Shop Talk
Retailers, consumers and prices
Check Out Line: Savers are shoppers, at least for now
Check out shoppers with fresh credit loosening their purse strings a bit – at least for now.
“There’s no question there’s some pent-up demand,” as over the past three months consumers saved and paid off their credit cards bills instead of spending, said Stifel Nicolaus retail analyst Richard Jaffe.
Now, “the credit cards are reloaded and the consumer has the ability to spend” on both holiday gifts and personal items such as clothes they had been holding off from buying, amid rising food and gas prices, falling housing values and shrinking credit availability.
Still, many leading U.S. retailers reported steep drops in November sales at stores open more than a year, as bargain seekers at the beginning of the holiday shopping season were unable to save a very tough month.
When those holiday promotions taper off, consumers with lingering credit card debt from holiday gift-giving and less discounted items will likely put the brakes on spending yet again, says Jaffe.
Also in the basket:
Homeless pets still need to eat
With foreclosures of homes on the rise, so are stories of pet abandonment, but pet food maker Del Monte says sales of dog and cat food and treats hasn’t been affected.
The New Haven Register in Connecticut reported on Nov. 23 of a dramatic rise in pet abandonment at shelters across the city, as adjustable mortgage rate resets make mortgages on many homes unaffordable, and rising food costs make paying for pet food and upkeep unrealistic.
And on Nov. 16, The Boston Globe said a record number of cats are being dropped off at local animal shelters. A Humane Society official attributed the record numbers to the faltering economy and people losing their homes.
Higher animal abandonments have hit Canada as well, according to a Nov. 7 article in the Albuquerque Journal (subscription required).
Still, pet food company Del Monte, maker of Meow Mix cat food and dog treats like Meaty Bone and Pupperoni, says they haven’t seen a meaningful drop in pet food sales in recent months.
“We have not seen any hard data that would indicate household pet ownership to be declining, and so anecdotally we’ve heard about pets being left in foreclosed homes and that sort of thing, but we have not seen any data or seen any evidence with our customers that that really is a problem,” Del Monte Chief Executive Richard Wolford said on a call with analysts.”
Whether they’re in a family home or living in an animal shelter, dogs and cats still have to eat.
Manolo Blahniks for cheap(ish)
Luxury lives! At least when it’s on sale.Today’s Manolo Blahnik sample sale brought out New York fashionistas looking for fabulous shoes on the cheap, and given the woeful state of the economy this year, they need it more than ever. The sale is typically held twice a year and is not widely publicized. Shoes that typically priced from $545 to over $1150 for tall suede boots were on sale from $100 for a simple pair of pumps to $400 for over-the-knee boots. Manolo Blahnik sends out an e-mail to their best customers and press friends, such as Vogue editors, who then tell their friends, and thus the word gets out.Most shoppers at the sale told us they will still buy luxury items like expensive shoes. But they are being more cautious and buying less these days.Cynthia Tabet of New York City said she buys new Manolos “every year,” but this year bought fewer pairs. “You’re tempted, but not as much” since the stock market tanked, she said. Tabet’s still on the fence about holiday purchases and is waiting to see if the economy picks up before buying.Picking through the piles of Manolos, Maria Jaqez of NYC also said she was “more cautious than usual,” but expected her holiday shopping to be “the same as last year.”Throwing caution to the wind was Tina Rich, also of NYC. The Cartier employee said she didn’t care about the ups and down of the stock market. “I’m just a little person, it doesn’t effect me!” she said cheerily, as she scooped up several pairs of pumps. “I wear Manolo’s and Dolce, that’s it.”(Photo/Reuters)
Too bad I missed the sale, but found quite a number of sample sale Manolo shoes posted at this shoe market.. Worth checking out…www.stilettomarket.com
Circuit City employees speak
Circuit City employees say they’re not surprised the struggling retailer is closing 155 stores in an attempt to remain solvent amid deteriorating liquidity and tighter credit conditions from vendors.
Employees interviewed by Reuters correspondent Chelsea Emery at Circuit City’s Paramus Towne Square, New Jersey store seemed resigned to difficut times ahead. The store is not among the 155 slated to close and employees who work there declined to give their last names.
“People thought (this news) was coming with the economy. It’s not a big surprise. They’ve (corporate headquarters) got to do what they’ve got to do. They’re not going to get bailed out like Lehman Brothers,” said television salesman Marko. “People aren’t going to buy plasma TVs when they can’t buy milk … We (employees) are trying to stay positive as we can.”
David, a supervisor for Firedog, said the store had a meeting this morning about the closures. “We’re all nervous,” he said, adding that employees had been told earlier in the year that any store closures would happen much later, even into January. “This (news today about 155 stores) is unexpected.”
Employees “are all nervous. We’re trying to fight to stay open,” computer salesman Anthony said.
(Photo/Reuters)
i had to get $150 rebate for HP Notebook Computer and didnt
Check Out Line: Sales up at Burger King, profit misses view
Check Out Burger King missing Wall Street views but saying sales grew 12 percent worldwide, with sales at restaurants open at least a year up 3 percent in the United States and Canada.
Lower-cost fast-food chains have benefited in the economic downturn, while higher-priced sit-down restaurant chains like Applebee’s and Chili’s Grill & Bar have been hit particularly hard, as consumers slash discretionary spending to adjust to falling home prices, a credit crunch and higher food and fuel costs.
The home of the Whopper hamburger has been sprucing up aging restaurants, extending hours and adding value menu items to better compete with rivals like McDonald’s, Taco Bell, Pizza Hut and KFC.
Burger King maintained its forecast of opening 350 to 400 new restaurants next year, a sign it is hopeful hungry people in a hurry will continue to order items like the 11,500-store chain’s flame-broiled burgers, Big Fish sandwich and newer offerings like its Angus beef burger.
Also in the basket:
L’Oreal shares fall on sales warning (Reuters)
Check Out Line: Staples sees good times ahead
Check Out Staples saying its third-quarter profit will top Wall Street estimates and backing its long-term forecast, all in the midst of a global economic crisis.
Staples is holding a conference today with investors. They will no doubt be wondering how the world’s largest office supply retailer plans to convince small business owners and consumers to buy more office supplies in a troubled economy that has made them cut back buying computers, printers and copiers in favor of smaller-ticket items like ink, toner and paper.
Staples said yesterday it plans to open only 75 stores in North America next year, down from a planned 110, but expected to report third-quarter adjusted earnings of 41 cents to 42 cents per share. That’s ahead of analysts’ average expectation of 40 cents per share.
Staples also raised its long-term operating margin goal for the total company to 9 percent, up from the 6.5 percent margin it had in 2007, including the results from its newly acquired Corporate Express business.
On Wednesday, Office Depot posted a quarterly loss and said it would delay new store openings in the face of poor sales, as customers pared back purchases in the face of a looming global recession. OfficeMax is set to report its third-quarter results Friday.
Also in the basket:
FEATURE-U.S. families brace for holidays without a home (Reuters)
Macy’s celebrates the next 150 years
Macy’s is still finding ways to celebrate in what could be a dark winter for retail this year. Customers entering Macy’s flagship store in New York City’s Herald Square it opened today were met by the pounding beats of the Soul Tigers Marching Band, lots of red balloons and a barrel full of exploding ribbons.
CEO Terry Lundgren was there cutting a ribbon promising another 150 years for the department store, to tack onto its current 150th birthday. A gaggle of employees sang “Happy Birthday Macy’s!”, threw confetti and danced.
Macy’s birthday celebration comes at the same time most retailers are struggling with flagging sales as consumers pressured by a global financial crisis, a housing market crash, rising food prices and a credit crunch cut back spending on non-essential items.
Macy’s recently cut its own forecasts, but is also reaching out to a bit more investors. Last week, it announced it will temporarily reinstate monthly reports of its sales to keep the market updated during uncertain times.
Rowland Hussey Macy opened his first store in 1858 at 6th Avenue and 14th Street in New York and made $11.06 in sales its first day, or around $345 in today’s dollars. The company reported 2007 sales of $26.32 billion and operates more than 850 stores including both Macy’s and Bloomingdale’s.
(Photo/Reuters)
Check Out Line: Who needs foreign tourists? Luxury chains have Palin!
Check Out Alaska Gov. and hockey mom Sarah Palin, who’s not only John McCain’s vice presidential pick, but a luxury fashion maverick.
The Republican National Committee has spent more than $150,000 since late August to outfit Palin and her family in the fanciest of duds from department stores like Saks and Neiman Marcus, says politico.com.
The financial disclosure records, included under the line item “itemized coordinated expenditures,” show RNC expenditures at Saks Fifth Avenue in St. Louis and New York of $49,425.74 in September. Based on Saks’ September comparable-store sales of $273.2 million, Palin accounted for .018 percent of sales.
The RNC also spent $75,062.63 during one September trip to Neiman Marcus, says politico.com, which would represent .012 percent of Neiman’s September comparable-store sales of $406 million.
The RNC spent only $789.72 at Neiman-owned Barneys New York but dropped $5,102.71 at Bloomingdale’s, which is operated by Macy’s, said politico.com, a website that tracks political news.
Hefty primping expenditures on the campaign trail are nothing new. U.S. Senator Hillary Rodham Clinton, D-NY, received guff for her expensive custom-made pantsuits, which cost upward of $6,350 each.
The RNC also spent $4,716.49 on Palin’s hair and makeup, and made $295 in purchases at high-end children’s stores Pacifier and Steiniauf & Stroller Inc., according to politico.com.
You have to be kidding. We are spending ink on her clothing? what about how much money the MEN are spending on clothing? It is gender bashing to “report” about Hilary and Sarah and their clothing allowances for campaigning. And I am a democrat -not defending Palin, however, the amount of attacks about superfluous “news” is appalling.
I’m Todd Davis and here’s my Social Security number
Giving out your Social Security number on national television is bound to attract trouble. But that hasn’t stopped Lifelock Chief Executive Todd Davis from flashing his social – 457-55-5462 – on television, the Internet, and print ads.
Davis says he’s so certain Lifelock will protect your identity and preserve your credit he gives out his social security number to prove it. He’s gotten around 100 dings on his credit, including people trying to get loans under aliases like Jabba T. Hutt.
Someone ordered $400 worth of meat, and a Texas man named Daniel managed to get a $500 loan in Davis’ name. Notified of the fraudulent loan by creditors, Davis sent the same TV crew that tapes “Cops” and “Cheaters” to Daniel’s house, where after some discussion Daniel apologized for copying Davis’ social off the Lifelock website and then taking out a loan in his name.
But none of this deters Davis, who knows a gimmick, and free publicity, when he sees it.
“In Texas our sales went through the roof” following media reports of the Texas encounter, Davis told Reuters on Tuesday.
Davis says Lifelock will make $90-$100 million in sales this year and expects the company to do $200 million in sales next year. He says Lifelock will remain private for the foreseeable future, especially in light of the global financial crisis.
(Photo/Courtesy of Lifelock)
Happy shopping, and watch out for mall shootings
The holidays are right around the corner, and the National Retail Federation has visions of tinsel, mistletoe and mall shootings on their mind. The NRF and International Council of Shopping Centers on Monday released guidelines to help retailers prepare for shooting incidents at shopping malls and retail stores. A joint effort with the U.S. Department of Homeland Security and retailers, the plan deals with an “active shooter,” or individual actively engaged in killing or attempting to kill people in a confined and populated area. “We live in a dangerous world and the stakes keep getting higher,” say the guidelines. The guidelines warn that a shooter may be a troubled current or former employee, or related to an associate with domestic problems. They also encourage employees to create an escape plan and be aware that law enforcement first responders may show up in bulletproof vests and Kevlar helmets and be carrying rifles, shotguns or handguns, and might use pepper spray. Only as a last resort when your life is in danger, the guidelines say, “Attempt to incapacitate the active shooter. Act with physical aggression and throw items at the active shooter.”
Some facts of note: – In 100 percent of the shootings the suspect was male. – In over 71 percent of the incidents, the shooter was between the ages of 15-25, with 20 percent ages 50-60. – In 24 percent of the shootings, the shooter committed suicide before police were able to respond. – Active shooter situations are often over within 10 to 15 minutes.
From 2004 through 2008 there were 17 shooting incidents at U.S. shopping malls and retail stores, with 34 killed and 33 wounded, according to the NRF.
(Photo/Reuters)
Which begs the question; “Why is mall security not better trained and equipped”? As the director of a security training school, I have no doubt whatsoever that private security officers if properly trained, are just as capable of dealing with assaults by gun-wielding assailants as any Police Officer. They do not all have to be armed – it would be simple to have a firearm safe where special repsonding officers could access weapons when an attack occurred. Another solution would be to arm senior supervisors who would undergo rigorous background, training and in-servcie training courses.
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Resident Shop Talk Expert
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Black Friday: A Great Start, but Show Me the Money!
With a combination of deep discounts, “two-fer” sales and early bird specials, retailers did better than expected—at least that’s according to the National Retail Federation (NRF). The NRF reports that more than 172 million shoppers hit stores and websites between Thanksgiving Thursday and Sunday, which is 25 million more than shopped last year. They are also reporting that shoppers spent an average of $372.57, up 7.2 percent over last year’s $347.55 for an estimated total expenditure of $41.0 billion.
While it’s still way too early to draw any real conclusions, they predict a 2.2 percent increase, or about $470 billion, in total holiday sales. Well, that all sounds rosy, but bear in mind that the NRF is a retailer’s trade association. That means they are the Cheerleaders of Shopping. And what is a cheerleader’s job? It’s to pump you up. Naturally they want to couch things in the best of terms possible even before anybody knows what the actual numbers are. Remember the mantra of herd mentality: if everyone else is doing it, it must be OK.
Since two-thirds of our economy is based on the spending of the U.S. consumers, without consumer spending it’s going to be hard for the economy to get much traction. But a strong opening weekend does not automatically translate into a strong holiday season for retail. After all, shoppers were looking for the deepest possible discounts this year, given the state of the economy, so a majority of the sales went to discount and mall-based retailers like WalMart. It’s hard to say how this flurry of activity will translate into profits. I suspect retailer’s gross margins are going to suffer after adding in expenditures before arriving at their actual operating income. This is key as I stated in the recent release book I co-authored called “The Big Gamble: Are you investing or Speculating?
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