Polar Vortex is the Latest Bad News for 4Q Retail
NEW YORK (TheStreet) - It doesn't look pretty for fourth-quarter earnings at many big retail chains, since it's safe to say that January retail sales are likely to be the pits.
There's a host of reasons why, including short-term factors that include bad weather, but longer term, the evolution of consumers' preference to shop online at Amazon
Ken Perkins of Retail Metrics believes that chain store same-store sales for January will rise 2.7%, far lower than the 5.1% gain they saw in January 2013, according to his initial overview on Wednesday. Excluding drug stores, he expects same-store sales to rise 2.8%. Perkins also lowered his expectations for fourth-quarter same store sales growth to 0.7% from 1.1%.
"Santa proceeded to dump a big lump of coal in most retailers' stocking in December in what turned to be the most competitive/promotional Holiday period since the depths of the financial crisis in 2008," Perkins wrote in research note. "The coal looks to keep coming in January as promotions have remained heightened as retailers' effort to sell clearance merchandise and make way for initial spring receipts."
Given that most retailers' fourth-quarters end in January, the last month of their fiscal year isn't shaping up to be helpful.
"January is typically a clearance month that also benefits from gift card redemptions, but there has been no real catalyst for improved January sales," Perkins wrote. "The first two weeks of January got off to a slow start with our store checks suggesting down traffic and conversion levels from December."