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.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.
"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.
Thursday, October 11, 2007
Retailers See Lower Sales
Consumers have started to batten down the hatches.