Shop Talk
Retailers, consumers and prices
Check Out Line: Have a Coke and an in-line quarterly profit
Check out Coke’s quarterly profit.
Coca-Cola reported a fourth-quarter profit that matched Wall Street’s expectations as strong volume in China, India and Brazil offset a decline in North America. Lower costs and market share gains in both the carbonated and noncarbonated segments helped too.
Coke’s growth in the developing markets — fourth-quarter volume rose 7 percent in Latin America and 11 percent in the Pacific region — helped offset a 1 percent volume decline in the closely watched North American market. Volume was up 1 percent in Europe.
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Check Out Line: Earnings encouraging, but still hard to peg
Check out how hard it is to figure out how well the economy is progressing, based on the earnings of consumer goods companies.
Toymaker Hasbro had a stellar fourth quarter, handily beating Wall Street’s expert forecasts, and said it expected its streak to continue in 2010. Hasbro got a lift from toys tied in with the hit “Transformers” movie and is expected to get even more help from characters such as Elmo, Cookie Monster and Big Bird under a 10-year deal signed last month with the Sesame Workshop.
On the other hand, drugstore chain CVS Caremark also reported better than expected profits ,but its sales fell short of Wall Street. Still, CVS did much better at its stores open at least a year than rival Walgreen, which posted back to back sales drops in December and January.
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Check Out Line: P&G CEO more worried than ever
Check out the worries Procter & Gamble CEO Bob McDonald has.
McDonald sat down with Reuters correspondent Jessica Wohl and talked about how his biggest concern is the possibility that President Barack Obama’s administration could choke off corporate growth by imposing taxes on companies’ foreign earnings.
“I am really worried about the United States … more worried than I’ve ever been in my career,” McDonald said at his company’s Cincinnati headquarters. “I worry about the deficit, I worry about an uncertain future.”
The head of the world’s largest household products maker said U.S. consumer sentiment is getting better but remains uneven, and he wonders how much of a return to purchasing has been driven by federal stimulus spending compared with underlying growth.
Check Out Line: Silver lining in retail land?
Check out the January same-store sales results at U.S. retailers.
Same-store sales for last month moved into positive territory from last year’s decline as many chains avoided drastic clearance sales and shoppers redeemed holiday gift cards. Many retailers reported sales that beat analysts’ forecasts, and Macy’s, TJX Cos (TJ Maxx, Marshalls among others) and American Eagle Outfitters raised earnings outlooks, while Bon-Ton Stores said its quarterly profit would be at or near the high end of its outlook.
Analysts on average had expected sales at stores open at least one year to rise 2.5 percent in January, according to Thomson Reuters data, rebounding from a 5.7 percent drop in January 2009.
The figures could mark the fifth consecutive monthly sales increase after a year’s worth of declines during the recession, as consumers slowly return to spending and retailers lower prices to match a more circumspect shopper.
Paper? Plastic? At Walmart, the push for reuseable
Three Walmart stores in Northern California are no longer giving shoppers the option of packing their purchases in free plastic bags.
Instead, in stores in Folsom, Citrus Heights and Ukiah, Walmart is offering shoppers resuable bags — a regular sized bag for 15 cents or an oversized bag for 50 cents.
It’s part of a plan by Walmart to cut plastic shopping bag waste in its stores by one-third by 2013.
In 52 other stores in California, Walmart is now selling both of these reusable bags up front at the register, where cashiers are encouraging shoppers to buy them when they check out (although shoppers can still opt for the free plastic bags).
Check Out Line: Walgreen sales catch a cold
Check out a dose of bad medicine for Walgreen.
Analysts had expected the No. 1 U.S. drugstore chain operator to post a 2.2 percent increase in same-store sales. But the company instead posted a surprise 1.1 percent drop. Among factors that hurt the company were a calendar shift. This January had one less weekday in it than last year. That might not seem like a big deal, but Walgreen fills more prescriptions during the week so the shift cut 1.3 percentage points from the same-store sales increase.
Pharmacy same-store sales fell 1.2 percent, a decline made worse by the fact that some of those sales have were in the form of H1N1 flu shots, a one-time item.
The same-store sales decline was also the second monthly surprise in a row.
UPS to U.S. consumer: relax, have an app!
UPS expects healthy profits in 2010, no thanks to the U.S. consumer the company is trying to entice with iPhone and BlackBerry applications.
Announced in November and December, the free applications enable users to create and track shipments, calculate rates and delivery times and find the nearest UPS location.
“People can browse the web on their phone as easy as on their home computer, so that’ll make it easier and easier to shop for holiday presents and birthday gifts,” Chief Financial Officer Kurt Kuehn told Reuters.
Online shipping is a sweet spot for both UPS and rival FedEx Corp, both considered economic bellwethers as they handle such a huge chunk of the world’s shipping. But it will be a whole lot sweeter when the U.S. economy catches up with the rest of the world and the U.S. consumer relaxes and starts to spend again. FedEx has iPhone and BlackBerry applications as well.
Check Out Line: Food companies serve up tasty results
Check out the better-than-expected results being served up by food companies.
Chocolate maker Hershey posted a quarterly profit above analysts’ expectations, said it was on target to meet its 2010 earnings forecast and boosted its dividend. The company also said it would boost advertising to try to sell more candy, including Almond Joy and York peppermint patties.
Meanwhile, Archer Daniels Midland, one of the largest processors of corn and soybeans, saw its profit slip 2 percent, but the results still topped analysts’ forecasts, and Pepsi Bottling also topped Wall Street’s view as productivity improvements offset a dip in sales. Fruit and vegetable producer Dole Food reported a higher fourth-quarter profit and paid down debt.
Outside the food and beverages sector, Whirlpool’s profit more than doubled on cost cuts and improving sales and the world’s biggest appliance maker offered a stronger-than-expected 2010 forecast. Women’s clothing retailer Ann Taylor said its fourth quarter earnings would top expectations.
Check Out Line: Predicting Valentine’s Day spending
Check out differing projections for spending on Valentine’s Day.
For you romantics out there who gauge the strength of your love by an annual showering of flowers, chocolate and jewelry on Valentine’s Day — you might want to adjust your expectations.
This year, couples plan to spend an average of $63.34 on gifts for their significant other or spouse, down nearly 6 percent from $67.22 last year, according to the National Retail Federation’s 2010 Valentine’s Day Consumer Intentions and Actions Survey. At the same time, the average person plans to spend $5.37 on their friends, up 13 percent from $4.74 last year.
The survey also found people plan to spend more on classmates and teachers, co-workers and pets.
Chavez puts a damper on U.S. earnings season
Venezuela President Hugo Chavez has rained on the U.S. consumer goods parade.
His government’s decision this month to devalue the Venezuela bolivar promises to hurt the profits of many leading U.S. consumer products makers this year even as they seem to be turning a corner.
On Friday, Newell Rubbermaid said the devaluation – which basically creates a two-tiered system that sells U.S. dollars for 4.3 bolivars in one market, and a separate parallel market where the greenback is going for about 6 bolivars- would shave 4-5 cents per share off of its 2010 earnings, sending its shares down.
The news follows Colgate-Palmolive and Procter & Gamble also saying on Thursday that Hugo’s tinkering with exchange rates would hit their 2010 profits, putting a little damper on the news that both companies had done better than expected last quarter.
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Walgreen had very week Black Friday specials – very little to draw people in on a day that drew many people to stores that were willing to feature a number of good specials. Its ads throughout the Christmas season were very anemic and pathetic. I am not surprised in the least to see this.