Posted Feb 12 2009, 01:50 PM by Anthony Mirhaydari Rating:Filed under: retail, Wal-Mart, Anthony Mirhaydari
"January's retail sales surprised everyone by rising 1% over the previous month as post-holiday discounts and falling gas prices resurrected the animal shopping spirits of American consumers. This ends a six-month slide and was a huge improvement over December's 3% fall.
Unfortunately, with job cuts deepening, gas prices on the rise again, and home prices still in freefall, the good news won't last. The market is selling away old favorites like Wal-Mart (WMT) and Costco (COST) on fear of revenue falls and margin contraction as consumers cut spending, reduce debt, and boost savings. Also, the great discounts that encouraged many to venture back into the malls last month will disappear as retailers continue to cut down inventories to better match diminished sales.
With that said, there are still some great opportunities in the sector. Ross Stores (ROST) and TJX (TJX) found lots buyers at critical trading levels during last week's broad market rally -- a strong sign investors believe these off-price retailers can prosper in a declining sales environment. Not only do the companies capture shoppers trading down from mall anchors and specialty stores, but benefit from the need for traditional retailers to clear inventory ahead of seasonal changes.
Both retailers weathered the disastrous 2008 holiday shopping season remarkably well. Ross recently raised its fourth-quarter estimates on better than expected margins while TJX indicated its end-of-year results should be on the high end of prior guidance. Barclays Capital analyst Jeff Black notes that the two discounters have controlled inventory well, which should bolster margins enough to offset any sales declines as we head into what will likely be the most painful stretch of this recession.
As conspicuous consumption becomes passé, to be replacd by a new era of frugality, hard discounters with low operating costs like Ross and TJX will very popular with shoppers and investors alike."
See: Original Article
********************
Are Green Jobs Good Paying Jobs?
Small Businesses Can Benefit From Economic Stimulus Plan
Economic Stimulus Package Plan
American Issues Project Announces Second Stimulus Ad
Stopping Stimulus Waste
How The Economy Went So Bad So Fast
Risk
Retail sales jump won't last
