Retail earnings misses back to levels last seen in Great Recession
The CNBC article, "Retail earnings misses back to levels last seen in Great Recession," quoted Russell Reynolds Associates Consultant Margot McShane about the changing landscape of retail earnings. The article is excerpted below.
Traditional retailers are struggling to predict their own fortunes.
The percentage of retailers that beat their earnings estimates dropped roughly 20 percent since 2010 on a rolling 12-month basis, according to Bespoke Investment. They reached a 15-year low in 2015 and are seeing miss rates last seen at the beginning of the Great Recession.
Retailers are closing hundreds of locations, but they don't know the impact that store closings and liquidations will have on their revenues. They are investing in e-commerce, but they don't know how many people will buy online and what that means for their in-store purchases. They are promoting in-store pickup, but they don't know whether shoppers will take them up on it and save them from expensive shipping costs.
The retail business model is no longer predicting how many more sales a single store will do this year compared with last year, the language its current club of executives is used to speaking. Retailer leaders largely came up through the ranks when the solution to most problems was building more stores or reinvesting in old ones.
"For many years it's been about scaling and optimizing — they all know each other and they really haven't had to look outside their industry as much as they probably should have to navigate the changing tides," said Margot McShane, a partner at executive recruiting firm Russell Reynolds.
To read the full article, click here.