Thursday, October 11, 2007

Retailers See Lower Sales

Consumers have started to batten down the hatches.
A slew of earnings warnings from retailers Thursday, on top of poor September sales numbers, added credence to concerns that consumers are feeling tapped out and that retailers are headed for a very difficult holiday period.

"We've had a whole bunch of retail warnings today. Retailers really struggled last month because of slow sales and also because of the warm weather drag, " said Ken Perkins, president of Retail Metrics.

Other retailers also warned on their third quarter. Limited Brands, parent of Victoria's Secret and Bath & Body Works chains, posted a 4 percent drop in its same store sales last month and warned that it now expects third quarter earnings of between flat to 4 cents a share, from its guidance of 4 cents a share.

Women's apparel chain Chico's said its September sales tumbled 8.3 percent, while teen seller American Eagle Outfitters reported a 2 percent decline in its same store sales.

American Eagle also warned that it expects third-quarter earnings to come in between 44 to 45 cents a share, compared to its previous forecast of 47 to 48 cents a share for the period.

Perkins said the weakness in last month's sales doesn't bode well for this year's holiday shopping season.

The November-December gift-buying months are crucial for retailers because the two-month period accounts for as much as 50 percent for merchants' annual profits and sales.
Two thirds of the economy is consumer spending. If that slows too much then a recession will occur. I have predicted a recession since I started this site and I stand by that prediction.

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