Retailers, consumers and prices
The department store operator also said same-store sales would improve during 2010 — it expects same-store sales to be flat in the first quarter and up in the “low-single digits” for the full fiscal year.
Like many retailers, Penney kept inventories tight to avoid having to slash prices to clear merchandise. That helped to boost its profits even as sales lagged.
Still, the company has underperformed several of its main competitors. Its same-store sales fell 3.8 percent in December and 4.6 percent in January, even as rivals such as Kohl’s and Nordstrom saw their sales shoot up. Penney has been hampered by a higher exposure to malls, where traffic has suffered particularly during the downturn.
Check out the bridge, the elongation and the unpredictability at the J.C. Penney analyst meeting.
CEO Mike Ullman told analysts that he will not be providing annual financial guidance at this time because the department store operator does not have enough visibility.
On Tuesday he highlighted how uncertain the retail environment was.
”I’ve been in the business 39 years. I don’t think I’ve ever seen an environment that was as unpredictable as the current environment,” Ullman said.
The department store chain has been hit as its middle-income customers contend with higher food and energy costs, a deteriorating housing market and a credit crunch.
Ullman said the time frame for the company’s five-year growth plan has probably been “elongated” and that the company now has a “bridge” plan that includes moderating store openings and curbing the amount of inventory it keeps in stores.
Weakness in the retail industry has had one beneficial effect for consumers, though. Inflation at the consumer level rose less than expect due to falling apparel prices. Clothing retailers have been cutting prices to try to attract customers.
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