Analysis-deep sound warning for US retail profits discounts

NEW YORK, Dec 6 Reuters) — consumer discounts this holiday season have carousing, but it means thinner profit margins for retailers Wal-Mart Stores Inc., Neiman Marcus and car manufacturer, a red flag for investors who have ridden a sector rally all year round.

This week clothing retailers including Aeropostale Inc ' in the fourth quarter, guess Inc lowered profit forecasts and on Thursday, several big retailers, posted disappointing sales in the United States for November.

"We have an economy which is growing very fast. Prices in most cases come down, "said Jim McNerney, head of the Business Roundtable and Chief Executive of aircraft manufacturer Boeing Co, sharing the Roundtable survey opening on Wednesday.

"Every Member of the Business Roundtable, which represents half the US economy price pressure is confronted," he added.

Discounting is likely to continue as retailers seek to hold onto market share. Shares of retailers, big winners this year begin that look expensive, and some investors position themselves to a decline in profit.

"It is in a sense that the economy is recovering, there is an increase in sales, is still price pressure on retailers, especially the traditional, troubling," said Rick Meckler, President of LibertyView capital management in Jersey City, New Jersey.

Most large retail sectors their margins on earnings before interest and taxes, or EBIT have seen to decline from last year in the last quarter, according to Thomson Reuters StarMine. A group of 11 multiline retailers, including target and Macy's, have seen that this margin drop to 5.2 percent from 6 percent, while the auto companies by 3.6 per cent to 1.5 per cent have fallen.

A remarkable divergence is in stores, includes a series of luxury, clothing name and home improvement companies. Their margin is increased to 9.8 percent from 9.2 percent, partly because of Home Depot, Signet jewelry and O'Reilly automotive.

INVENTORY BUILDING

Great seller of apparel and gift ideas expected to face cost pressure in the entire last quarter. The newest report on the third quarter gross domestic product showed a surprising increase in inventories – specifying a few too optimistic sales lower expectations that through rates are set.

L Brands Inc, that parent of Victoria's secret, reported on Thursday that same store sales fell 5.5 percent, while analysts expected a decline of 1.1 percent. Profit margins had taken a hit due to reinforced offers but would not say how much to say. The company also noted that in the Victoria's secret online store down unsold clothes mark it.

Joel bines, managing director at consulting firm AlixPartners, said that the disorder at some retailers allow clothing suspect that many shops more were easy to sell, ordered, as she can and even luxury boutiques, which usually avoid, holiday discounting, in have gotten over the action for the first time since 2008.

"It will hurt all the edges. It is a "Beggar-thy-neighbour" battle for market share,' "he said."

On Wednesday more than 24 percent express shares fell in afternoon trading, so that the fashion retailer of the top losers on the New York Stock Exchange after it a weaker than expected holiday quarter surrounded by intensive promotions forecast.

Thomson Reuters data for consumer discretionary stocks show estimates of earnings growth for the fourth quarter rose 4.4 percentage points to 9.8 percent since Oct. 1 have fallen. The total saw S & P, its estimates fall 3.1 percentage points to 7.8 percent, but some keep the consumer has way.

"Estimates in this sector, aggressive", Adam Parker, U.S. equity Chief Strategist at Morgan Stanley, said has an "underweight" rating on discretionary within the sector.

The S & P discretionary in the sector of consumer group of stocks has 35.8 percent won this year, which ranks it among the 10 S & P sectors place, asked for only health care shares. But in the last five days discretionary sector 1.1 percent compared with a 0.6 percent decline in the overall S & P 500 has lost.

HEAVY DISCOUNTING

David Strasser at Janney capital markets said he expect stores to deep discounts through the rest of the holiday season offer middle and lower income buyers hesitate, are free to spend.

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These countries offer the most auto insurance discounts

In addition to the monthly payment, property is the "cost" usually with vehicle fuel. However, people often forget their vehicle over the cost of the insurance. Most importantly, it seems, as each insurance company advertises the discounts they offer, but if discounts are looking it seems it is, where you live, rather than what company you use.

Residents of Connecticut, Indiana, Missouri and Wisconsin will enjoy more discounts than any other State. Each of them has the potential to the save more than 32 percent of the time, according to a survey by Insure.com.

While the tourist ports such as Hawaii and North Carolina are famous for the holiday destinations, will not the same recognition as insurance they deserve oases as they at last among the 50 States and Washington, D.C. came the lowest number provide the available discounts.

The study analyzed 49 discounts in each State for several big auto insurers, collecting data on 24.988 possible discounts nationwide availability and potential savings.

"The right discount can hundreds of dollars from your auto insurance bill, knock," said Amy Danise, editor of Insure.com.

"But some may not acquisitions switch value." Drivers should take also into account that an insurer offer a great discount could have also a high base rate. This means that you might save less than expected."

The largest discount of the many available was the "good student" discount for drivers, the younger than 25 years old. Marital status and low annual mileage also ranked highest for average savings. But the amounts vary, with some car insurance savings topping offer 25 percent, while other single-digit savings offer for the same discount. The good student discount the average savings of 16 percent.

State rankings: Availability of 49 common discounts
Rank State Discounts
1 Missouri 33.10%
2 Connecticut 32.60%
3 Indiana 32.30%
4 Wisconsin 32.10%
5 Iowa 31.70%
6 Kansas 31.30%
7 Oklahoma 31.10%
8 Nebraska 30.20%
9 Pennsylvania 30.10%
10 Kentucky 30.10%

Ironically his student drivers, who tend to have to go the highest insurance premiums with these great discounts. Studies show that drivers under 20 years of age three times more frequently involved in a fatal accident to be according to the Insurance Institute for highway safety. The mortality rate is current data, after a decade of decline to.

Male teenagers are likely to be a higher penalty premium than paying female, but the prices vary depending on where you live. A teen driver will improve the family car insurance premiums by an average of 116 percent in Arkansas, but only 18 percent in Hawaii.

Parents and teens can take to reduce the likelihood of tickets and accidents, and lower insurance costs. The steps range from course to take a defensive driving the young motorist drives a car with safety features such as antilock braking system.

On average, the InsuranceQuotes survey of 10 insurance companies was that the average annual premium will rise 84 percent, if a teen driver is added, as a penalty of $2,000. But the exact figure varies depending on the age, gender and geography.

A 16-year-old causes, that the typical premium to 99 percent go a number that dips to 90 percent for a 17-year-old, 82 percent for a driver for someone 18 and 65 per cent in the age of 199.

The average male teen drivers is the family, with a 96 percent rise in car insurance premiums sock, while women means that premiums will rise a modest 72 percent.

The student discount was not only the largest, but also there was mostly: 77 percent of the time. Additional breaks policy (68 percent), payment (46 percent), marital status (41 percent), additional drivers came training (41 percent) and vehicle use (40 percent) for a simultaneous home owners.

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GM discounts, CEO comments raise eyebrows

Last fall, the road ahead looked smooth for General Motors.

Since it sank in Government guided bankruptcy, wiedereingestellt a leaner, meaner auto manufacturer over a year its shares on the world's major exchanges, again on the investment scene at the world's largest initial public offering burst.

But only four months later some industry watchers are fears that the company could draw new drivers, CEO Daniel Akerson, with the car market area is unfamiliar and GM into a ditch.

Critics claim that Akerson, a former telecommunications executive with pleasant subordinates of similar background, focus too much on cost reduce and heavily surrounded on incentives, such as such as discounts, artificially inflate sales at the expense of profits and brand image to leave is.

Adding to the worry: finance the departure this month of GM's Chief Chris Liddell after less than a year at work. Liddell ran GM through its record $23 billion IPO in November last year and his departure concerns about GM renewed stability and in the last few months behind the automaker put performance that many analysts have attributed to had. The company has four bosses in the past two years had.

"I have before this movie, and it ends badly," longtime Detroit Adam Peter Delorenzo said his blog, autoextremist.com.

Things have certainly optimistic considered for GM of the last time.

In the first months of 2011 sales of GM market share from its rivals packed cars and trucks, as the company increased according to sales data of j.d power and associates. It seems the rest of their investment in the company well for the future of the company, and hence the potential for U.S. taxpayer again bode.

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But some have called into question as these sales were made, and competitors have complained tactics of GM. You say, the use of sales incentives such as discounts access market a shortsighted tactic is disturbing their use that is industry now of a company under the direction of outsiders.

GM has strong incentives their cars since the beginning of the year, added great discounts offers for current owners of GM cars, no penalty early part-exchange for currently leased GM cars and larger discounts for users of the GM credit card. The result was a U.S. market share of more than 21 percent higher than the company has had in the year.

"We see upside to the incentives,", said Eric Lyman, Director of the residual value solutions in the automotive lease Guide, the industry authority on residual values.  "It is manipulating the market and lowering the cost of your vehicles, which lowers the resale value of your used vehicle on the market," he said.

This is the main concern of George Pipas, spokesman for sales analysis for Ford Motor Co. "The focus will be on the business rather than on the product" noticed he said "It clearly has adverse implications for resale value."

GM declined to respond directly, but text of a March 1 conference call with analysts by Don Johnson, Vice President of sales operations supplied. He was "price or incentives alone does not fully explain a 70 percent increase and a gain of almost three full share points,".

But the word in the industry is that sales fell in March after the incentives. "The metaphor that was used as drug addition,", Pipas said.  "If you move it sheetmetal depend on it is not so good."  "Then your customers hang it."

Some veterans ensure unfamiliarity with automotive engineering - he had to Akerson a long career as a Manager with Nextel and MCI--leads GM, error, that it made, when it was run from 1992 to 1995 by Chairman John Smale to repeat, formerly President and CEO of consumer products company Procter & gamble.

Smale's hand-picked North America President Ron Zarella the introduction of the Pontiac aztek, a dismal sales of SUV championed the styling of ridiculous it brought a quick end.

Akerson has appointed some top positions including the recent announcement that April 1 will take over as chief financial officer Dan, Ammann outsider in a similar way. Ammann came to GM of Morgan Stanley investment banking group. Akerson former Sprint Nextel has executive Linda Marshall, GM OnStar lead Division installed.

As GM's CEO, Smale was the conviction that GM just like P & G's consumer goods, and is largely could be sold cars with the differences in the packaging and marketing. The result was a product line of inconspicuous Autos--the aztek ungeachtet-- drains both costs and customer appeal.

In an echo of the past, Akerson recently said the Wall Street Journal was that a GM as the can of diet Coke was during the interview as well drink car.

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"It is a consumer product," he said. "GM is acting like a consumer-oriented, not engineering driven company start." "We sell a consumer product - our can cost only $30,000"

Industry insiders with a memory of the 90s years blasted immediately this view as a return to Smale's strategy failed, cultivate a product commoditize is important for a strong emotional connection to the drive sales and brand loyalty.

"The only difference between GM then and now GM is that this is a a company that has emerged only recently from the brink of bankruptcy, the bad-a single misstep can afford over brought from misguided leadership, even though she has the most competitive lineup (the vehicles) it had in decades" Delorenzo said.

At the time of his departure from the company last year, former Vice President of product development reminds boss Bob Lutz the mess which he found after joining GM in 2001:

"Product development all organisational with brand management was in," he said. "This was done Smale, John, who believed that you could use the principles of the Division of consumer products in the automotive business, which has sought, and it simply doesn't work."

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Focus on costs and speed product development rather than on product quality and customer satisfaction has led cars, no one wanted, Lutz said.

Under Lutz, GM won numerous awards car as the North American car of the year for Saturn Aura and Chevrolet Malibu, Chevrolet Volt, while cars like the Cadillac CTS, Chevrolet Corvette and Buick LaCrosse won applause from magazine reviewers.

In addition said transaction prices-the actual selling price of GM car and truck-increased from $4,000 as a result of an additional $1,000 of the cost, Lutz, so that customers happier and the company more profitable.

Now Akerson says that speed and cost are the aspects on which he will focus the magazine to say that "while the second WELTKRIEGS GM produced tanks and equipment for four years." "Why should it take four years to a car?"

Reuters contributed to this report.

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