More retailers sing holiday blues
- Article by: ANNE D'INNOCENZIO
- Associated Press
- January 10, 2014 - 12:52 AM
NEW YORK – Several major retailers slashed their fiscal fourth-quarter profit forecasts this week in the latest sign that Americans didn’t spend briskly during the holiday shopping season. The latest round of dismal news sent stocks drifting sideways Thursday.
American Eagle Outfitters and Bed Bath & Beyond are among seven retail chains so far that have cut their expectations for their fiscal fourth quarter, which includes the critical holiday shopping season when stores can make up to 40 percent of their annual sales.
The holiday season was challenging for stores as many Americans still were contending with the effects of a shaky economic recovery. Weather was also an issue, as snowstorms across the country kept some shoppers home. And the season was six days shorter, which meant less time for people to shop.
Retailers discounted early and often to get shoppers into stores. In fact, it was common to see sales of 50 percent off a store’s entire stock of clothes during the final days of the season. It appears that the discounts got people to spend — sales for November and December rose a better-than-expected 2.7 percent to $265.9 billion, according to data tracker ShopperTrak. But the deep price cuts ate away at retailers’ profits.
As a result, Bed Bath & Beyond Inc., a Union, N.J., company that owns Cost Plus World Market and Bed Bath & Beyond, on Wednesday lowered its earnings forecast for the fiscal fourth quarter and full year that ends early this year after its third-quarter results missed analysts’ expectations.
Pier 1 Imports Inc., a Fort Worth, Texas-based chain that sells home decor, on Thursday also downgraded its earnings forecast for the fiscal fourth quarter and the full year, citing a disappointing December.
And teen retailer American Eagle Outfitters Inc. on Thursday reported that sales at stores open at least a year fell 7 percent in the nine weeks that ended on Jan. 4 when compared with the same period a year ago.
The bad news held back the stock market Thursday. The Dow Jones industrial average fell 17.98 points, or 0.1 percent, to close Wednesday at 16,444.76. The Standard & Poor’s 500 index added 0.64 points, or less than 0.1 percent, to 1,838.13.
The worst performer in the S&P 500 was Bed Bath & Beyond, which plunged $9.93, or 13 percent, to $69.75. Family Dollar fell $1.37, or 2 percent, to $64.97.
After the bell Thursday, Sears Holdings Corp. weighed in with bad news of its own. The beleaguered retailer said it expects a hefty loss for the fourth quarter and full year as sales during the critical holiday season dropped sharply.
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