A muted Christmas for retailers: Lazard Capital on holiday shopping to date
As the holiday season begins winding down in the last week before Christmas, investment bank Lazard Capital says sales aren’t all retailers hoped they’d be. In fact, sales hint that consumers are acting as if the economy is in recession.
According to a recent CNN poll, roughly half surveyed said they think the country is already in a recession.
“People who believe we are in a recession, probably spend like they are in a recession,” Lazard Capital analyst Todd Slater wrote in a research note. “That means reining in discretionary spending and making fewer trips to the stores. This environment favors defensive consumable and grocery-related discount names.”
Slater’s research comes as The University of Michigan today reported consumer sentiment slipped to 75.5 in December from 76.1 in November, still the lowest since Hurricane Katrina.
For the month-to-date December period, Slater says channel checks reveal “imploding traffic trends” and shortfalls to forecasted sales. The analyst says he is hearing that some large retailers in the department store space could be behind by 6% to 10%.
“While earnings are still at risk and weakness could bleed into the first half of 2008, we would buy the dips and remain constructive on a number of retail/apparel/footwear stocks that remain well positioned for 2008,” Slater wrote.
