Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

For Retailers, 'Tis the Season for Low Expectations

By

This year, the stores are under promising with the hope of over delivering.

PrintPRINT
Last year's holiday season was one of the worst on record for retailers. During the last quarter of 2008, Macy's reported a 59% decrease in profit, Sears' dropped 55%, and Target's earnings fell 41%. Overall, holiday sales declined 3.4% in 2008.

This year, the economy continues to struggle, but retailers are hoping that they're more in sync with consumers and can draw holiday shoppers back into store aisles. They're also hoping to make room for upside by keeping expectations low.

J.C. Penney (JCP), the third-largest US department store, is hoping that its moderately priced inventory will help it pick up some slack this holiday season, especially after posting a 78% decline in net income for the third quarter.

Last holiday season, the retailer posted earnings of $0.94 per share. This year, the company expects earnings to be in the range of $0.70 to $0.85 per share.

The company's CEO is expecting customers to be wearing their frugality on their sleeves and said J.C. Penney's selection of alternatives to high-end brands will draw in more sales, especially in its leading department: women's apparel.

(See also, J.C. Penney CEO Bullish on Recession)

Kohl's (KSS), a J.C. Penney rival, announced a 20% jump in its third-quarter profit, but released a watered-down forecast for the fourth quarter, which it sees as being in the range of $1.14 to $1.24 a share. Analysts are expecting $1.23 a share.

That's more than the $1.10 per share the company earned during last year's fourth quarter but below the $1.31 per share it earned during the 2007 holiday season.

Richard Jaffe, a retail analyst at Stifel, Nicolaus & Co., said in a note that Kohl's may be hoping to "under promise, and over deliver."

Target's (TGT) third-quarter release proved stronger, with an 18% increase in profit -- a welcome sight after last holiday season's 41% drop in quarterly earnings.

However, like Kohl's, Target isn't overly optimistic going into the fourth quarter. In a statement, executives said the company "remains cautious about fourth-quarter performance and is planning conservatively."

For more on Target's third-quarter earnings and expectations, read Target Hits the Bull's-Eye.

Target said it expects fourth-quarter same-store sales to decline, though by low single digits.

Analysts watching for consumer traffic have a close eye on the store's deals and its other approaches to draw in holiday shoppers. So far, Target has been near the top of the crowd. Its Black Friday specials, including some $3 appliances, helped lure in more than four million unique visitors to its website -- a 2% increase over last year, according to comScore.

For more on this season's e-commerce, see Holiday Web Shopping Looks Brighter Than Last Year.
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE