The Upcoming Commercial Real Estate Woe

Forward-Thinkers Must Brace Themselves for the Commercial Real Estate (CRE) Fall-Out Ahead; One Sub Sector of CRE is Retail, and Next Week the Reality of Plummeting Retail Sales & Balance Sheet Erosion will be Confessed; EXTRA CAUTION is URGED with Sears (SHLD); Director Richard Perry Recently Sold Nearly $69M Worth of Stock. POTC Did Give All an Early Warning with First Solar (FSLR) Several Months Ago After a Walton Family Member Sold a Large Stake; Now We Are Concerned About SHLD in the Weeks & Months Ahead, as We Predict a Much Lower Share Price; SHLD is Supposed to Release their Earnings Report Around Thursday, Feb 26th: NEW YORK (Dow Jones)--Retailers will begin posting fourth-quarter results en masse next week, with the reports illustrating the impacts from one of their roughest periods on record. The expected 33% drop in retail earnings for the period will be accompanied by severe margin strain and scant signs of stabilization. -All seven of the retail groups in the Standard & Poor's 500 Index are projected to see their fourth-quarter earnings fall from a year ago, according to Thomson Reuters. -Wal-Mart Stores Inc. (WMT) is classified differently, as a consumer staples company because of its large supermarket business, and its fourth-quarter earnings are expected to be down 5% from a year ago. -Most retailers' fourth quarters closed at the end of January, meaning the period will reflect the strain of consumer scarcity in November, deep discounts in December, and continued apathy and low gift card redemptions last month. -"This was a very tough period for retailers, beginning with their toplines," said Carl Steidt, chief economist at Deloitte Research. -Of the seven S&P retail groups, home improvement retailers are projected to see the biggest tumble, with earnings falling 56%. The group is made up of S&P 500 members Home Depot Inc. (HD), Lowe's Inc. (LOW) and Sherwin-Williams Inc. (SHW). -Department stores' fourth-quarter earnings are projected to fall 37%. The S&P group is made up of J.C. Penney (JCP), Kohl's Corp. (KSS), Macy's Inc. (M) and Sears Holdings Corp. (SHLD). -Apparel retailers are projected to see fourth-quarter earnings drop 29%. The sector is made up of Abercrombie & Fitch (ANF), Gap Inc. (GPS), Limited Inc. (LTD) and TJX Cos. (TJX). A 26% profit decline is pegged for discounters, including Target Corp. (TGT), Big Lots Inc. (BIG) and Family Dollar Inc. (FDO). -Fourth-quarter profit for specialty retailers is projected to fall by 24%, a group made up of Tiffany Inc. (TIF), Staples Inc. (SPLS) and Office Depot Inc. (ODP). -Best Buy Inc. (BBY), RadioShack Inc. (RASH) and GameStop Inc. (GME) make up the consumer electronics group whose fourth-quarter profit is pegged to fall 10%. -Amazon Inc. (AMZN) and Expedia (EXPE) make up the Internet retail group whose fourth-quarter earnings are expected to decline 1%. -Wal-Mart will be the first major retailer to report fourth-quarter results, on Feb. 17. -The reports will encompass a fourth quarter that was marked by same-store sales declines for each month for most retailers. -The period saw severe and margin-cutting markdowns that continued after the holidays. -"There was no Christmas for retailers," said Todd Slater, retail analyst with Lazard Capital Markets. -Slater said the industry's troubles are hardly over and that outlooks from companies should be taken with a grain of salt, when they are provided. -"Several more retailers probably will say they are not providing guidance, which isn't good because it crystalizes already-negative sentiment," Slater said. "Retailers that do provide guidance will remain very conservative; even coming in lower than what they believe internally." -The best guidance will be gleaned from retailers' comments about their financial position and how they plan to improve it, Slater said. "This year is all about financial controls, managing liquidity" to fund operations and pay down debt. -As things presently stand, results for retailers' current quarter are not expected to show much improvement. -Department stores are expected to show a loss for the fiscal first quarter, while apparel retailers are projected to see earnings fall 32%. -The projection for home improvement chains is a 28% drop; and for specialty retailers should see earnings fall 26%, Thomson Reuters said. -Consumer electronics retailers are expected to report an 18% decline in first-quarter earnings, discounters a 23% decline and Internet merchants a 15% drop, Thomson Reuters said. -By Karen Talley, Dow Jones Newswires; 201-938-5106; karen.talley@dowjones.com (END) Dow Jones Newswires February 11, 2009 08:30 ET (13:30 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 08 30 AM EST 02-11-09