Mass-market retailers putting together their orders for the holiday season might want to prepare for the worst. Mark Zandi, the chief economist at Moody’s Economy.com, said home price weakness may well worsen in the autumn, hurting consumer sentiment and retail demand heading into the end of the year. “I think retailing will be very, very soft, particularly for lower, middle-income households,” he told the Reuters Global Real Estate Summit in New York. However, luxury retailers should do fine as the well-off will be relatively unscathed by a housing downturn, Zandi said.

British retailer Tesco may have a new item for sale: some lakeside property in Prague.

The world’s fifth largest retailer has already been selling off  some U.K. properties as it tries to unleash billions of pounds in value from those properties.

At the Reuters Consumer and Retail Summit, Finance and Strategy Director Andrew Higginson said the retailer will probably extend that sell-off to properties outside Britain at some point.
 
“No one was building in Central Europe when we started, so we built and we’ve got some fantastic assets there. We have the lakeside of Prague, a huge shopping development,” he said.

Higginson also told the summit that the Bank of England needs to be careful not to go too far with increasing interest rates, saying that consumer spending was already slowing.
Video: Tesco warns of tough year ahead

For companies that make cosmetics, targeting age groups is a critical part of their business.

John Dempsey, group president for Estee Lauder, said his company is not trying to be everything for everybody.

Dempsey, one of the featured guests on the second day of the Reuters Consumer and Retail Summit, said that Estee’s many brands — including Sean John, MAC, Clinique and Bobbi Brown — position them well to hit all the major age groups.

The summit continues in New York and London through Thursday.

How can golf gain more traction among young people around the world?

Make it an Olympic event, said George Fellows, chief executive of Callaway Golf at the second day of the Reuters Consumer and Retail Summit.

Fellows asks why such stellar pursuits as curling and badminton have Olympic status, while golf doesn’t.

Golf in the Olympics also wouldn’t hurt his company — which could provide everything from golf clubs to balls to apparel for future Olympians.

Besides, who wouldn’t like to see Mickelson, Vijay, Tiger and Argentina’s new star, U.S. Open winner, Angel Cabrera fight it out for a medal.

Blue Nile Chief Executive Mark Vadon sees his company’s share of the engagement ring and other online jewelry product market growing over the next few years.

Vadon sees the areas outside of the typical engagement market as growing even more quickly for his 8-year-old company and sees a better mix of products.

Vadon was a guest at Reuters Consumer and Retail Summit in our New York offices.

Procter & Gamble, one of the world’s largest consumer products companies, makes most of its Folgers brand of coffee in Louisiana, near New Orleans.

While the plant was hard hit by Hurricane Katrina in 2005, it also did a pretty good job getting itself back and running after the devastation that the hurricane brought to the area.

Keith Harrison, P&G’s global products supply officer, spoke on Monday at the Reuters Consumer and Retail Summit about what the company has done since then to better prepare for another such storm.

Harrison spoke on the first day of the Reuters annual industry summit, which extends through Thursday in our New York offices.

Despite gas prices that have pushed the $4 a gallon mark, U.S. consumers continue to shop.
 
The latest report by the Commerce Department showed that sales by U.S. retailers, including auto dealers, jumped 1.4 percent in May, the largest increase since January 2006.

“The good news from today’s report is that consumer spending continues to be solid in spite of higher gasoline prices and mixed readings on consumer sentiment,” Brian Bethune, U.S. economist at Global Insight said in a research note. “The relatively strong job market has kept spending energized and will contribute to a solid bounce back in overall economic growth in the second quarter.”

The report comes a week after many U.S. retailers reported higher sales in May at stores open at least a year, as warm weather helped them rebound from a dismal April.
 
Still, sales in the first five months of 2007 are up only 4.6 percent, a slowdown from the 8.1 percent increase a year earlier, with mall stores up only 1.7 percent, according to Customer Growth Partners, which analyzes Department of Commerce data and retailer sales results.

Off-mall retailers were up 7.9 percent in the first five months, Customer Growth Partners said.

“Consumers continue to ‘vote with their feet,’ preferring more convenient off-mall locations and new formats, to the point that traditional malls now account for under 17 percent of total retail sales, vs. 38 percent a decade ago,” Craig Johnson, president of Consumer Growth Partners, said.

Amazing what a little bit of sunshine can do.

The weather warms up a bit, and suddenly consumers are buying lawn and garden equipment and spring and summer clothing.

Many U.S. retailers on Thursday posted improved sales for May, compared with a year earlier, as warmer weather erased the chill from a cold April.

Nordstrom, Bon-Ton, Costco and Limited were among the retailers that had better-than-expected sales.

But it wasn’t bright for everyone: teen retailers like American Eagle and Aeropostale missed Wall Street’s expectations. And Wal-Mart sales were at the low end of its plan, with the discounter saying that shopper’s worries about higher gas prices have increased.

---

The following table lists select U.S. retail companies that have reported May sales at stores open at least a year, a key retail measure also known as same-store sales.The table includes the range of mean estimates* given by analysts polled by Reuters, the average of those means#, and the actual change in same-store sales reported by the companies^.      

All figures expressed in percentage change over the same period last year except number of estimates.

			MAY-07		MAY-07
		Analysts’	same-store	No. of	same-store
Company	Symbol	estimates*	sales(est)#	Estimates	sales (act)^
Wal-Mart		0.5 to 1.5	1.2	10	1.1**
Target		5 to 8	5.9	10	5.8
Costco		2.8 to 7	5.4	11	7.0
BJ’s Wholesale		0.5 to 3	2.0	8	4.1
TJX Cos.		3 to 5	3.9	9	5.0
Dollar General		2.5 to 3.5	3.0	8	4.1
Family Dollar		1 to 2	1.8	9	2.5
Ross Stores		-1 to 2	0.9	7	1.0
Kohl’s		3 to 8	6.0	13	10.5
JC Penney		-2 to 2	0.2	11	-2.0
Macy’s		-4 to 0	-1.5	11	-3.3
Nordstrom		2 to 7	3.4	14	6.3
Saks		10 to 18	13.7	8	37.5
Dillard’s		-3 to 1	-1.4	7	-2.0
Bon-Ton Stores##		-4 to 2.5	-0.1	4	1.2
Gap		-7 to 1	-3.7	13	-3.0
Limited		-3 to 1	-1.5	12	2.0
Abercrombie		-5 to 2	-1.7	14	-5.0
Hot Topic^^		-6 to -3	-4.6	11	-6.1
Chico’s FAS		-5 to 3.8	-2.8	12	-2.9
American Eagle^^		4 to 7	5.7	16	5.0
Aeropostale^^		3 to 7	4.8	9	1.9
Pacific Sunwear		0 to 3	1.7	14	6.4
Ann Taylor		-6 to 1	-3.2	10	-4.6
Bebe		-7 to 0	-2.6	10	-3.0
Children’s Place		1 to 6	3.0	7	4.0
Sharper Image		-15 to -12.5	-14.2	3	-8.0

**For U.S. stores, excluding fuel. Including fuel, same-store sales rose 1.3 percent.

##Reported on Tuesday. Bon-Ton and Carson’s combined sales.

^^Reported on Wednesday.

A plan by antitrust regulators to sue to block Whole Foods Market Inc.’s purchase of Wild Oats Markets could put a chill on the retail merger scene, and cool the takeover hopes of book-store chain Borders Group Inc.

Goldman Sachs on Wednesday downgraded Borders to “sell” from “neutral,” saying it expects the bookseller’s stock to fall due to the reality of rigorous antitrust regulation of retail deals.

Shares of Borders, long-rumored to be a takeover target, have risen about 10 percent in the past year in hopes it could be acquired by rival Barnes & Noble Inc. or private equity firms. A possibility previously discussed here by Reuters.

Borders’ stock shed 98 cents, or 4.5 percent, to $20.80 in early trading on Wednesday in the wake of the Goldman downgrade. The stock hit a 52-week high of $24.19 in November. The book store has a market capitalization of about $1.3 billion.

Regulatory opposition to the merger of Whole foods and Wild Oats makes a deal less likely for Borders, Goldman said. Shares of Borders, the second-largest U.S. bookseller, are overvalued on a purely fundamental basis, Goldman said.

The Federal Trade Commission on Tuesday it would challenge the Whole Foods-Wild Oats deal in federal court because it would eliminate competition between “two uniquely close competitors” in many local markets around the United States.

Even if a deal with Barnes and Noble seems unlikely, private equity firms could still have an appetite for Borders. Last month, Reuters reported that private equity firm Pacific Equity Partners had expressed interest in buying the 24-store Australian unit of Borders. 
 

 

 

 

Wal-Mart Chairman Lee Scott is used to the criticism the world’s largest retailer gets for its impact on the environment, wage and benefit policies and other practices.

But at the company’s annual meeting he also faced criticism from shareholders who thought the company is spending too much time and money trying to appease its critics.

“People shop at Wal-Mart for low prices, not because the company is politically correct,” one shareholder said.

Scott was criticized for appearing on stage with Andrew Stern, president of the Service Employees International Union, in a call for universal health-care coverage for Americans and for the companies push on environmental issues like pushing to suppliers to reduce packaging.

One proponent of a pro-capitalism shareholder proposal even suggested that the company should use the marketing muscle it has employed to sell millions of energy efficient light bulbs to instead sell “Atlas Shrugged,” the 1957 Ayn Rand book that attempted to lay out a moral foundation for capitalism.

In a meeting with reporters, Scott said he was baffled by some of the criticism and said that the actions the company was taking that were seen as appeasing its critics or burnishing its image actually made good business sense.

For example, on sustainability, the company is cutting the cost of packaging, reducing its costs for dumping waste and for shipping products.

“Even if you are against the idea that climate change is important, why in God’s name would you be against saving money?” Scott said.

Scott also pointed out that many Wal-Mart customers are among those who do not have health insurance, meaning that money they have to spend on health care is money they don’t spend at Wal-Mart.

Scott also said that being concerned about diversity also was good business.

“I think the more diverse you are … the more likely you are to be able to understand that customer and meet that customers needs,” Scott said. Although he did give nod to the executive team gathered with him — almost all white males wearing grey suits.

“This group can’t even buy a different suit,” he said.

Overall, Scott said business goals and social responsibility can co-exist.

“I just don’t have much patience for anybody that thinks that creating a better business while simultaneously contributing to society is somehow a bad deal,” he said.