For Immediate Release
Chicago, IL - December 5, 2011 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
Macy's Inc.
(
M
),
Saks Incorporated
(
SKS
),
Ross Stores Inc.
(
ROST
),
Costco Wholesale Corporation
(
COST
) and
Limited Brands Inc.
(
LTD
).
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Here are highlights from Friday's Analyst Blog:
Party Time for Retailers
The Thanksgiving weekend brought record sales for retailers who
went on to post better-than-expected November comparable-store
sales and are now padding up for the holiday season. Does this
indicate that the retail party has just begun?
Early hours store openings, huge discounts, promotional
activities and free shipping on online purchases were enough to
lure customers on Black Friday that turned out to be a bonanza for
both brick-and-mortar as well as e-commerce retailers.
The data released by Swampscott, Massachusetts-based Retail
Metrics, reveals that comparable-store sales of over 20 companies
rose 3.2% beating the expectation of 3.1%. The data provider
further added that 57% of retailers outpaced while 33% missed their
expectations. Yes, there were retailers that stuck to old
traditions and were not bold to think out of the box. These missed
the boat and failed to seize the opportunity of pent-up demand.
Season's Blast Breaching Economy
An economy plagued by financial crisis and high unemployment,
remains a bitter truth, but Thanksgiving, Black Friday and Cyber
Monday all have stories to tell, the story of regained consumer
confidence that looked far stronger than the prior-year period. It
seems that consumers who were saving up for the holiday season,
shrugged off the economic gloom and went from shop to shop to grab
the best available deal.
According to the data released by National Retail Federation (
NRF
), sales on the Thanksgiving weekend surged 16.4% to $52.4 billion.
The survey also revealed that as many as 226 million bargain
hunters visited stores and browsed the Internet over the past
weekend compared with 212 million in the prior year. The average
spending per customer rose to $398.6 from $365.3 in the prior year,
over the four-day period from Thanksgiving to Sunday.
The economy, which was believed to be heading towards a
recessionary downturn early in the year, has started looking up
again. What's more, consumer confidence remains high. Conference
Board data suggests that Consumer Confidence Index rose to 56.0 in
November from 40.9 in October, and attained the highest level since
July, when the index touched 59.2. This is prompting consumers to
loosen their purse strings.
Further, the data from the Commerce Department indicates that
consumer spending, which represented 70% of the economy, increased
at an annualized growth rate of 2.3% in the third quarter,
reflecting the fastest rate so far in 2011.
What Comps Say…
Record Black Friday weekend sales provided an impetus to the
retailers' November sales who tried all means to woo customers and
gain market share amid fierce competition and sluggish economy.
Total retail sales on Black Friday, which kicks off holiday sales,
rose 6.6% to $11.4 billion according to the data released
ShopperTrak. November comparable-store sales results are a
significant indicator for the retailers, as it gives an insight of
the days ahead.
The saying early bird catches the worm goes well with the
retailer
Macy's Inc.
(
M
) that for the first time opened its doors at the stroke of
midnight on Black Friday to attract customers. The leading
department store retailer in the U.S. saw its comparable-store
sales rising 4.8% that fared better than what analysts expected.
Online sales, which include sales from macys.com and
bloomingdales.com, continued to show growth momentum in November,
soaring 49.6%.
Comps for the luxury department store,
Saks Incorporated
(
SKS
) increased 9.3%, exceeding the estimate.
Ross Stores Inc.
(
ROST
), the off-price retailer of apparel and home accessories,
witnessed a 5% growth in its comps.
Costco Wholesale Corporation
(
COST
) sustained its sales momentum, and registered a comps growth of
9%. Excluding the effects of higher gasoline prices and foreign
currencies fluctuation, Costco's comparable-store sales climbed
7%.
Limited Brands Inc.
(
LTD
), a specialty retailer of women's intimate and other apparel,
beauty and personal care products, posted healthy sales results.
The company's comparable-store sales for November 2011 rose 7%,
following an increase of 6% in October 2011.
Retail companies targeting lower and middle-class customers had
a tough time, as their target consumers remained frugal in spending
or did selective shopping.
Target posted a 1.8% increase in comparable-store sales that
missed analysts' expectation, indicating that consumers still
remain cautious. The company hinted that although sales surged on
Black Friday, the rise was not enough to boost its November sales.
The company now foresees an intense competitive and promotional
environment in December.
We believe that retailers will leave no stone unturned to drive
sales. But there's a nagging fear that if recession-hit consumers
decide to be cautious on their spending in this holiday season or
if the economic crisis aggravates, the picture will only have dull
colors. A pick-up in demand would definitely augur well for the
economy.
Unanswered Questions
Retailers are using different arsenals to fire on all cylinders.
These include offering discounts and indulging in promotional
activities, which are reflecting on their sales. But we wonder
whether these are coming at the price of margins. Moreover, what
impact will these have on the bottom line?
Let's Conclude
The sea doesn't seem calm, waves are high and waters are rough.
It is evident that customers remain sensitive to macroeconomic
factors including high fuel and energy costs, credit availability,
unemployment levels, and high household debt levels, which may
affect their discretionary spending, and in turn curtail the
sector's growth and profitability.
Going by the pulse of the economy, we could see more competitive
pricing and new products to attract shoppers in the holiday season.
We believe that retail companies will move heaven and earth to win
the hearts of bargain hunters and it definitely remains a
wait-and-watch story as to who emerges successful in wooing
consumers in this distressed economy.
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COSTCO WHOLE CP (
COST
): Free Stock Analysis Report
LIMITED BRANDS (
LTD
): Free Stock Analysis Report
MACYS INC (
M
): Free Stock Analysis Report
ROSS STORES (
ROST
): Free Stock Analysis Report
SAKS INC (SKS): Free Stock Analysis Report
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