As earnings season continue, this time for retailers, some of their earnings managed to beat estimates. For instance, TJX reported in-line results, Target beat estimates by 13 cents, and Home Depot gave better earnings. JC Penney also topped estimates, along with Nordstrom (which was in-line), Macy’s and Wal-Mart. Having said that, it’s still not very rosy looking at the previous quarter. Comp sales are still down and most, if not all, are not expecting recovery until the second half of next year, which only means consumers are still pocketing money as much as they could with the unemployment still expected to rise. Savings rate are to go up further. That means even back-to-school and the holiday season won’t be seasons of joy. Continued lower sales could only mean further inventory cuts.
Retailers across the spectrum provided foreboding reports. Discounter Target Corp. reported that sales at stores open at least a year were down 6.2% from a year earlier in the quarter ended Aug. 1, while luxury purveyor Saks Inc. reported a 15.5% drop in same-store sales over the past quarter as shoppers stuck to buying basics. Building-supply chain Home Depot Inc. saw total sales drop 9.1% in the quarter ending Aug. 2, and it reaffirmed expectations of a 9% sales drop this year.
More from the WSJ.
Without any significant pick-up in consumer purchases, retailers will continue reporting dismal numbers.
If there was anything ‘good’ that we can take from it, it’s that we expect all these things anyway. No surprises whatsoever. After all, we’re not expecting recovery until later this year/next year. We can only be surprised about any move to the upside.