Holiday Season May End on Soft Note - Analyst Blog
24 Dicembre 2012 - 1:15PM
Zacks
Holiday season is usually the time
for shoppers to make some of the biggest purchases of the year.
However, the flagging economy has somewhat dented consumer
confidence, leaving the possibility that this holiday season might
end on a soft note.
Meanwhile, politicans have yet to
find a solution to the impending "Fiscal Cliff". Analysts are
predicting another recession if Republicans and Democrats fail to
agree on ways to avert the automatic austerity measures and tax
hikes before the start of next year.
Huge discounts, promotional
activities and other buyer-friendly moves by retailers failed to
boost confidence. Consumers are worried about issues related to
personal disposable income, the business climate and the economic
woes. A report by Thomson Reuters and the University of Michigan
reveals that consumer sentiment has been hit hard due to the
ongoing economic impasse, falling to 72.9 in December from 82.7 in
November.
ShopperTrak stated that both foot
traffic and retail sales dropped 4.4% and 4.3%, respectively, for
the week ending December 15 from the prior-year period. The
Chicago-based retail analysis firm also trimmed its sales growth
forecast for the holiday season, blaming the huge discounts and the
adverse impact of Hurricane Sandy.
ShopperTrak now projects holiday
sales for November and December to rise only 2.5%, down from 3.3%
increase previously forecasted in September 2012. The current
estimate also fares unfavorably with 3.7% growth achieved in the
prior-year holiday season.
Data compiled by International
Council of Shopping Centers (ICSC) hinted of comparable-store sales
growth of 3% during November and December, against a 3.3% increase
in the prior-year period. For December, ICSC is projecting retail
sales to rise between 4% and 4.5%.
The National Retail Federation
reiterated its holiday sales forecast for a 4.1% jump in November
and December to $586.1 billion, which is short of the 5.6% growth
registered last year. A study done by the nation's largest retail
trade group and Macroeconomic Advisors hinted that if the “Fiscal
Cliff” is averted, retail sales may increase 2% to 2.5% in 2013.
However, failure to avoid the "Fiscal Cliff" may lead to flat sales
or a contraction in the first half of next year.
Sensing these challenges, retailers
such as Target Corporation (TGT),
Macy’s Inc. (M),
Kohl’s Corporation (KSS),
Nordstrom Inc. (JWN), Costco Wholesale
Corporation (COST), Limited Brands Inc.
(LTD) and others have been actively making efforts to win the
hearts of bargain hunters. We'll have to wait and see if their
moves are successful.
COSTCO WHOLE CP (COST): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
KOHLS CORP (KSS): 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
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