Shop Talk

Retailers, consumers and prices

Check Out Line: How low will retailers go?

January 6, 2009

cloudsCheck out the days of reckoning for retailers.
This week most U.S. retailers will tell us how December sales went. The news is not likely to be good.
According to Thomson Reuters data, Wal-Mart is about the only one that saw an increase in same-store sales. With a recession, job losses, falling home values and tighter credit, it’s not surprising that most people cut back and that sales fell for most retailers.
But what will be more telling is how much the big sales — like Jos A Bank’s three-for-one suit sale — lead to profit warnings by retailers. Those deep discounts may move merchandise (though even that is debatable in this environment), but they come at the expense of profits.
Retail stocks have actually outperformed the broader market in the past month. But the depth of the profit warnings will likely determine whether those retail stocks also go back on the discount rack.
Also in the basket:
UK retailers ease Christmas fears, but gloom lingers
Smoking ban in cafes puts French off cigarettes
Coming down on tobacco (N.Y. Times)


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