So plenty of debate on the retailers as JC Penneylowers estimates. The crux of the debate is, is this the worst for the year?
Lehman Brothers thinks so, in a note to clients a short while ago they said: "we are optimistic that 1Q08 represents the low point of the year as we expect inventory levels to improve throughout 2008."
But that is hotly debated. Management itself seems to be hinting that it expects this difficult environment to continue into the rest of 2008.
Credit Suisse agrees. This morning they said, "Today's announcement is in our view a clear sign of tremendous pressure and deceleration in department store business in March across the board. Early signs from several of JCPenney's competitors indicate a similarly tough March, with sales trends decelerating materially even from January and February levels."
They concluded, "We would not be interested in buying department store stocks until they are completely washed out and investors have fully factored in down earnings year-over-year in 2008 and at best flat year-over-year 2009 earnings."
Doesn't sound like a bottom to me, but remember these stocks are already down 20-25 percent from their highs, and much of this information has already been discounted. The risk here is that Q2 numbers deteriorate in the same way Q1 has.
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