Retailers: Sales Down, Stocks Up--What's Going On? - Holiday Central

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It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Feb.07

4:59 PM ET

Thursday, 7 Feb 2008

Retailers: Sales Down, Stocks Up--What's Going On?

Posted By:Margaret Brennan

Topics:Earnings | Consumers | Retail Sales

Sectors:Personal and Household Goods | Retail

Companies:JC Penney Company Inc | AnnTaylor Stores Corporation | Wal-Mart Stores Inc | Macy's

CNBC.com
It is a tough time to be a retail executive but a good day to be a retail shareholder. While January sales were the weakest in 39 years, according to the International Council of Shopping Centers, retail shares rallied today.

Why? Some stores reaffirmed earnings (JCP [JCP Loading... () ], WMT [WMT Loading... () ] , etc), and some investors decide to go bargain hunting. Sales results may not have bottomed but some investors believe we're close to a stock bottom in this beaten down category.

Today, meager sales were spread across luxury, department stores and the discounters. Now the pressure is on retail executives to manage inventory tightly (buy less, buy later from manufacturers), to merchandise just right (put things on shelves that will convince consumers to spend their budgeted cash) and, potentially, to restructure infrastructure.

Retails Details

U.S. Economy Is Showing More Signs Of Weakening
Fed's Lockhart: Market Moving to 'New Normal'
Movers roundup: J.C. Penney, Shutterfly

Translation: making the hard decision to close stores and layoff workers (a la Macy's [M Loading... () ] and Ann Taylor [ANN Loading... () ] .) I imagine those sales associates working the floors on commission are seeing leaner earnings themselves.

The consumer is the first place an economic slowdown hits. January's sales results are proof of that. That said, the turnaround may not be upon us yet but it is coming. Analyst Dana Telsey of TAG forecasts that retailers can get ahold of inventory levels by the third quarter.

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