First Quarter Retail Profits Down

A report issued Monday from the U.S. Commerce Department had mixed news for retailers. While sales figures were strong, profits were not: For large retailers, after-tax profits fell 11.5 percent in the first quarter, compared with a year earlier, despite the fact that sales grew by 3.6 percent. According to the Wall Street Journal, “Heavy discounting appears to be the culprit for revenue and profits moving in opposite directions. Retailers put products on sale to lure in shoppers otherwise hesitant to venture into the cold to shop.”

Sung Sohn, an economist at California State University, Channel Islands told the WSJ that unusually cold weather kept consumers home and prevented retailers from moving their inventories. “The only way to move that is through promotions, and that shaves profit margins,” he said.