Anyone looking at Wal-Mart’s (WMT) results would have have been terribly misled about the state of American retail.
JC Penney (JCP) showed what retail really looks like in a recession. JPC reported earnings per share from continuing operations of $0.55 for the third quarter ended Nov. 1, 2008, compared with $1.17 in last year’s third quarter. Net income for the 2008 third quarter was $124 million versus $261 million last year.
During the third quarter, total sales decreased 8.7%. Comparable store sales decreased 10.1%, which was in line with the company’s revised guidance for a low-double digit decrease.
The curren quarter is even worse, much worse.
Sales for Q4 will drop decrease 7% to 9%. Comparable store sales will be off decrease 9% to 11%.
Penney is probably a good proxy for retail in general. It has a large store base and a middle-of-the-road customer base.
The latest estimates for retail sales in the fourth quarter is that they will be down 1% which would make it the worst holiday in over two decades.
A 1% would be a sunny day in a time of storms. It won’t happen.
Douglas A. McIntyre