‘CNN Effect’ Goes On As Iraq War Attracts Consumers’ Focus

Major retailers gave tepid revenue guidance for March, citing concerns over the Iraqi war, which has glued many shoppers to their TVs, and the limp economy.

New York — The first week of spring and the arrival of the baseball season didn’t pull consumers out of their wartime shopping stupor.

Stores reported more shutouts than home runs during the final week of the calendar month. Nordstrom was even left doubting its most recent forecast for the first quarter.

Major chains gave tepid revenue reviews to the month, which wraps up this week for most stores. Concerns over the war in Iraq have glued many consumers to their television sets, a host of economic issues have constrained spending and the shift of Easter into April this year, from March last year has complicated comparisons.

Taken together, conditions have added up to three strikes for many merchants. The final tally for the month will be ascertained when the majority of retailers report March sales results on April 10.

Additionally, Nordstrom warned that war had hampered already soft sales, contributing to a drop in first-quarter earnings estimates below the firm’s prior projections. The company is now forecasting profits below its previous guidance of 23 to 27 cents, versus profits of 22 cents for the same period a year ago. A more exacting estimate was not given due to the lack of visibility in consumer trends.

The bottom line has drifted downward with the top. Nordstrom, in a statement, said sales were trending down by a percentage in the low-single digits so far this quarter, which will end May 3.

For the fiscal month of March, Wal-Mart Stores Inc. reported Monday that its comparable-store sales would increase just barely, at the low end of the low-single digits. This forecast was based on results through Friday, the end of the fourth week in its five-week fiscal month.

Last week, the discounter experienced negative trends in both average ticket price and traffic, compared with the week prior to Easter last year. This made for tough comparisons Saturday and an easier go of it on Sunday and into this week.

"We continued to see some ‘CNN Effect,’" last week, said a Wal-Mart spokeswoman on a recorded call, referring to the preoccupation by at least some consumers with news of the Iraqi war. The strongest product categories in the U.S. included intimate and ladies’ apparel and swimwear.
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