It's been a dismal summer for department stores as many consumers keep tight grips on their wallets, and the despair could continue for...
Industry spotlight |
It’s been a dismal summer for department stores as many consumers keep tight grips on their wallets, and the despair could continue for a while, executives and analysts say.
“As we look to the second half of the year, and into 2009, we expect the environment to remain [as] difficult as we’re seeing now,” said J.C. Penney (JCP) Chief Executive Mike Ullman in a conference call with investors earlier this month.
Ullman made the comments after the company reported a 36 percent drop in second-quarter profit, largely due to a 4.3 percent decline in same-store sales, or sales at stores open at least a year.
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Macy’s (M) warned that it would likely miss analysts’ profit expectations for the full 2008 fiscal year.
Both retailers have seen sales decline as consumers cut back on discretionary spending because of high gas prices, the continued weak housing market and a lack of confidence in the overall economy.
Even luxury retailers are suffering. At Nordstrom, (JWN) second-quarter profit slipped 21 percent with same-store sales down 6 percent overall.
Only the company’s discount concept, Nordstrom Rack, performed well in the period. Saks (SKS), meanwhile, recorded a wider-than-expected second-quarter loss.
Goldman Sachs analyst Adrianne Shapira says the sales woes may be even more pronounced in the months ahead, since economic-stimulus payments have already been either spent or saved.