Corporate News -- The Week Ahead: Retailers Suit Up for Holiday Results
From Wal-Mart Stores Inc. to Kohl's Corp. and Gap Inc., almost every major retailer reports fiscal fourth-quarter earnings this week, and the results will be the final word on whether holiday shoppers were naughty or nice to the country's chain stores.</br></br>Despite cold, snowy weather that walloped major swaths of the country in January, and uneven sales throughout the sector in December, the early consensus is that retailers for the most part posted solid earnings growth for the quarter. That's due in part to a robust November that lured shoppers with discounts galore as well as the retailers' ability to keep inventories and expenses in line after having tough lessons learned during the recession.</br></br>That's the good news. With mounting prices on everything from fuel and food to cotton, retailers still are expected to offer muted full-year earnings guidance for 2011. Broad inflation hasn't beset clothing makers and sellers in almost two decades and rising costs will pose a quandary for stores: Do they pass those higher costs onto still-strapped consumers, who may in turn buy less? Or do they absorb some of the cost and take a hit to their gross profit margins?</br></br>The first half of the year poses additional challenges, particularly for department stores and discounter Target Corp. They will be lapping their toughest sales comparisons from a year ago.</br></br>"Most companies will provide conservative, cautiously optimistic guidance due to increasingly tough comparisons, erratic consumer spending trends (with a growing divide between wealthy and poor) and perhaps most importantly, apparel inflation," Bill Dreher, retail analyst at Deutsche Bank, wrote in a recent report.