Posts Tagged ‘retail stocks’
When retailers in the U.S. economy warn about their sales being in a slump or start to forecast rough roads ahead, it should be a warning to investors of an economic slowdown ahead. The logic behind this is very simple: Retailers in the U.S. economy show trends about consumer spending; if retailers are worried, it means consumer spending is in trouble.
One way to get an idea about bleak consumer spending is by looking at what happens during the peak buying seasons. In the most recent peak buying season, being the back-to-school shopping season, retailers in the U.S. economy were only able to lure in customers by slashing their already low prices.
The president of Retail Metrics (a company that provides estimates of same-store sales), Ken Perkin, said, “They [discounts] seem to be above the norm. That was emblematic of just the lack of demand for back-to-school.” (Source: “U.S. retailers rely on deep discounts to win back-to-school shoppers,” Reuters, September 5, 2013.)
In the very recent past, we have heard from retailers like Wal-Mart Stores, Inc. (NYSE/WMT) and Macy’s, Inc (NYSE/M) about how they are struggling with their sales. And that’s a problem when you have both low-end and higher-end retailers facing similar customer demand issues.
The Cato Corporation (NYSE/CATO) is an apparel and accessory chain founded in 1946. The company reported its same-store sales in August were down two percent compared to the same period a year ago. The CEO of the company, John Cato, said, “August same-store sales were within our range of expectations and consistent with our current trend. We remain cautious in regard to the … Read More
The retail sector of the economy acts as a gauge of consumer spending. When the retail sector shows weakness, it means consumer spending isn’t as strong. If that becomes the case, economists assume the U.S. economy will perform poorly since consumer spending makes up about two-thirds of U.S. gross domestic product (GDP).
As it stands, the retail sector is showing weakness and providing troubling news on consumer spending. According to Thomson Reuters, sales at retail stores open for at least a year increased a dismal 3.9% in July, below the analyst expectation of a rise of 4.4%. (Source: Reuters, August 8, 2013.)
A well-known name in the retail sector, Gap Inc. (NYSE/GAP), registered an increase of one percent in July same-store sales from July 2012. Analysts were expecting an increase of 1.7%.
Costco Wholesale Corp. (NASDAQ/COST) said its July same-store sales increased four percent from July 2012; analysts were expecting a rise of 5.1%. The company also stated that consumers are shying away from buying big-ticket items such as electronics.
In July, American Eagle Outfitters (NYSE/AEO) reported a decline of seven percent in its quarterly same-store sales, again compared to July 2012.
What’s even more troubling…to get those sales in July going, the retail sector had to offer deep discounts to customers.
July usually kicks of the back- to-school shopping season and gives us an idea of how consumer spending going into the fall season looks. After the holiday shopping season, the back-to-school season is the second busiest for the retail sector.
As it stands, the National Retail Federation (NRF) is already expecting lower spending in the retail sector on … Read More
Among retail stocks, it was widely expected that Cabela’s Incorporated (NYSE/CAB) would report very good earnings results. But the company didn’t just announce good earnings—it hit a grand slam.
Cabela’s is the world’s largest direct marketer of hunting, fishing, camping, and other outdoors merchandise. It is one of those retail stocks that is implementing its business plan perfectly.
It currently has 41 stores in the U.S. and three in Canada, totaling 5.4-million square feet of retail space, up 5.8% since the end of 2012.
According to the company, its sales for the first quarter of 2013 grew to $802 million, representing a gain of $179 million, or 29%, over the comparable quarter.
Not surprisingly, the company’s hunting equipment category experienced the biggest increase in sales.
The company said that its comparable store sales increased 24%, which is an outstanding performance in retail merchandising.
First-quarter earnings grew 73% to $49.8 million, way up from earnings of $28.8 million. Earnings per diluted share grew 75% to $0.70 from $0.40 in the comparable quarter.
Cabela’s five-year stock chart is featured below:
Chart courtesy of www.StockCharts.com
While the sale of firearms and ammunition was expected to be strong, what was notable about Cabela’s first-quarter earnings performance is the strength experienced in other categories.
The company said it experienced strong growth in the sale of soft goods, footwear, optics, and archery. Excluding firearms and ammunition, comparable store sales increased nine percent, which is impressive. (See “Tills Ringing for Costco, Cabela’s—Obama Effect or Big New Trend?”)
As is the case with many corporations today, Cabela’s cash … Read More
Profit Confidential — IT'S FREE!
"A Golden Opportunity for Stock Market Investors"