Big Discounters Feeling Less Holiday Cheer

Friday, 15 Nov 2013 10:02 AM

By John Morgan

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A dismal holiday season is shaping up for discounters Wal-Mart and Kohl's, as poor job growth and higher payroll taxes are crimping the wallets of lower-income shoppers.

Showing that the lower end of the economic ladder is feeling cash-flow pain, both Wal-Mart and Kohl's issued cautious forecasts for the Thanksgiving-to-Christmas period, NBC News reported.

Wal-Mart predicted flat sales for the holidays on the heels of its third straight quarterly decline in U.S. comparable sales on account of slower traffic.

Editor’s Note:
New Video Exposes a ‘Great Retirement Heist’

Both the discounter and analysts that follow its stock are seeing yellow caution lights that extend beyond the holidays.

"That low-end consumer is just not willing to step out and buy those discretionary items," said Edward Jones analyst Brian Yarbrough.

Ken Murphy, a senior vice president at Standard Life Investments, told NBC News, "Lowering prices no longer drives an offsetting increase in traffic, which has been the lifeblood of Wal-Mart."

Wal-Mart CEO Mike Duke said economic uncertainty is another factor weighing on customers.

"Some customers feel uncertainty about the economic, government [and] job stability," Duke said in a statement.

Kevin Mansell, Kohl's CEO, told analysts he was disappointed in last quarter's sales, when sales fell 1.6 percent, and said the company expects to spend more on advertising to entice shoppers into its stores.

In addition, Mansell said Kohl's is retooling its e-commerce efforts, which has hampered its online business.

Wal-Mart is also making a more concerted effort to compete against both Amazon.com and Target, including beginning its holiday sales earlier and moving the clock back on its in-store Black Friday sales to Thanksgiving Day.

The National Retail Federation estimated holiday shoppers will spend about 3.9 percent more in 2013 than they did last year.

Black Friday, the day after Thanksgiving, traditionally marked the kickoff of the year-end shopping season, but no longer.

According to 24/7 Wall Street, at least eight big retailers will be open at some point on Thanksgiving Day this year.

They are: Wal-Mart, Target, Best Buy, Sears, Macy's, Kohl's, J.C. Penny and The Gap.

Editor’s Note: New Video Exposes a ‘Great Retirement Heist’

Related Stories:

Macy's: 'Every Single Day Is Going to Matter' in Shortened Holiday Shopping Season

Holiday Spending Seen Rising 11 Percent, Accenture Estimates

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