Retailers, consumers and prices
Check Out Line: “Insult to injury” for retailers
Around this time last year, stimulus checks amounting to more than $100 billion started landing in cash-strapped consumers’ bank accounts, giving them a chance to spend and boosting sales for many retailers.
But this year’s stimulus entails lower withholding taxes and not ”hard checks,” which means “the effects of this year’s stimulus on retailers will be a far cry from 2008,” Pali Capital analyst Stacey Widlitz said in a research note to clients.
As retailers already face thrifty consumers, tough comparisons versus a year ago could put some retailers at risk this time around, adding “insult to injury,” she said.
For example, electronics retailer RadioShack offered consumers a 10 percent discount on purchases over $50 when a stimulus check was used between May 4 and July 12 last year. That along with sales of TV converter boxes helped sales, Widlitz said.
“Beware of tough comps ahead, lack of stimulus promotions and the end of converter boxes in June,” she said in the note.
Widlitz also mentioned discounting giant Wal-Mart Stores, saying the retailer benefited last year from stimulus checks, and ”on top of increasing expectations, investors are not fully factoring in the headwind for May-June.”
Other companies mentioned include Best Buy, closeout retailer Big Lots, and grocery store chains such as Supervalu, Safeway and Kroger.
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