Retail Wrecks: Amazon to J.C. Penney

Amazon’s revenue rose 20%, to $25.6 billion. Some analysts believed the number would be closer to 25%. Net income was only $239 million, representing a razor-thin margin.

At the nation’s largest retailer, Wal-Mart Stores Inc. (NYSE: WMT):

“For the 14-week period ending Jan. 31, 2014, we expect both Walmart U.S. and Sam’s Club comp store sales, without fuel², to be slightly negative to the guidance provided in our third quarter report,” Holley said. “Walmart U.S. guidance on Nov. 14 was for comp sales to be relatively flat, and Sam’s expected comps, without fuel, to be between flat and 2 percent.

“Despite a holiday season that delivered positive comps, two factors contributed to lower comp sales performance for the 14-week period for Walmart U.S.,” Holley explained. “First, the sales impact from the reduction in SNAP (the U.S. government Supplemental Nutrition Assistance Program) benefits that went into effect Nov. 1 is greater than we expected. And, second, eight named winter storms resulted in store closures that impacted traffic throughout the quarter.

Since Walmart is an almost perfect proxy for the low and middle income shopper, Wall Street’s anxiety will extend to Target Corp. (NYSE: TGT), where any sales shortfall will be overshadowed by a cyber-security breach that exposed the records of tens of millions of its customers.

Although not every retailer has reported, a smattering of results indicate good earnings will be few and far between. American Eagle did poorly. So did Gap Inc. (NYSE: GPS), along with Bed Bath & Beyond Inc. (NASDAQ: BBBY). Shoppers with money appear to have been a little more optimistic. Costco Wholesale Corp. (NASDAQ: COST) and Macy’s Inc. (NYSE: M) holiday results were relatively good.

The bad news may not have come to an end. There is evidence that many sales in December were driven by discounting, which mean same store sales weakness was compounded by bad margins.

Retailers, at least those which have a strong balance sheet, will have to wait until the end of 2014 for another shot at the holiday season. Let’s hope that the grinch doesn’t steal sales again next year.