Go Shopping This Labor Day Weekend
Tue, Aug 31, 7:16 PM ET, by Betty L. - Freshman Equities Trader, Hedge Fund Live
So comp sales are creeping up on us again with the numbers for August out this Thursday. The average expectation is for an increase of 2.4%. The issue at the forefront for retailers is discounting. Although when we as consumers think “SALE”, “Buy 1 Get 1 FREE” are great news, clearly the retail companies that are employing this method are not as excited. Discounting of course is used to attract customers, and given the weak economy that we’re in, it comes as no surprise that retailers are relying heavily on discounts and promotions to help boost sales. Hence, Thursday’s numbers might show weakness in the sector from all of this discounting. Furthermore, retailers are now struggling to clear merchandise after a slow summer. In light of the “head fake” in February and March when sales and demand appeared to be picking up (along with the economy), retailers built up their inventories, and now given the shift in the economy and consumer spending, they have to deal with these increased inventories: another reason for more discounting. Also important to note in regards to comp sales is that August marks the end of “easy” comps. Monthly comp sales are a YoY figure and August 2009 was the end of a series of monthly declines in sales; September 2009 showed an uptick. So a weak outcome this Thursday will not be promising for the upcoming month(s). Another cloud over the comp sales that will come out next month is that discounting may accelerate into September, especially if Labor Day weekend sales come in weak. So in conclusion, please go shopping this Labor Day weekend! Visit HedgeFundLIVE.com.
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SDI Glossary: "price" Definition
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