After a week of terrible retail data, a number of high profile retailers, including Home Depot, TJX and Wal-Mart, surprised Wall Street with better-than-expected results. Bobbi Rebell reports.
Fashion is apparently not in style for traditional retailers this season. Last week department stores, like Macy's and Nordstrom, squashed hopes for a joyous holiday season, warning that consumers just weren't buying what they were selling. Fast forward to this week, and other retailers are telling a different story. Wal-Mart results came in better than forecasts, shoppers buying into their value oriented offerings. Value also driving better-than-expected results at off-price TJX. And Home Depot, which taps into demand for home goods, even raised its growth forecast. Morningstar's Bridget Weishaar: (SOUNDBITE) BRIDGET WEISHAAR, MORNINGSTAR (ENGLISH) SAYING: "This week you saw, like a Home Depot, you saw a home goods company out there, Wal-Mart sells a bigger diverse group of products instead of just apparel. Last week was department stores, and, yes, department stores have some home goods, but the majority of their sales are still related to apparel and accessories. " Weishaar adds that there is way too much inventory for department stores, and they will be aggressively slashing price, and facing smaller profit margins. Stores like TJX that focus on value will be better able to maintain margins. Retailers with shorter lead times to buy their merchandise, like fast fashion retailers, will also have an advantage, because they won't face inventory gluts.