Thursday, May 19, 2011

Retailers hurting as sluggish job market

While many retailers have struggled recently, a few have surprisingly thrived.

While many retailers have struggled recently, a few have surprisingly thrived.

Staples is discovering it's not so easy after all, as corporate customers continue to be cost-conscious.

The office supplies seller cut its profit and sales forecasts for the year, although it thinks it has a solution for tepid sales - smaller stores.

Staples said it would cut "significant square footage" from its stores, following in the footsteps of companies like discounter Walmart, which also plans to roll out trimmer shops in an effort to boost revenues.

Staples cut its earnings outlook to $1.35 to $1.45 a share. It also said it would open fewer stores in the months ahead.

Its shares slumped nearly 15%.

Many retailers have been struggling as consumers hold back on spending amid a sluggish job market and rising gas and food prices.

Target posted unexpectedly strong earnings, although some of it was due to its credit card business.

The discounter's credit card program - which gives a 5% discount on purchases - earned a bigger profit as it paid out less to cover customers who didn't pay their bills. Still, CEO Gregg Steinhafel said shoppers "remain cautious in their spending."

Shoppers seeking cheaper gas and food boosted sales at BJ's Wholesale Club, which raised its annual profit forecast to between $2.68 and $2.88 per share.

During the quarter, sales at clubs open at least a year rose 6.3% - although minus gasoline sales they rose a more modest 2.4%.

Teen retailer Abercrombie & Fitch also posted strong quarterly earnings as it sold more of its preppy jeans and oxfords overseas. Its overall revenue rose 22% to $837 million, while its international revenue jumped 64%.

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