Business and Capital Market Analysis !!!

(RTTNews) - The ongoing economic crisis, which has been dubbed as the worst since the Great Depression, has wreak havoc on retailers, as it has forced consumers to sharply cut back on their spending. A shaky job market and a prolonged housing slump have added to the gloom.

Many retailers have reported lower earnings for the third quarter and issued profit warnings for the all-important fourth quarter, which includes the holiday shopping season. Wall Mart Stores, Inc. (WMT: News ), the world's biggest retailer, reported higher earnings for the third quarter but forecast fourth quarter earnings below analysts' estimate and cut its earnings outlook for the full year.

With the holiday shopping season approaching fast and economic data pointing to weak sales, retailers are expected to experience their weakest holiday sales in years.

The Commerce Department said today that retail sales fell 2.8% in October, surpassing the old mark of a 2.65% drop in November 2001 in the wake of the 9/11 terrorist attacks. Economists had been expecting sales to decrease by a more modest 2.1%.

Sales excluding autos fell 2.2%, almost twice the expected drop of 1.2%. It was the biggest ex-autos drop since at least 1980.

In October, vehicle sales were down 5.5%, furniture sales fell 2.5%, electronic sales were down 2.3%, department store sales declined 1.3% and non-store sales (internet & catalogue) were down 1.8%. Gas sales fell a stunning 12.7%, reflecting a sharp drop in gas prices.

October also marked the fourth consecutive month of increasingly steep declines in consumer spending.

Among the retailers, department store operator Kohl's Corp. (KSS: News ) on Thursday reported a 17% drop in its third quarter profit and cut its earnings outlook for the fourth quarter and the full year. Kohl's also said it expects same-store sales to fall between 8% and 12% for the fourth quarter.

Also on Thursday, fashion specialty retailer Nordstrom Inc. (JWN: News ) reported third quarter earnings that fell 57% from last year. The company also forecast fourth quarter earnings below analysts' expectations and lowered its earnings outlook for the full year.

On Friday, department store chain J.C. Penney Co., Inc. (JCP: News ) reported a 52% drop in its third quarter profit, forecast fourth quarter earnings below analysts' expectations and predicted that the challenging retail conditions will last well into 2009. J.C. Penney said it expects same-store sales to fall 9% to 11% in the fourth quarter.

Teen apparel retailer Abercrombie & Fitch Co. (ANF: News ) said Friday that its third quarter profit fell 46% from last year, hurt by weak demand for its girls' tops and the overall consumer spending slowdown. The company forecast fourth quarter earnings below analysts' expectations and slashed its earnings outlook for the full year 2008. The company expects same-store sales to drop 26% in the fourth quarter.

Earlier this week, electronics retailer Best Buy Co (BBY: News ) cut its full-year forecast, citing "seismic changes" in consumer behavior.

Also this week, Circuit City Stores, Inc., the second largest U.S. electronics retailer, filed for Chapter 11 bankruptcy, citing vendor concerns about the company's liquidity and ability to pay for its purchases in a challenging economic climate. However, the troubled electronics retailer said it plans to continue operating its business as usual.

Amid the global financial crisis, shoppers have curbed their spending on buying TVs and other discretionary items to focus on necessities, as rising unemployment and tight credit dents their purchasing power.

To overcome the impact, many retailers are taking drastic steps to cut costs through store closures and job cuts.

If the recent results and outlooks from retailers are any indications for difficult days ahead, the retail sector should brace itself for a disappointing holiday season, when retailers usually generate about one-third of their annual sales.

Related Post :
1. J.C Penney Q3 Earning Slides

Source :
1. Retailers' weak results, outlooks ominous signs for holiday shopping season, 11/14/2008 5:02 PM ET.