Katrina Continues Her Damage
New York City, The destruction caused by Hurricane Katrina—and the uncertainty surrounding those affected—dominate the news this morning. From a retail perspective, store closings and the expected surge of gas prices will exact a heavy toll from chain stores. At one point, Wal-Mart Stores said up to 3.3% of its store base in the United States was forced to shut down as a result of the hurricane. Two distribution centers also were forced to close.
But according to analysts, the impact of the damage will be felt in other ways. “If the hurricane contributes to even higher gas prices, according to a Merrill Lynch research note, “The effect is likely to be broad-based, as consumers look to trim spending further. We do not anticipate a wholesale retrenchment, but we could see more trading down and less discretionary expenditures.”
Michaels 2Q Profit Jumps
Irving, Texas, Michaels Stores Inc. posted a 15% gain in second-quarter profit. Net income rose to $30.8 million, or 22? a share, from $26.7 million, or 19? a share, a year ago. Sales rose 9% to $745.5 million from $682.9 million a year ago.
Same-store sales increased 4.2% in the quarter, driven by a 2.4% rise in the average ticket and a 1.4% gain in transactions. The best-selling departments were jewelry and beading, paper-crafting, foam and yarn.
The Finish Line Lowers 2Q Earnings Guidance
Indianapolis, The Finish Line Inc. reported net sales of $341.6 million in the second quarter, up 9% year-over-year, despite a 2% dip in same-store sales. The retailer also lowered its guidance on second-quarter diluted earnings to the range of 37?-to-39? per share. The retailer had previously projected the figure would come in between 48? and 50? per share.