By  on February 25, 2016

Across channels and regions, it seems that consumers have mostly fled the market.And while retailers are blaming the weather for soft traffic and lousy fourth-quarter results, a more frugal shopper — at all income levels — continues to be keen on bargains and shopping online. Meanwhile, a presidential election year is also emerging as a distraction for consumers.For now, retailers struggle to post solid financial results amid a promotional market aimed at luring shoppers into stores.At mass, for example, retail giant Wal-Mart Stores Inc. lowered its earnings outlook for the year last week after citing warm weather for weak apparel and outerwear sales as well as deflationary prices for food items, which dragged down fourth-quarter results.In the moderate sector, Sears Holdings Corp. also blamed the weather for lousy results. Edward S. Lampert, chairman and chief executive officer, said this morning that "the unseasonably warm weather and the associated competitive promotional environment resulted in higher than expected markdowns and significantly lower gross margin in our key apparel categories.”In the department store channel, Nordstrom Inc. posted quarterly results earlier this month that were impacted by a heavy promotional environment as well as by its own investments. The stepped-up promotions — although rare for the company — resulted in a 92-basis point contraction in gross margins.And then there's Macy's Inc., which posted lower sales and earnings earlier this week for the fourth quarter. Management cited the same factors such as weather and a promotional environment for the weak results. But the company, as well as Wal-Mart, Nordstrom and Sears, are all taking various actions to transform its businesses as consumer spending power seems to have diminished at physical stores while growing online.But there are some exceptions.Target Corp., for example, was a bright spot in the retail earnings season. The company managed to sell a variety of product categories at higher margins in the fourth quarter, which included double-digit sales gains in its apparel business, according to Brian Cornell, chairman and chief executive officer. Another outlier was TJX Cos. Inc., which beat analysts' estimates on sales and profits for the fourth quarter. The company said earlier this week that store traffic was up, which bolstered same-store sales.Still, many companies across the entire consumer discretionary sector are struggling with their top-line growth. According to Thomson Reuters I/B/E/S, 69 percent of the companies in its Retail/Restaurant Index that have reported so far delivered better-than-expected earnings. But 61 percent have missed on revenue results. "This means that sales were weaker than anticipated and companies are cutting costs to score an earnings beat – a worrisome sign," the analysts at the firm said.

As reported, unseasonably warm weather kept shoppers out of stores, and analysts have noted that the overall markdown activity was higher. But some noted the impact of the election year, which historically has served as a troublesome "distraction to consumer spending," according to Chris Christopher, director of consumer economics at IHS Global Insight.

Since last fall, presidential hopefuls on both sides of the aisle have consumed the attention of consumers. Social media channels including Facebook, Twitter and YouTube have been flooded with various perspectives, rants and op-eds on the which candidate would be best.

To continue reading this article...

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus