Shop Talk

Retailers, consumers and prices

Check Out Line: The discretionary downtown

February 25, 2009

sksCheck out the effect of splurge-resistant shoppers on quarterly results.

With newly frugal shoppers sticking to newly shrunk budgets, Saks posted a quarterly loss that was much steeper than Wall Street expected, and said same-store sales in its fourth quarter fell 15.3 percent.

“During the quarter, the company experienced continued weakness across all geographies, merchandise categories, and channels of distribution,” said Chairman Stephen Sadove.

Saks grabbed headlines this holiday for slashing prices on designer merchandise after it realized its stores were stocked with too much inventory. The aggressive price cutting may have long-term consequences if shoppers, accustomed to discounts, balk at paying full price once again.

Saks said it expects the environment will be “extremely challenging” throughout 2009 so it is cutting its capital spending plans and said it is targeting a 20 percent decrease in inventory receipts for the year.

Meanwhile, Zale also posted a quarterly net loss after it cut prices in the face of lower consumer spending during the holiday shopping season. The jewelry retailer said it was taking additional actions to cut costs that include reducing inventory and closing about 115 stores with weak sales when their leases mature. The company said it cut 245 jobs this month.

But it did say that sales trends improved from January through Valentine’s Day.

Also in the basket:

TJX profit tops view; no full-year view given

Del Monte posts higher profit, raises forecast

Dollar Tree quarterly profit rises 11 pct

Crocs taps former Reebok exec as new CEO

Tween Brands posts surprise Q4 loss, to cut more jobs

(Photo: Reuters; the Saks store on Manhattan’s Fifth Avenue)

Comments

This economic downturn is most impacting these big retailers, like Saks, Macys, and Zales. Now, people can no longer spend huge sums of money that they were earlier able to.

 

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