to retailers able to keep a healthy supply level on their shelves while also keeping prices at a level that still delivers relatively strong profit margins. According to analyst Eric Beder, "many players" despite "slackening demand, were able to maintain margin integrity via less product" Here's got a buy on ARO, BEBE CACH and WTSLA.
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