US Retail Sector Cuts Jobs As Well As Prices To Stay Afloat
February 06 2009 - 12:21PM
Dow Jones News
Retailers are slashing jobs as aggressively as they are cutting
prices, with the latest employment figures showing the industry has
given up virtually all of the positions it added since the last
recession while the retail unemployment rate has leapt to 8.7%.
Retailers cut 45,000 jobs in January, putting their total
employment just below 15 million for the first time in five years,
the U.S. Labor Department said Friday.
The current number is just about 100,000 away from where retail
employment bottomed, at around 14.9 million, in July 2003,
following the recession that began two years earlier.
The January figures are based on Labor Department surveys of
paid employees through mid-December. Retailers have further thinned
their ranks since then as a battery of big companies, including
Macy's Inc. (M), Target Corp. (TGT), Sears Holdings Corp. (SHLD),
and Saks Inc. (SKS) have disclosed job cuts.
The retail industry has now lost a seasonally adjusted 592,000
jobs in little over a year, from when the sector's employment
peaked in November of 2007.
Retail's 8.7% unemployment rate compares with 5.4% in January
2008. The figure includes some wholesale job cuts by wholesaling
companies, but the lion's share is from the retail sector, the
Labor Department said.
The latest retail-sector job cuts include 10,000 positions from
home-center goods, building-materials and garden-supply stores,
9,000 from department stores and 7,000 from furniture and
home-furnishings stores.
While seasonal jobs tend to be cut after the holidays, retailers
are going much deeper.
Some 522,000 jobs were added during the seasonal hiring period
of October through mid-December, the lowest number in the decade
the Labor Department has been tracking holiday employment.
In recent years, 600,000 or 700,000 jobs have been added for the
Christmas holidays, and the workers were let go by the end of
February.
But this year, in January alone, retailers that undertook
seasonal hiring shed all of the Christmas-time positions plus
another roughly 96,000 jobs, the Labor Department said.
The employment report for January is the latest sullen news
indicating that conditions for retailers are continuing to
deteriorate.
On Thursday, the group reported a 1.8% drop in same-store sales
for January, its 12th consecutive monthly decline.
Following the same-store-sales reports, Standard & Poor's
placed the ratings of just about all of the major department stores
on its credit watch, with implications for debt downgrades.
Nordstrom Inc. (JWN), J.C. Penney Co. (JCP), Sears, Dillard's Inc.
(DDS), Macy's and Neiman Marcus Group Inc. (NMGA) are all very
vulnerable to a recession that is likely to accelerate in the first
half of this year, S&P said.
Steep discounting over the fourth quarter will weigh on margins
and earnings that most retailers begin reporting later this
month.
S&P projects a nearly 30% decline in year-over-year
per-share earnings for the period, to $1.75 from $2.45, for the
roughly 100 members of its retail index.
The ongoing economic downturn makes retail stocks still a risky
bet, despite their upside movement in recent sessions, said Richard
Hastings, consumer strategist at Global Hunter Securities LLC.
"Happy moments don't stick because valuations are getting so
brutal," Hastings said.
-By Karen Talley, Dow Jones Newswires; 201-938-5106;
karen.talley@dowjones.com