Nicole Maestri

Check out more retailers reminding Wall Street that all is not well on Main Street.

On Friday morning,  AnnTaylor Stores reported lower-than-expected quarterly revenue and gave a cautious forecast for the current holiday quarter.

The operator of the Ann Taylor and Ann Taylor LOFT chains said its fourth-quarter sales would be slightly below those of the third quarter, and that its gross margins would be lower as well, due to heightened promotions it expects to use to drive sales throughout the holiday shopping period.

Meanwhile, Foot Locker late on Thursday reported third-quarter results that missed Wall Street expectations. The athletic shoe retailer cited lower than expected U.S. sales.

On a conference call on Friday morning, Foot Locker said it expected same-store sales for the holiday fourth quarter to be negative.

Foot Locker and AnnTaylor join a chorus of retailers ranging from Macy's to Kohl's to Wal-Mart that have warned investors in recent weeks that the holiday shopping season may be a little less merry than the stock market is expecting as consumers continue to show a reluctance to spend.

Or as Doug Scovanner, the CFO of Target, said quite pointedly earlier this week: "In our view, sell-side analysts are somewhat more optimistic across most of our industry than we believe is warranted in light of the harsh realities of the current environment."

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Philip Morris ordered to pay $300 million to smoker

P&G repurchasing shares, quiet on potential deals

Ferrero, Hershey would likely break up Cadbury: report

(Photo: Reuters)

Check out consumers stepping up their online bargain hunting ahead of the holiday shopping rush.

According to Hitwise, searches for retailer promo codes rose 19 percent last week compared with 2008.

Those numbers should rise headed into "Cyber Monday" - the Monday after Thanksgiving when retailers shift from in-store to online promotions.

Last year, Hitwise said searches on a portfolio of search terms for specific retailers (i.e. 'target coupons', 'target coupon codes' and 'target free shipping code') peaked during the week of Cyber Monday, up 76 percent from 2007.

So who is doing this searching? Hitwise looked at the demographics of online bargain hunters in the 8 weeks ending Dec. 27, 2008. It found the split is even for male and female searchers. Just over half of the searchers were between the ages of 25 to 44, and Hitwise said the younger searchers, aged 25 to 34, were more likely to search for retailer coupons than the rest of the online population.

It also found the greatest share of searches are from those making between $30,000-$60,000 and $60,000-$100,000.

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Dollar General IPO prices at low end, rue21 above

Kraft seen saving Cadbury sweetener for end-game

Abercrombie & Fitch profit higher than expected

JC Penney Q3 profit falls, shares up on forecast

Nordstrom profit below Street view, shares fall

(Photo: Reuters)

Lean inventory may be the secret weapon that retailers are depending on to survive the holiday season with earnings intact.

But consumers don't exactly seem to be quaking in their boots at the prospects of finding empty racks this Christmas season.

According to the ICSC, with 18 days until Black Friday and 46 shopping days until Christmas, the consumer appears "unfazed" by reports of retailers running low on inventory.

The ICSC and Goldman Sachs’ 2009 Holiday Spending Survey found that 81 percent of consumers said lean inventories are not motivating them to shop earlier than in past seasons.

One culprit behind the nonchalance?  Gift cards.

According to the survey, 48 percent of holiday shoppers said that if they can not find the gift item they are looking for, they will buy a gift card.

"It is surprising that consumers are not willing to shop early for holiday gifts to get the best selection," said Michael Niemira, ICSC’s chief economist.  "Bargains seemingly may matter more than selection for the consumer, which is why more consumers this year than in any recent time plan to shop on the day after Thanksgiving (16%) —which now should be dubbed Bargain Friday."

(Photo: Reuters)

Walmart has launched an aggressive push to win market share this holiday shopping season, cutting prices on everything from books to toys to lean ground beef and televisions.

Now, it is taking its effort to reach potential holiday shoppers beyond its typical TV or print ads.

While Walmart is already tweeting, and has launched an official Facebook page (where it now has 43,112 fans), it has now come out with an iPhone application to help shoppers pick out holiday gifts.

"New Walmart iPhone app! U can take pic of your room & see what size TV would look best (and other cool stuff)" Walmart Kevin tweeted today, on the retailer's behalf.

Indeed, the first edition of the application is focused on electronics, but Walmart intends to adds more products to future editions of the app.

Walmart joins a growing list of retailers, including JC Penney, Target and Best Buy, who are trying to find customers in the land of social media.

While Facebook, Twitter and iPhone apps have not yet gained enough critical mass to make or break the season, in a year where holiday sales might struggle to rise above 2008's depressed levels, it looks like retailers are determined to chase holiday sales wherever they can find them.

(Photo: Screenshot of Walmart iPhone app)

Companies that cater to consumers are always chasing after the latest consumer technology trend (anyone remember Second Life?), and this holiday season that means following them into the world of social media.

Companies ranging from Wal-Mart and Panda Express to J.C. Penney and Target are experimenting with Facebook, Twitter, YouTube or Flickr. Some are tweeting special coupons or limited-time deals, while others are doling out fashion advice or providing play-by-plays from product launch parties on Facebook. M.A.C. said it is using its Facebook page to feature artists, color collections, and what is happening backstage at fashion shows. 

While figuring out if all this tweeting, posting and friending is increasing sales is difficult, companies said one thing is certain: Social media is giving them a direct, unfiltered link to consumers.

For instance, when Target asked its Facebook fans what they thought of its mens clothing line, they got suggestions like: "MORE MLB, NFL, NBA merchandise..." and "Could use a better selection of mens jeans, and tall mens shirts (not just dress shirts) too."

Target is now using the responses to tweak its merchandise selection.

When Panda Express wanted to celebrate its new SweetFire chicken breast, it allowed Facebook fans to print a coupon so they coud visit a restaurant on Sept. 25 and try it for free. Chief Marketing Officer Glenn Lunde said 25,000 coupons were redeemed and traffic in its restaurants rose that day. 

Larry Weintraub, the chief executive of marketing agency Fanscape, said that unlike traditional media, social media can give companies tangible results.

"If I run a TV ad or I do a billboard ... I don't always know the direct effect," he said. "If I do Facebook and there's a coupon or a direct link to buy it, I actually see the results."

Coach said it is luring shoppers to its stores and its website by using Facebook, Twitter and establishing relationships with influential blogs. For this holiday, it is developing an iPhone gifting application. Users can type in who they are shopping for, what that person's favorite color is, and their price range. The application will respond with a bundle of possible gift ideas.

But Zain Raj of Euro RSCG Discovery said companies need to keep social media's potential in perspective for this holiday. He pointed to Dell, which has said it raked in more than $3 million from Twitter followers who clicked through its posts to its Websites to make purchases. 

However, Raj said that is "not even a drop in the ocean" for a company that posted $12.3 billion of revenue in the first quarter of this year, alone.

(Photo/Reuters)

Every year retailers (at least some of them) fight to keep their Black Friday deals and discounts a secret. And every year, they wind up being leaked (or intentionally distributed) online.

Those holiday ads are now starting to crop up online.

BF Ads sent an email to subscribers yesterday, saying it has posted what appears to be OfficeMax's 48-item Black Friday ad.

"We originally hesitated on posting this advertisement because it appears to be a very early revision of their Black Friday advertisement. There are multiple misspellings (e.g. "consule" instead of "console" and "brower" instead of "browser") and bad grammar throughout most of the advertisement," BFads.net said in its email.

"On the positive side, all of the items look legitimate (correct SKU #'s) and the prices aren't out of the ordinary for a Black Friday advertisement. "

But buyer beware. By Friday afternoon the ad had been pulled from the site and there was a  link to a cease and desist letter from Office Max's lawyers.

"Not only is most or all of the information BFads.net is disseminating regarding OfficeMax advertisements and sales false or misleading, such information is also misapproriated OfficeMax confidential information," the letter states.

BF Ads said it was their first cease and desist letter of 2009 and it "touches on some of the reasons why we were hesitant to post the advertisement in the first place."

"While we warn that no advertisements released early on this site should be regarded as 'official,' the majority we receive turn out to be the final version of the advertisement. This was not the case with OfficeMax's advertisement and to prevent visitor/buyer confusion, we are cooperating with this Cease & Desist and have removed the advertisement scan along with the item listings."

Stay tuned.  More ads cannot be far behind.

(Photo: Reuters)

Check out the boost Coach is getting from its new Poppy line.

The leather goods retailer reported higher than expected quarterly profit and sales on Tuesday.

Coach said its new Poppy line, which is aimed at younger women with its bright colors and lower prices, helped increase store traffic from the previous quarter.

The average price of a Poppy bag is $260, about 20 percent less than the usual Coach purse. The line's introduction is part of a plan by Coach to reduce overall prices by 10 to 15 percent and appeal to more cost-conscious shoppers.

Coach Chief Executive Lew Frankfort told Reuters in an interview that he expects earnings per share to show gradual improvement for the balance of the fiscal year when compared with the prior year.

"Consumers are starting to feel a bit more confident that the economy is stabilizing, that the outlook is no longer dire," he said, adding that he expected a stronger holiday shopping season for the overall industry.

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US retail holiday sales seen up 1.6 pct - ShopperTrak

FEATURE: Holiday miracle needed for turnaround at US ports

FEATURE: Fewer holiday goods spurs US retail scramble

(Photo: Reuters)

Check out Mattel reporting a smaller-than-expected decline in third-quarter revenue as the toymaker sees gains in its Hot Wheels and American Girl brands.

Profit fell to $229.8 million, or 63 cents a share, from $238.1 million, or 65 cents a share, a year earlier.  Net sales fell 8 percent to $1.79 billion.  Analysts expected revenue of $1.78 billion.

Chief Executive Robert Eckert said Mattel's revenue was still under pressure due to the weak economy, a move by retailers to tightly manage inventory and a dearth of toy lines tied to movies and other entertainment.

"That said, we are continuing to make strong progress on reducing costs, rebuilding margins and generating strong cash flow," he said in a statement.

Mattel and rival Hasbro are facing another tough holiday as key retailers Wal-Mart and Target have already begun offering steep discounts on their products to woo shoppers.

After a bruising holiday season in 2008, toy companies are making fewer and more affordable products, such as those that cost less than $30. Mattel's Barbie "Fashionista" doll is expected to be a hot seller this holiday.  It sells for $11.99 at Toys R Us.

Hasbro will report earnings on Monday morning.

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Cadbury looks for sweet Q3 to deter Kraft

Office Depot CEO worried about small U.S. businesses

Tesco sets goal to be zero-carbon business by 2050

Louboutin Fetes Barbie at 50 (WWD, subscription required)

(Photo: Reuters)

Check out the ongoing debate about September's same-store sales results and how the numbers beat expectations.

Yesterday, we found out that September same-store sales rose 0.6 percent, surpassing a forecast for a decline of 1.1 percent, according to Thomson Reuters data. When all was said and done, 78 percent of retailers that report monthly same-store sales posted results that beat Wall Street estimates, also according to Thomson Reuters.

So how was Wall Street so far off in its estimates?

Well analysts, economists and industry watchers we talked to cited a number of factors -- the late Labor Day pushing back-to-school sales into September, cooler weather putting shoppers in the mood to buy Fall merchandise, easier comparisons to last year when sales began to fall off a cliff in the wake of the financial crisis, and retailers finally getting inventory in line with lower consumer demand.

"The Labor Day shift, cooler weather and start of easier comparisons all contributed to the upside," wrote Pali analyst Amy Noblin in a note to clients on Friday morning.

"It is hard to walk away from a month with such broad-based strength and not feel marginally more confident about the consumer despite the fact that unemployment is still high and credit remains an issue," she added.

Meanwhile, Lazard Capital Markets analyst Todd Slater said the larger question is, why didn't more retailers beat expectations? 70 percent of the retailers he covers beat expectations.

"Our Beat-O-Meter came in at 70%, meaning that 7 of 10 retailers exceeded consensus comp expectations, begging the question: With benefits from the Labor Day shift, easing comparisons, and cooler weather, how did 30% not beat?" he wrote.

But Slater cautioned October may have a tough time sustaining September's momentum.

"Based on our analysis, when retailers beat expectations by a large margin in one month, they usually miss consensus numbers in the following period (71% of the time), which simply means that expectations tend to get ahead of themselves pretty quickly," he noted.

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Shoes, bags prove staying power in luxury crisis

Kimberly-Clark to buy I-Flow for $324 million

H&M's September sales seen up 2 pct yr/yr

Naomi Campbell Collaborates With Vuitton for Charity (WWD, subscription required)

(Photo: Reuters)

As we mentioned on Shop Talk this morning, the National Retail Federation expects total holiday sales this year to fall 1 percent.

The trade group held a conference call later in the day to add details about their forecast. Here is what NRF spokeswoman Ellen Davis said about the forces that will shape the upcoming holiday shopping season:

Unemployment:

"The golden ticket this year for the holiday season is going to be unemployment. With the unemployment rate at about 10 percent, we know that a lot of Americans will be pulling back on the holiday season because they have to, because they don't have a job or because someone in their family doesn't have a job.

"But the unemployment picture really goes far beyond that 10 percent because anyone who knows someone who is out of a job, looking for work or is concerned about losing their job is going to be pulling back. You don't want to be the guy who drives up in a brand new BMW if your neighbor just got laid off."

Retailers' efforts to prepare for this year's impending holiday season:

"This year, retailers knew going in consumers would be very price conscious and frugal for the holiday season and they've been able to plan accordingly.

"They're doing everything they can to cut back on their operating costs. They're pulling back on inventory. As we have seen from NRF's port tracker report, retail containers to the nations' ports are down to the levels we saw in 2002 and 2003, which is an indicator that retailers really aren't shipping as much to their stores as they may have been in previous years.

... That will help retailers protect their profits and will keep them from, we think, having to resort to any panicked, unplanned markdowns at the last minute because they have too much merchandise."

What shoppers can expect to see in stores:

"For the holidays specifically, we are expecting retailers to focus on a lot of lower-ticket items. This will be the holiday season of the blue jean instead of the Blu-ray.

... Absent, we think except perhaps for Black Friday, will be a lot of promotions of flat screen TVs and laptops. So, really more of a focus on the basics, the necessities and the lower-priced items this holiday season."

"We are expecting a lot of aggressive discounts and promotions. The good news ... is that retailers should be able to protect their profit margins this year because they have been planning these sales and promotions throughout the holiday season. Because they have done a nice job controlling their inventory, retailers really won't have as many issues with unplanned markdowns as they may have a year ago, but consumers may start to find that retailers are coming out with many aggressive promotions and deals very quickly."

(Photo: Reuters)