Mixed Economic Retail Sentiment

While some analysts are upbeat and see signs of improvement for retailers that have the right product mix, others have expressed concerns that profit warnings may cause holiday sales to falter, reports Reuters.

With some sales-growth measures showing sharp declines, August reports will suggest which companies are weathering the headwinds and which are likely to fall behind. A slew of retailers, ranging from women’s apparel chain AnnTaylor Stores Corp. to discount retailer Target Corp., are expected to give monthly results and possible forecasts this week.

“Sales trends and customer traffic seen in August will likely continue through the holiday season,” said Dana Telsey, an analyst with research firm Telsey Advisory Group. “Shopping frequency is key.”

Investors and analysts are favoring companies that have responded to slower sales by changing their inventory or redesigning stores, but companies which are undergoing costly remodeling or business restructuring could suffer.

“Wal-Mart Stores Inc. remains a company in transition where remodels and merchandising changes have added a significant layer of risk to the stock,” said J.P. Morgan Chase & Co. analyst Charles Grom.

One measure of retail sales growth is showing significant declines, according to MasterCard SpendingPulse, a U.S. economic indicator developed by the payment company’s consulting arm.

According to Business Week, Americans have already cut back on entertainment, eating out, and all sorts of discretionary spending. And the latest figures are telling: According to a report released by The Conference Board on Aug. 29, the organization’s consumer confidence index fell to 99.6 in August, from a revised 107.0 in July. This is the sharpest drop since Hurricane Katrina battered the Gulf Coast last year.

The report may signal trouble ahead for consumer spending – and perhaps for the overall economy. Early reports of August retail sales show that shoppers of all stripes are already cutting back, from the lower-income shoppers at Dollar General to the more affluent who buy their linens and dishes at Williams-Sonoma.