Analysts picked the chains they see as winners during the holidays: AutoZone, because of its strong core business; BJ's Wholesale, due to a increased at-home dining this year; and JCPenney, for learning from last year's mistakes and slimming down its inventory.
Other bright spots for the industry as a whole include improving consumer confidence, better inventory levels, an increase in marketing spending and and another calendar day for shoppers this year compared to 2008. Analyst Lorraine Hutchinson said the weather is predicted to be warmer this December as well. "If they're reading the tea leaves correctly, that should be a positive," she said.
But the conference call also highlighted some negative aspects as well. The industry will likely see some large chains, like Ann Taylor, Gap Inc., and Zales closing more stores, Hutchinson said. Analyst Alan Rifkin sees closures coming from Home Depot, Office Depot, Barnes & Noble and RadioShack.
Meanwhile, more macro problems will continue to afflict the industry, such as rising unemployment, tight consumer credit, higher gasoline costs and less interest in gift card transactions. Plus, we are in an environment where consumers are expecting lower prices, Hutchinson said. "People will expect to continue to pay less for goods," she said. "You have to look at the holiday season as a game of chicken between the retailers and the consumers."
But for the most part, the analysts agreed that the recession is waning down for the most part, and things will start turning around for retail. "We're past the panic phase that came after the Lehman bankruptcy," said Ethan Harris, head of North American research for Bank of America-Merrill Lynch. "A double-dip recession is very unlikely."