Shop Talk
Retailers, consumers and prices
Check Out Line: Taking on Starbucks paying off for McDonald’s
Check out how the McCafe keeps perking up McDonald’s sales.
Last month, Ronald McDonald and company reported a strong first-quarter profit, showing that their bet on taking on Starbucks on its home turf has paid off. And judging from McDonald’s April sales, that McCafe business — with its expanded lower-priced roster of coffees and new frappes — continues to caffeinate its results.
In April, sales at restaurants open at least 13 months (same-store sales, in the industry’s shorthand) were up 3.8 percent stateside, and did even better overseas, for a global average of 4.9 percent.
It wasn’t just Frappes that gave Mickey D its boost- old stalwart products such as its Chicken McNuggets did very well in April. French fries with that, anyone?
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Check Out Line: Consumer Reports lifts warning for Lexus SUV
Check out Consumer Reports lifting its ‘Don’t Buy: Safety Risk’ designation for Toyota’s 2010 Lexus GX 460 sport utility vehicle.
The well-known consumer magazine said it was changing the rating for that SUV after recall work corrected the problem it displayed in one of its emergency handling tests.
Last month, Toyota recalled nearly 10,000 of the Lexus SUVs, which had only been on sale for a few months, after its engineers replicated the Consumer Reports test. Two weeks later, Toyota, which has seen its reputation for quality tarnished in a series of recalls and incidents, resumed selling the SUV.
In a test called “lift-off oversteer,” as a vehicle is driven through a turn, the driver quickly lifts his foot off the accelerator pedal to see how the vehicle reacts. Consumer Reports said it found that the Lexus SUV’s rear end slid out until the vehicle was almost sideways, raising concerns of an accident including a rollover.
While Consumer Reports was not aware of any reports of injury related to this problem, tall vehicles with a high center of gravity like the GX 460 concern the magazine.
Dealers received a software fix for the vehicle’s electronic stability control last week and began notifying owners to bring in for repair their SUVs, which sell for $50,000 or more. Consumer Reports brought in its test vehicle and found the repair work took 90 minutes, after which the SUV passed the driving test it had previously failed.
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Check Out Line: Consumer earnings offer plenty of good news
Check out the better-than-expected earnings reports from several consumer companies.
Dr Pepper Snapple, Sara Lee and TreeHouse Foods reported stronger-than-expected quarterly profits, while Liz Claiborne, Elizabeth Arden and K-Swiss posted smaller-than-expected losses.
Dr Pepper, the maker of such soft drinks as its namesake brand as well as A&W, Sunkist, Canada Dry and 7Up, said it was helped by an 8 percent sales volume gain in Latin America. It also raised its full-year profit forecast.
Sara Lee was helped by cost cuts and strength in its Hillshire Farm lunchmeats and Jimmy Dean breakfast sandwiches. While sales fell short of expectations, the company raised its full-year profit.
TreeHouse cited strong results at its retail grocery business and raised its full-year profit outlook.
Cosmetics maker Arden results were better than expected as sales rose in domestic and international markets. Liz Claiborne’s loss was smaller than expected thanks to strength at its upscale Juicy Couture and Kate Spade brands.
K-Swiss had a mix of good and bad news as the athletic shoe maker also had a smaller than expected loss, but said 2010 sales would be hurt by the closure of a manufacturing facility in Thailand.
Check Out Line: Spitting out brand-name mouthwash
Check out slipping brand loyalty.
The lesson the recession taught many U.S. consumers is that they can do without their favorite brand, according to a new survey by comScore Inc.
Hardest hit was the mouthwash category, where only 44 percent of those surveyed in March said they buy the brand they most want. That is down from 61 percent in March 2008.
Shampoo also took a hit, down to 52 percent of people saying they buy the brand they want from 65 percent year earlier, Toothpaste, cough/cold and allergy medicine, jeans, fruit juice, laundry detergent and small appliances also saw double digit declines in loyalty.
The product that held up the best was paper towels, which slipped to 35 percent from 36 percent.
We would have thought that toilet paper would have seen the most loyalty, but that wasn’t listed in the survey results.
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from Dhanya Skariachan:
Check Out Line: A mixed bag of consumer news
Check out a mixed bag of results from the consumer world.
Investors looking for yet another clue to gauge the strength of the U.S. consumer spending recovery might find some solace in online retailer Overstock's results and women's apparel retailer Ann Taylor's strong first-quarter outlook.
Overstock, which sells excess inventories of clothing, accessories, furniture and other items, recorded a 42 percent rise in quarterly sales, while Ann Taylor forecast a same-store sales rise of 11 percent in its latest first quarter.
"Consumers are back in the malls and outlet centers...They are being lured to spend on nonessential goods by pre-planned promotions from retailers and greater confidence in their economic well-being," Wall Street Strategies' Brian Sozzi summed it up.
The U.S. consumer is certainly warming up to spending on more than essentials and maybe a tad more comfortable replenishing their wardrobes with news of an improving economy floating around. But just how far will they go? Will we see a simultaneous improvement in all sectors of retail?
Judging by the latest crop of results from the restaurant world, maybe not.
Cash for creative moms
At some point — usually in the middle of the night during the umpteenth feeding/diaper change of their child’s young life — most parents think they have come up with the greatest idea EVER that could revolutionize baby and child care.
Huggies wants to give the most inventive moms a bit of a financial boost. Just in time for Mother’s Day, the diaper brand and parent Kimberly-Clark have set up a grant program called MomInspired. The goal is to give away up to $15,000 to each woman with a great idea for a baby product.
The seed capital could help entrepreneurs grow their ideas into businesses.
There are about 10.6 million women-owned businesses in the United States and women are starting businesses at nearly twice the rate of men, Kimberly-Clark Chief Marketing Officer Tony Palmer noted, citing data from the Center for Women’s Business Research. However, it is still men who get the vast majority of the venture capital funding that is already out there.
“There’s this huge unmet need for seed capital for women,” Palmer told Reuters.
Moms — actually, any women 21 years or older (they don’t have to be mothers, but moms probably have a better shot) — can submit their ideas until June 11 for a chance to win the cash, plus access to Huggies resources.
Steve Paljieg, senior director of growth and innovation for Kimberly-Clark, sees it as a way to craft a business relationship with moms who have an entrepreneurial spirit.
I would like to see huggies add wipes to every Diaper in their box attached to diaper or if not 2 wipes maybe add a sanitizer napkin to every diaper so parents can at least wipe their hands after each diaper change to cut down on germs.
Check Out Line: Taylor Swift — the new face of Covergirl
Check out country music star Taylor Swift becoming the newest Covergirl.
The songstress, known for her blond ringlets and girl-next-door charm, has been busy collecting armfuls of accolades. In February, the 20-year-old won four Grammys and was the youngest artist ever to take home the coveted prize for album of the year. In November, she won four awards from the Country Music Association, which named her entertainer of the year.
Last month, Swift got a mention in People magazine’s “World’s Most Beautiful People” special issue.
Now Swift joins Queen Latifah, Ellen DeGeneres, Rihanna and Drew Barrymore as a spokeswoman for the mass market cosmetic brand owned by Procter & Gamble.
“It’s like a dream come true,” said the 20-year-old in a statement, noting that she has admired many of the brand’s earlier spokeswomen since she was “a little girl”.
Since the brand’s introduction in 1961, its Covergirls have included Christie Brinkley, Cheryl Tiegs, Rachel Hunter, Tyra Banks, Niki Taylor and Molly Sims.
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Check Out Line: What’s significant?
Check out Avon’s dose of disclosure.
The world’s top direct seller of cosmetics (led by Chairman and CEO Andrea Jung, shown here) topped analysts’ expectations with its quarterly profit.
It also gave a little more insight into its ongoing investigation about possible bribery in China — which is by far its smallest market, but one with great potential. The company said fees paid to professionals working on the probe were “significant” in the latest quarter.
The ongoing probe has been expanded to additional countries in Avon’s other international regions — Latin America; Central & Eastern Europe; Western Europe, Middle East & Africa; and Asia Pacific.
Avon also had some trouble recruiting sales representatives in China as it moves to more of a direct sales model from the boutiques it runs there. The number of active representatives in China fell 25 percent during the quarter. In 2009, the number of active representatives in China rose 32 percent. In 2008, that figure popped 79 percent.
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Rich guys love their manSpanx for looking thin
To the relief of many women (and men for that matter) out there, Spanx introduced its cotton-compression undershirts for men in February this year.
No surprise that a garment that helps hide unsightly potbellies and sagging rear-ends would be a hit. But I admit, I was surprised on a recent trip to Chicago to see Spanx for Men at the Neiman Marcus on Michigan Avenue. I thought, in my naïveté, that that product might be a bit downmarket for Neiman’s upscale male patrons.
I was wrong. Neiman wasn’t just passively selling Spanx — it was looping on a large screen a video extolling its virtues, gave it half a wall of display space and made sure the helpful salesman knew how to approach guys about Spanx without directly saying, “don’t think we can’t see your ample love handles.”
In an interview with Reuters on Thursday, Neiman Marcus Stores CEO Karen Katz (she becomes CEO of the whole company in October) said Spanx for Men has been a major hit.
“We have sold thousands of units of those Spanx for Men- it has been unbelievable,” Katz told us. “Men in some ways are just as vain as women.” And lest any still-young, still-svelte man think he’ll never need them, she warned, “At some point you may get a little bit of stuff here and there,” pointing to her hips.
For a look at the modern man’s girdle, click here.
(Reuters photo)
Check Out Line: A smorgasbord of consumer earnings to parse
Check out the smorgasbord of quarterly earnings in the consumer sector.
Among the many companies to report earnings on Thursday were P&G, Burger King, OfficeMax, Colgate, Fortune Brands, Bunge, Kellogg, Safeway and Mead Johnson. As usual, there was something for investors of all stripes.
P&G, for example, posted a better-than-expected profit, helped by its biggest volume gain in more than four years. That would please the optimists.
The pessimists, however, had their news to focus on as the world’s largest household products company, known for its Tide detergent (pictured), also forecast results for the current quarter below Wall Street’s expectations. Go figure.
Burger King reported a smaller profit, blaming severe winter storms during the period for weaker sales in North America, and the CEO said warned that high levels of unemployment and underemployment remained the biggest headwind.
Agricultural processor Bunge posted a weaker-than-expected profit and cut its full-year outlook. OfficeMax, the No. 3 U.S. offices supplies retailer, posted a higher profit as it gained market share and kept a tight lid on costs.
Meanwhile, Fortune Brands, known for alcohol, home products like Moen faucets and golf gear, affirmed its outlook from Tuesday in reporting its stronger profit and said it saw consumers “getting more active,” including stronger-than-expected remodeling activity in the housing sector.
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