5.4% Expected dip in fourth-quarter earnings for 130 retailers tracked by RetailMetrics
1.2% Expected increase for those retailers at the beginning of December
NEW YORK — Major retailers’ cautious ordering of goods is expected to salvage what could have been dismal fourth-quarter profits, but the 2008 outlook looks more sobering. While stores can manage how much merchandise they order, they can’t direct consumer spending — which is on the skids.
“Retailers can control inventories and expenses to a certain degree, but it is not finite. The most important component — and one they have least control of — is consumer demand,” said analyst Richard E. Jaffe.
As major retailers begin reporting fourth-quarter earnings next week, the industry is bracing for its bleakest times since the 1991 recession. In recent weeks, merchants such as Macy’s, Sears and Ann Taylor have closed hundreds of stores, laid off thousands of employees, scaled back store expansions or pared inventories as consumer spending slows substantially.
