RETAIL.jpg In many respects, there was fair amount of good news stemming from the April same store sales results in which investors and analysts could revel. After all, many of the declines weren’t as bad as analysts had expected, thanks to continued promotions and more favorable weather, which rendered the spring and summer merchandise more appealing. And depending upon whether a retailer opted to remain open or closed on Easter, the shift in the holiday offered benefits. Several chains also saw significant improvements in certain divisions that had been draining their performances like an albatross. Many more even raised their quarterly earnings guidance, which speaks to a sharpening in the skills and focus of management to respond fast and effectively to market conditions with an arsenal of tools to trim costs, control inventories and properly allocate their capital expenses. CNBC reported this morning that about 64% of retailers that reported same store sales this morning were able to beat expectations.
But at the end of the day, two glaring facts remained. The first is that top line growth (revenues) remained largely negative, which means earnings gains are being driven by cost cuts and there’s only so long that can last without an improvement seen in sales. The second fact is that the worst hit segment – luxury – is still performing inversely to that of the market’s biggest gainers – the discounters, proving that consumers even at the high end are not ready to indulge yet again. Consumers are feeling slightly more optimistic, yes, but it’s a stretch to declare these results as a return to feeling confident.
"It is the only time when we've seen both the high-end and low-end consumer only spending on necessities,” retail expert Dana Telsey said on CNBC. “We think by the fourth quarter that will ease, but right now consumer spending is all about replenishment and basics." (Stylesight)