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Can retail weather the latest economic swings?

Sally Herships Aug 12, 2011

Can retail weather the latest economic swings?

Sally Herships Aug 12, 2011

JEREMY HOBSON: We’ll get earnings this morning from JC Penney. And the big question won’t be how well the retailer did last quarter. It’ll be how they’re
adjusting their outlook for the rest of the year to take into account what’s going on
in the economy right now.

And Sally Herships reports from New York that is a question all kinds of businesses are asking.

Sally Herships: Over the next few days, major department stores chains like Nordstrom, Sears and Saks will report their earnings for the last quarter. But what everybody is really going to be listening for is what the retailers think the future looks like.

Paul Swinand is an equity analyst with Morningstar.

Paul Swinand: What’s been happening, though, is companies have said, ‘hey, we haven’t seen anything yet, we’re cautious, we’ve maybe even a little worried, but thus far the consumer hasn’t really responded.’

Thus far we haven’t had a week like this on Wall street. Still, Swinand says, most big department stores have been basing their expectations on a difficult economy for two years. Swinand says retail chains at the low end, like Kohls and JCPenney, have already figured how to sell in a down market. He says could see sales grow 2 to 4 percent.

Swinand: Main Street hasn’t really felt the recovery yet.

One segment of the retail economy that has been cushioned is luxury.

Retail consultant Howard Davidowitz.

Howard Davidowitz: The top tier of Americans had a phenomenal last few years and that’s reflected itself in tremendous sales in Louis Vuitton, in Hermes, in jewelry stores, in Harry Winston, in Tiffanys.

You get the idea. And now it’s these retailers who may have to lower their expectations.

In New York, I’m Sally Herships for Marketplace.

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