Retailers Face a Tough Holiday Shopping Season
When Morgan Stanley issued a report in late October, predicting the worst holiday shopping season since 2008, they apparently weren't lying.
Reuters confirmed Morgan Stanley's thesis on Wednesday when it published an article with the headline, “For U.S. stores it is ugly out there: in more ways than one.” A weaker consumer confidence index, plus no new “fashion must-haves” and consumers attempting to practice financial responsibility are all factoring towards a very gloomy retail outlook.
Best Buy (NYSE: BBY) has joined its competitors Wal-Mart (NYSE: WMT), Target (NYSE: TGT) and other retailers in offering Black Friday deals not only a day early, but in some cases more than a week early. Wedbush analyst Gabriella Santaniello noted consumers are being more selective in where they spend their money, forcing retailers to offer deep discounts at the expense of their bottom line.
During Best Buy's recent conference call, management offered guidance for its upcoming quarter -- which will be dominated by holiday shopping.
“So if our competition is, in fact, more promotional in the fourth quarter, we will be too,” said company CFO Sharon McCollam, "and that will have a negative impact on our gross margin.”
One thing remains for sure. This holiday shopping season will be a difficult and challenging one for retailers, investors and -- perhaps most importantly -- with families at home.
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