Retail sales coming up short

Posted Jun 20th 2007 3:00PM by Eric Buscemi
Filed under: Berkshire Hathaway (BRK.A), Circuit City Stores (CC), Wendy's Intl (WEN), Economic Data

Best Buy Co Inc (NYSE: BBY), Circuit City Stores Inc (NYSE: CC) and Wendy's International Inc (NYSE: WEN) have all warned of or reported light results during the past few days, a sign that the consumer is slowing down.

Best Buy reported a drop in gross margins, as promotions for higher-end flat panel TVs kick in. Same store sale comps came in at a positive 3% and the company is guiding to 2% to 2.5% growth.
Circuit City warned last quarter that business was deteriorating, with its stock getting hit hard.
Wendy's reported a 3% drop in same store sales and a big miss on its EBITDA line.

Do not expect much of an uptick in consumer spending until the Fed starts dropping rates. Consumer dependency on home equity loans to finance large purchases is over, making year-over-year comparisons hard for the retail industry.

Tags: bby, best buy, BestBuy, cc, circuit city, CircuitCity, consumer, gross margins, GrossMargins, retail, same store sales, SameStoreSales, sss, wen, wendy's, wendys