Consumers’ wallets looking empty
What’s in the American consumer’s wallet? Not much, judging by poor numbers released Thursday by credit card lender Capital One (COF) and retailers led by Macy’s (M). Capital One shares dropped to a new low in morning trading after the company warned in a midnight press release that its 2007 earnings will fall 20 percent short of the bank’s previous forecast. The announcement prompted the company to counsel Wall Street that it “remains well-positioned with respect to funding as a result of its more robust access to deposits, reduced reliance on wholesale funding markets, and strategy of holding significant liquidity.” That is, Capital One doesn’t have to expect to raise money in the markets this year, which is a good thing considering investors’ aversion to lending money to all but the safest borrowers. Meanwhile, Macy’s said sales in established stores dropped almost 8 percent last month, prompting CEO Terry Lundgren to muse that “macroeconomic trends led customers to spend cautiously for the holiday.” And beyond: Macy’s expects to see January same-store sales drop about 5 percent from a year ago. The retrenchment is on.
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