In our ongoing effort to get past the “weeping and gnashing of teeth” aspect of so much economic reporting, we bring you this month’s overblown financial “forecast.”
On Friday, the Associated Press reported that several of the nation’s largest retailers cut their earnings forecasts after “lingering summer weather and an uncertain economy kept consumers from shopping last month and left the big merchants with disappointing sales.”
Darn that lingering summer weather.
AP reports that as stores reported September sales figures, the “biggest losers were apparel sellers, including Limited Brands Inc., and Gap Inc.”
Phrases such as “biggest losers” imply that the stores lost money, which, of course, is not the case. They just didn’t make as much money as forecast, and in some cases, not as much as the same time last year.
For example, the article doesn’t say that Limited Brands Inc., reported net sales of $713.2 million for the five weeks ended Oct. 6, 2007, compared to sales of $781.3 million for the five weeks ended Sept. 30, 2006.
The company reported a comparable store sales increase of 2 percent for the 35 weeks ended Oct. 6, 2007. Net sales were $6.213 billion compared to net sales of $5.951 billion last year.
Really, not so dire.
Target, J.C. Penney and Nordstrom also lowered their earnings outlooks. Those merchants may not make as much profit at the end of the year as predicted, or would like, and that’s just business.
The AP tells us that Wal-Mart stores posted a “modest” sales gain that was slightly below analysts’ expectations, but raised its third-quarter profit outlook because of cost-cutting.
The article doesn’t add, apparently because it doesn’t fit its theory, that Costco saw a 5 percent jump in its fiscal fourth-quarter earnings, driven by a rebound in same-store sales growth, cost cutting and a tighter returns policy for electronics.
Wal-Mart said that its company research shows that “customers remain concerned about their finances, particularly the cost of living.”
Cost-saving memo to Wal-Mart: Stop the research. It’s a fact that customers will always be concerned about their finances, particularly the cost of living.
It’s also a fact that, despite the Associated Press’ claim, nothing less than the apocalypse will ever keep “consumers from shopping.”
This is evidenced by an earlier economic report this month that showed consumers have boosted their borrowing at the fastest pace in three months, increasingly using their credit cards instead of home equity loans as a source of cash. News, by the way, that is always greeted as good, never with gnashing of teeth.
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