Record Retail Sales? 'Yes!', Record Retail Margins? 'I Don't Think So'
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It should be no surprise to investors and analysts when they begin to hear retailers are posting "record" total and same store sales for the holiday season as U.S. retail sales rose about 3.8 percent, excluding automobiles and gas.
What investors and analysts should also expect to hear is that earnings and margin profitability may be down for the season as retailers used heavy promotional models to drive up sales. It almost seemed everyone was using Samuel Walton's, founder of Wal-Mart (NYSE: WMT), business model this holiday season.
Retailers may have felt consumers were going to be less willing to spend as much due to uncertainty in the markets, especially Europe's market, which is still lingering heavily. Promotional deals were what really drove sales as it is reported consumers spent 9.1 percent more on Black Friday this year over last year.
A WSJ poll indicates 54 percent of readers are feeling better about their financial situation these days while only 22 percent claim they are actually watching their spending. 33 percent of WSJ readers began their holiday shopping back in November and the average reader spent $409 on presents this season. 56 percent of readers paid for their gift via credit, while only 16.6 percent paid cash. Only 44 percent report they are cutting back on their spending each week.
Online promotional deals also helped drive retail e-commerce spending for the first 56 days of the November – December 2011 holiday season up by 15 percent year over year to $35.3 billion, reports comScore (Nasdaq: SCOR). Online sales were so strong this year for Best Buy (NYSE: BBY) that the company was forced to cancel some orders after running short on merchandise.
SmartMoney forecasts $46.3 billion of all merchandised purchased during the holiday season will be returned.
What investors and analysts should also expect to hear is that earnings and margin profitability may be down for the season as retailers used heavy promotional models to drive up sales. It almost seemed everyone was using Samuel Walton's, founder of Wal-Mart (NYSE: WMT), business model this holiday season.
Retailers may have felt consumers were going to be less willing to spend as much due to uncertainty in the markets, especially Europe's market, which is still lingering heavily. Promotional deals were what really drove sales as it is reported consumers spent 9.1 percent more on Black Friday this year over last year.
A WSJ poll indicates 54 percent of readers are feeling better about their financial situation these days while only 22 percent claim they are actually watching their spending. 33 percent of WSJ readers began their holiday shopping back in November and the average reader spent $409 on presents this season. 56 percent of readers paid for their gift via credit, while only 16.6 percent paid cash. Only 44 percent report they are cutting back on their spending each week.
Online promotional deals also helped drive retail e-commerce spending for the first 56 days of the November – December 2011 holiday season up by 15 percent year over year to $35.3 billion, reports comScore (Nasdaq: SCOR). Online sales were so strong this year for Best Buy (NYSE: BBY) that the company was forced to cancel some orders after running short on merchandise.
SmartMoney forecasts $46.3 billion of all merchandised purchased during the holiday season will be returned.
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