Will December Mirror November Sales? - Analyst Blog
14 Dicembre 2012 - 3:05PM
Zacks
November retail sales data are out amid an economy which has
been exposed to a number of mixed events. On one hand, the Labor
Department indicated that initial jobless claims have fallen 29,000
to 343,000; on the other, consumer sentiment is showing a negative
inclination, largely due to the looming fiscal cliff. Again, the
unemployment rate declined to 7.7% in November from 7.9% in
October, but it remains well above the Federal’s long-term target
of 5.2% to 6.0%.
In such a scenario, November retail sales data revealed an
upswing from October. According to the data released by the U.S.
Department of Commerce, total retail and food services sales
(including non-general merchandise categories such as automobiles,
gasoline stations and restaurants) jumped 0.3% in November,
rebounding from a decline of an equivalent percentage in
October.
Hurricane Sandy did enough to derail November sales, but a
modestly improving job market, falling gasoline prices and a
resurging housing market favorably impacted the holiday shopping
season, with consumer spending picking some momentum. Data compiled
by National Retail Federation (NRF), the nation's largest retail
trade group, suggested that November retail sales (which exclude
automobiles, gas stations and restaurants) inched up 0.8% from
October.
Consequently, NRF reiterated its holiday sales forecast of 4.1%
jump in November and December period to $586.1 billion, which is
short of the 5.6% growth registered last year. However, it is above
the 10-year average sales increment of 3.5%.
Sandy dampened the November comparable-store sales performance
of Target Corporation (TGT), Macy’s
Inc. (M), Kohl’s Corporation (KSS) and
Nordstrom Inc. (JWN), all of
which missed the forecasts. However, Costco Wholesale
Corporation (COST) and Limited Brands
Inc. (LTD) performed above expectations. (Also read: Sandy
Derails November Comps).
Home improvement retailers, such as Lowe’s Companies
Inc. (LOW) and Home Depot
Inc. (HD), were the beneficiaries when Hurricane
Sandy hit the U.S. East Coast. Customers rushed to get hold of
flashlights, generators and batteries before the storm and came
back to buy materials for repairing purposes after Hurricane Sandy
wreaked havoc.
The question now is, “Will December retail sales mirror or
surpass November’s performance?” The answer is very tough at this
juncture, as the economy is surrounded by slew of events, the
latest being the Fed’s announcement to spend $45 billion to buy
long-term treasuries in addition to the $40 billion per month in
mortgage-backed bonds. The Fed also said that it will continue to
maintain short-term interest rate at near zero levels till the U.S.
unemployment rate drops below 6.5%.
However, this encouraging announcement was not enough to negate
the Fiscal Cliff of $600 billion in tax increases and spending
cuts. Republicans and Democrats continue to wrangle about ways to
find a solution. Analysts are thus projecting soft economic growth
as companies shy away from making big investments until a
negotiation is reached. The austerity measures and fear of
impending tax hike are creating some panic among consumers.
Thus, we believe that retailers have to cover this holiday
season with compelling pricing, promotional strategies and new
products launches to attract shoppers. Despite lingering concerns,
we hope the arrival of Christmas guides demand higher and shed
consumers’ apprehension.
COSTCO WHOLE CP (COST): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
KOHLS CORP (KSS): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
LIMITED BRANDS (LTD): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Grafico Azioni Nordstrom (NYSE:JWN)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Nordstrom (NYSE:JWN)
Storico
Da Lug 2023 a Lug 2024