Reading Tea Leaves
September 13, 2004,
What's up for the fourth quarter? That's easy. It is either going to be the best of times or the worst of times — or so one would conclude from the tea leaves.
Wal-Mart stores wrapped up the month of August with an anemic 0.1 percent comp store gain, and last week company CEO Lee Scott said high gas prices continue to curtail consumer spending for many.
On the other hand, he also said Wal-Mart was sticking by its expectations for holiday sales and maintaining its full-year earnings forecast of $2.36 to $2.40 per share.
Then, despite Hurricane Frances' run through Florida over the Labor Day weekend, the Johnson Redbook Index showed that same-store retail sales picked up 2.9 percent during the first week of September, slightly ahead of retailers' expectations of 2.8 percent gain.
But a few days later, Planalytics, which forecasts the impact of weather-related events on business, predicted that an onrushing Hurricane Ivan would significantly disrupt retailing across the southeast over the weekend, harming sales of non-survival items in particular.
In other words, there's been a whole lot of to and fro on the economic front. Not surprising, then, that late last week, respondents to the “Weekly Pulse” poll on hometextilestoday.com were all over the map regarding the prospects for holiday 2004 sales.
By Thursday afternoon, one-third of respondents predicted holiday revenue would jump at least 10 percent by the time all the receipts are counted, but another third expected sales to fall flat, and a remaining third foresaw a sales decline compared to holiday 2003.
For the home textiles industry, what happens in January is the bigger question. And despite the recent petition from a textiles coalition calling on the United States to imposed safeguard restrictions against Chinese goods immediately, it seems very likely that quotas will be eliminated as planned.
That is, unless Bush thinks he's going to lose South Carolina, but there aren't many people who would bet on that one.