Home | Growth | Bracing for coal in retailers' Christmas stockings

Bracing for coal in retailers' Christmas stockings

By
Font size: Decrease font Enlarge font
Bracing for coal in retailers' Christmas stockings

Even with consumer confidence at a six-year high, retailers ranging from Target to Macy's are competing not only with each other but are also having to adapt to shifting spending patterns.

Many consumers are taking advantage of still-low interest rates, purchasing cars and houses, but at the same time they are holding back on shirts, dresses and shoes, which doesn't bode well for many retailers in the run-up to the Christmas season.

"People are putting their money into things that will last," said Jill Puleri, IBM's global industry leader for retail. "If you look at appliances, if you look at jewelry, these are not necessarily small purchases. They're rewarding each other. ... They're putting money where things are more stable."

IBM expects U.S. appliance sales to rise 6 percent in the current third quarter, with sales of other home goods up 1.67 percent. For the holiday season, it expects appliance sales to rise 2.13 percent and sales of home goods to rise 1.98 percent, while anticipating the steepest decline, 3.62 percent, in men's apparel.

(Read more: Christmas? Retailers gear up for holidays)

That's good news for companies such as home improvement chains Home Depot and Lowe's, which reported strong quarterly results and raised their fiscal year forecasts as people spruced up their homes.

In contrast, Macy's, Kohl's, Wal-Mart Stores, Target and even luxury chains such as Saks and Nordstrom posted disappointing second-quarter sales in recent weeks, and many aren't hopeful about the holidays.

"As people are spending more money on their cars and homes, they are cutting back elsewhere, such as their spending on items like clothes and shoes," Sears Holdings Chairman and Chief Executive Edward Lampert told Reuters in an interview.

Macy's, which gets about 80 percent of sales from clothing, lowered its sales forecast for the year after it noticed spending shifting away from what department store chains offer.

"The problem now is that there is no fashion, and if there is no newness, clothing becomes a commodity," said Patty Edwards, chief investment officer of Trutina Financial, which sold shares in Nordstrom earlier this year but has shares in Michael Kors, PVH and Nike. "Beyond a select few, I'd think twice about getting into apparel and retail stocks."

Read more...

Join PRESIDENT&CEO on LinkedIn

Subscribe to comments feed Comments (0 posted)

total: | displaying:

Post your comment

  • Bold
  • Italic
  • Underline
  • Quote

Please enter the code you see in the image:

Captcha