earnings are trailing analysts’ estimates by the widest margin in 13 years after bad weather and weak spending by lower-income consumers intensified competition. Chains are missing projections by an average of 3.1%, with 87 retailers, or 70% of those tracked, having reported, researcher Retail Metrics Inc. said in a statement today. That’s the worst performance relative to estimates since the fourth quarter of 2000, when they missed by 3.3%. Over the long term, chains typically beat by 3%, the firm said.
Extreme winter weather through February and March forced store closings and stifled sales, Swampscott, Massachusetts-based Retail Metrics said. Lower- and moderate-income consumers had little discretionary spending power, and chains also faced price competition from e-commerce sites.
“The American consumer is not fully back and remains cautious,” Ken Perkins, Retail Metrics’ president, wrote in the report.
What’s more, the expectations the chains are missing have been significantly lowered. While analysts now project retailers’ earnings fell an average of 4.1%, back in January they had estimated a 13% gain.
Most retail segments are showing profit declines, with department stores, teen-apparel chains and home-furnishing stores faring the worst, Retail Metrics said. About 41% of retailers have missed estimates, while 45% have beat.
Improved weather, pent-up demand and better employment trends may help the industry in the second quarter, Perkins said. Analysts are projecting an 8.6% gain in profit for the current three-month period, he said.
The Standard & Poor’s 500 Retailing Index was up 0.9% at the close in New York, while the S&P 500 was 0.4% higher. The retailing index fell 7.8% this year, compared with a 2.8% advance in the broader index.
