January Was Not So Bad

At the risk of debating the current wisdom that the sky is falling, January comp-store sales results may not be as bad as they appear on the surface. For many retailers, January 2007 was a very strong month with comp-store sales increases 1% to 4% above their trends at the time. These results set the stage for challenging comparisons for 2008. The following chart provides some interesting comparisons of the two years.

Combining the results of the two years, the trend for the past three to six months appears to be consistent. Generally, the slowing economy has negatively affected results 2% to 3% with the balance attributed to retailer performance. The continued weakness at Macy’s, Kohl’s, Chico’s, Sears, Dillard’s and Sharper Image is not a byproduct of the economic slowdown. Rather, it’s the consequence of not understanding what their Core and Must-Have customers want to buy. Recently reported restructurings at Wal-Mart, Macy’s and Sears will reduce costs, but will not solve the core problem of deteriorating sales.

In a weak market, vulnerable retailers are usually affected the most. Looking ahead, there are a number of factors to consider:

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