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Here are highlights from Tuesday's Analyst Blog: Notes on Retailer Earnings
We are in the middle of the retailers earnings reporting period, and a couple of items stand out. Last week, the soft results and tepid outlooks from the likes of Wal-Mart (NYSE: WMT) and Home Depot (NYSE: HD), among others, lowered the market's expectations on how strong consumer will be in the second half of the year. Subsequent earnings reports from companies from Target (NYSE: TGT), Lowe's (NYSE: LOW) and J.C. Penney (NYSE: JCP) showed that the consumer is still spending--albeit at a moderate pace.
Investors should recognize that we are in a lower growth environment and consumers are going to tighten their belts somewhat. As the market assess how much consumer spending will slow, retail stocks may remain under pressure. In this environment, the best-run retailers will continue to outperform the rest of the retailers. This is evident when comparing the earnings reports of Target vs. Wal-Mart or Lowe's vs. Home Depot.
Additionally, e-commerce sales remain strong and continue to account for a larger percentage of total retail sales. The bulk of this growth is not coming from pure-play "e-tailers," but from brick-and-mortar retailers with growing Internet divisions. Also, retailers that cater to shoppers with the most discretionary income should perform well. These include fashion-forward teen apparel or high-end stores.
See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645
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