Shopping habits challenging retailers
NEW YORK - The financial strains and shifting shopping habits of Americans have led to uneven fortunes for retailers.
NEW YORK - The financial strains and shifting shopping habits of Americans have led to uneven fortunes for retailers.
Traditional consumer companies like Wal-Mart Stores and Mattel have continued to struggle as Americans spend more cautiously in the uncertain economy.
Both companies faced stock declines on Friday after Wal-Mart warned that fourth-quarter results may be lower than expected and Mattel issued a disappointing fourth-quarter earnings report. Wal-Mart shares fell in the morning before ending the day flat.
Mattel shares fell 12 percent on Friday.
Meanwhile, Amazon.com has flourished as shoppers increasingly buy online rather than head to stores.
The trend was evident during the holiday shopping season, when many retailers can make up to 40 percent of their annual revenue. Overall, government figures show that spending during October through December rose at the fastest clip in three years.
Amazon said late Thursday that its profit and revenue both grew in the latest quarter. Still, the world's largest online retailer said its results fell below what Wall Street was expecting as costs rose in tandem with revenue. The news sent its shares down 11 percent Friday.
But Amazon faces different problems than its brick-and-mortar peers. Amazon's results were hurt because its costs are rising along with its meteoric revenue growth.
As it struggles to balance its operating costs with growth, the company said late Thursday that it is considering raising the fee on its Prime membership, which offers free two-day delivery on most items.
The service is so popular that Amazon had to suspend accepting Prime members during the holidays because it could not process them fast enough.
In addition, carriers had trouble delivering orders on time due to unforeseen demand, so Amazon had to issue some gift certificates and rebates.
Despite Amazon's results falling short of expectations, Wedbush analyst Michael Pachter said 2013 was Amazon's best holiday ever.
"Amazon set records in several areas, including a record number of Amazon Prime items shipped worldwide on Amazon's peak shipping day," he said.
