U.S. Retail Chains See First Profit Decline Since Recession
Source: Bloomberg
By Cotten Timberlake Feb 27, 2014 1:55 PM ET
U.S. retailers last quarter suffered their darkest days since the recession.
With results in from 62 of 122 retail chains, the industry has posted its first profit quarterly drop since the economic contraction that ended in 2009, according to Retail Metrics Inc. Revenue also rose at the lowest rate since that year, the research firm found.
The results paint a grim picture of an industry hit hard by the sluggish job recovery and slow wage growth, which have turned U.S. consumers into a nation of penny pinchers. Earnings are expected to drop 6.1 percent on average during the holiday quarter, according to Retail Metrics data. The broader pool of Standard & Poors 500 Index companies, meanwhile, are estimated to see profit rise 8.5 percent.
It was a very tough season for the retailers, no question about it, Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics, said in a phone interview. They were facing pressure on multiple fronts.
Still, some chains are predicting a rebound this year. Target Corp. (TGT) -- which saw profit and revenue tumble last quarter, in part because of a hacker attack -- said yesterday that sales have shown signs of improvement this month. Macys Inc. also predicted that spring would bring a sales recovery, after frigid weather forced it to close hundreds of stores.
Read more: http://www.bloomberg.com/news/2014-02-27/u-s-retail-chains-seeing-first-profit-decline-since-recession.html
Locally, the cold weather is sucking up any discretionary $$$ one might happen to have.
Heating oil 4.29 gallon, propane 5.99 gallon and that is being rationed due to low supplies, gasoline just popped up to 3.79 this morning.
Not a wonder that retail is taking a hit.
gelsdorf
(240 posts)Laelth
(32,017 posts)And this OP merely reflects what I already know. Most Americans have very little money to spend on anything beyond necessities.
-Laelth
Purveyor
(29,876 posts)are something you'd expect to see back during the depression.
Families are going out with trucks or car with trailer just to cut downed wood that is laying on State land. Problem is, they have to walk through a foot and a half of snow to bring it out to the road.
2 situations I saw last weekend had dad cutting the wood and mom and 2 kids around 12 years old carrying the wood out one stick at a time.
We have never seen as cold a winter as this. There are over 150 homes in the city of Jackson that have no water as the underground pipes froze somewhere between the house and the street.
Going to get down the -14 real temp tonight!
global1
(25,294 posts)It is not rocket science. If people feel secure in their job and are drawing a weekly paycheck they spend their money to go to restaurants, on vacation, for a new car, for appliances, to remodel their house, to buy a house, to buy some non-essential things that they would like to have but have been depriving themselves of, etc.
Once people start spending their money - it jumpstarts the economy. More demand means more production. More production means more people needed to be employed to meet the demand. More people put to work those people enter the continued fueling of the economy. It starts to churn. Sales tax, property tax, federal and state income tax revenues rise.
I just don't get it as to why companies don't understand that. I'm no economist. It's just common sense.
Right now people don't have money to spend - so retailers are suffering.
The right things to do are to raise the minimum wage. Put people to work - we have a crumbling infrastructure that can be shored up - if people were put to work on infrastructure projects.
Like I said above - it's not rocket science. We have a fix staring us right in the face to fix our anemic economy. It's about time Congress does their job and does the right thing.