While the Easter basket may have been full for millions of kids last weekend, the bunny was clearly not kind to department store retailer J.C. Penney
Truth to tell, Wall Street wasn't expecting much in the way of earnings for the company this quarter -- $0.75 per share or 28% lower than last year. But the reality is looking much worse. Even with the help of an earlier Easter in March, the company warned that $0.50 might be the best it can muster.
Management sounded decidedly gloomy in the press release, saying that "consumer confidence is at a multi-year low," and that the management team intends to "position the company to benefit when a recovery takes hold." This doesn't sound like J.C. Penney expects sales trends to improve anytime soon.
Is this just a J.C. Penney issue, or the first of an avalanche of retail profit warnings? Kohl's
Still, discount apparel retailers like Ross Stores
I'm not ready to dump retail shares on this news. The economy is soft right now, to be sure, and isn't showing signs of a rapid turnaround. But the consumer isn't dead just yet. The bigger concern for me is inventories and markdowns. There's plenty of time left for retail companies that have bought conservatively to sell through spring merchandise. For those that haven't -- look for more cracked Easter eggs.
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