Inflation May Not Be the Biggest Problem for Retail Stocks Right Now
Inflation is problematic for all businesses. They have to deal with rising costs, and they're not all able to pass rising prices along to customers without negatively affecting demand. For customers, it also leads to problems related to affordability -- and that may be contributing to a rise in theft, or "shrink," as the industry calls it.
One theme investors may have been noticing this past earnings season is that many retailers are complaining about a rise in shrink, and how that is hurting their businesses more so than in the past.
On Aug. 22, Dick's Sporting Goods (NYSE: DKS) reported its second-quarter earnings numbers, for the period ending July 29. While the sporting goods retailer's revenue of $3.2 billion was relatively resilient and grew by nearly 4% year over year, the company's bottom line totaled $244 million and was down by a mammoth 23%. Its gross profit margin of 34% was down nearly two percentage points compared to a year ago.
Source Fool.com
