U.S. Retail Industry Q1 2009 Results Give Big and Small Retailers Mixed Feelings About Their Uncertain Q2 Earnings Outlook
Monday March 30, 2009
Before March retail same store sales figures start rolling out next week, the retail industry is already taking a big picture look at its Q1 2009 results and crafting strategies to stabilize Q2 earnings. The outlook is still uncertain, but compared to the terror and panic that dominated the retail industry at the beginning of the first quarter, uncertainty is a welcome relief.
The predictions at the beginning of 2009 for retailers both big and small were quite apocalyptic. After watching the financial sector meltdown, it was assumed that a similar implosion was inevitable in the retail sector.
Only a small fraction of the 200,000 store closings that were forecasted by some of the most pessimistic experts actually occurred in the first quarter of 2009. The post-holiday season fallout was substantial for retailing, but not completely devastating. That should provide some hope for any retailers who are still unlocking their doors and turning on their lights every day.
Best Buy should feel nothing but hopeful now that its major U.S. competitor, Circuit City, has closed its doors and the pressure of competitive liquidation pricing is gone. Circuit City’s annual consumer electronics revenue of $11 billion is up for grabs now. That is something that should inspire hope in Best Buy’s boardroom, as well as the boardrooms of Wal-Mart, Costco, Target, Kmart, Fry’s, Conn’s, Amazon and the plethora of other online and offline retailers who participate in the crowded consumer electronics category.
Chapter 11 filings for multi-store retailers were a weekly occurrence in 2009, and for those retailers whose debt obligations drove them to seek court intervention, there were undoubtedly some helpless feelings. While the odds of emerging from Chapter 11 as intact and viable retail enterprise are not very high, Mrs. Fields accomplished it last year which should provide some hope to Ritz Camera executives who have stated their intentions do the same.
As the second quarter of the 2009 retail recession begins, whether the Q1 numbers are better than expected or worse than feared for the retail industry a couple of things can be predicted with certainty. Publicity teams will spin the news in the way that they think will have the best impact n their stock prices, and analysts will spin the news in the way that they think will get the most attention.
With every piece of quarterly sales news will come somebody’s conclusion about how the world should feel about it. After giving a few quarters away to fear, it would be an interesting experiment if we all made a decision to feel hopeful, and then looked for evidence to support that position.
The predictions at the beginning of 2009 for retailers both big and small were quite apocalyptic. After watching the financial sector meltdown, it was assumed that a similar implosion was inevitable in the retail sector.
Only a small fraction of the 200,000 store closings that were forecasted by some of the most pessimistic experts actually occurred in the first quarter of 2009. The post-holiday season fallout was substantial for retailing, but not completely devastating. That should provide some hope for any retailers who are still unlocking their doors and turning on their lights every day.
Best Buy should feel nothing but hopeful now that its major U.S. competitor, Circuit City, has closed its doors and the pressure of competitive liquidation pricing is gone. Circuit City’s annual consumer electronics revenue of $11 billion is up for grabs now. That is something that should inspire hope in Best Buy’s boardroom, as well as the boardrooms of Wal-Mart, Costco, Target, Kmart, Fry’s, Conn’s, Amazon and the plethora of other online and offline retailers who participate in the crowded consumer electronics category.
Chapter 11 filings for multi-store retailers were a weekly occurrence in 2009, and for those retailers whose debt obligations drove them to seek court intervention, there were undoubtedly some helpless feelings. While the odds of emerging from Chapter 11 as intact and viable retail enterprise are not very high, Mrs. Fields accomplished it last year which should provide some hope to Ritz Camera executives who have stated their intentions do the same.
As the second quarter of the 2009 retail recession begins, whether the Q1 numbers are better than expected or worse than feared for the retail industry a couple of things can be predicted with certainty. Publicity teams will spin the news in the way that they think will have the best impact n their stock prices, and analysts will spin the news in the way that they think will get the most attention.
With every piece of quarterly sales news will come somebody’s conclusion about how the world should feel about it. After giving a few quarters away to fear, it would be an interesting experiment if we all made a decision to feel hopeful, and then looked for evidence to support that position.
In my consulting work with independent specialty retailers, I’m also finding that the terror and panic is subsiding, having been replaced by trepidation. As sales decreases have stabilized, and there’s been the occassional up week, most want to believe the worst is over, but they’re still looking to see if there’s another cliff out there. my sense is that it’s going to take at least a quarter or two before most smaller retailers feel the ground is once again solid beneath their feet.