Even though Black Friday sales were better than expected, most retailers saw their November sales plunge. As I posted in April, Wal-Mart Stores, Inc. (NYSE: WMT) would likely benefit from consumers' recession diet. That has proven to be a fairly safe bet, but the scary thing is that just about every other retailer is taking a hit.
A glimmer of good news is that for many of those that hurt, the results were not as bad as expected. Here are the actual results of five retailers (with expected results in parentheses):
- Wal-Mart +3.4%, (+2.1%)
- Costco Wholesale (NYSE: COST) -5%, (-2.4%)
- Limited Brands (NYSE: LTD) -8%, (-11.6%)
- Pacific Sunware (NASDAQ: PSUN) -10%, (-14.3%)
- Bon-Ton Stores (NASDAQ: BONT) -16%, (-14.5%)
An emerging theme is that expectations are so bad that retailers seem able to exceed them. However, there is no guarantee that such outcomes are likely to continue. If retailers do better than expected then forecasters may raise their estimates until retailers can't exceed them.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.




Reader Comments (Page 1 of 1)
12-04-2008 @ 1:26PM
Iridium said...
You know the problem is this expectation to constantly grow. What if we simply can't grow the economy any more than we have.
The past ten years have been based on a lie of fake money generated by market speculation. What we are seeing right now is the real economy. The real economy built on corporate socialism. The one company in each sector that rules them all.
Why can't we be happy with sales that stay flat for years on end. Why do we have to put a Walmart Supercenter in every town. Why must ther be 8 Best Buys within 10 miles of each other.
When a big box store is competing with itself for sales you have a huge problem. We actually have a situation where one Walmart has to lower prices to compete with the Walmart 2 miles away.
Our economy is totally overbuilt with gargantuan retailers. There is more sq ft supply than people it can service. What is too bad is that this overbuilding of big box low wage stores has killed off nearly every small business in the country. The best thing for the economy would be for all major retailers to go bankrupt. It's not like we will lose manufacturing jobs because of it. We'll only lose low paying garbage jobs.
In fact we may actually gain manufacturing jobs because small stores will not be able to buy the quantity needed to make offshore manufacturing a viable solution.
Yes the best thing would be for the big box store to go the way of the dinosaur.