Shop Talk

Retailers, consumers and prices

Check Out Line: Return of the killer inventories

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Check out the rising retail inventories. USA-ECONOMY/

How soon retailers forget the lessons of the recession, when heavy inventory and a drop in consumer spending forced them to slash prices in order to move excess goods off the shelves in 2008 and early 2009.

Cut to the summer of 2010 and retailers are slashing prices in order to move excess goods as consumers cut back.

American Eagle Outfitters on Wednesday posted lower quarterly profit as it had to mark down more goods this summer and also said sales for the back-to-school quarter would be weak.

That follows on rival Abercrombie & Fitch also having to discount to clear inventory.

Check Out Line: Barnes & Noble forecasts weaker sales

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Check out a weak financial report from Barnes & Noble.EARNINGS/

The United States’ top specialty book store chain posted a steeper-than-expected quarterly loss on Tuesday and said a proxy battle with billionaire investor Ron Burkle would put it even further in the red this year. The standoff has already raised doubts about the retailer’s ability to attract buyers after it put itself up for sale earlier this month.

Furthermore, the bookstore chain forecast a deeper decline in sales at its stores open at least a year during its fiscal second quarter than it experienced during the first quarter.

Check Out Line: Barneys gets new CEO, at last

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BARNEYSCheck out the end of Barneys’ two-year wait for a new CEO.

Well it was about time. After two years of having a committee of seven executives share CEO duties, luxury department store Barneys has finally named a permanent CEO. And he’s got quite the pedigree:  incoming CEO Mark Lee, who starts his new job on Sept. 1, was  CEO of Gucci from 2004 through 2008. Earlier in his career, he had stints at companies like Yves Saint Laurent, Saks, Giorgio Armani and Jil Sander.

The Barneys CEO suite had sat empty since 2008, when Howard Socol’s gig ended.

Check Out Line: Warning, slow recovery ahead

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homedepot1Check out signs that a slow recovery is in the offing.

Retail executives see only gray skies ahead as U.S. shoppers are still spending cautiously, giving weight to the notion that a recovery will remain weak beyond 2010.

“The economic backdrop is not optimal,” Ken Perkins, president of retail research firm Retail Metrics, told Reuters. “It’s not catastrophic like it was in 2008 and the first quarter of 2009, but it’s just very sluggish.”

Starbucks drive thru menu getting makeover

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thissbuxStarbucks’ drive thru menus are getting a facelift — as the cafe chain takes a page from the fast-food industry’s playbook.

At the end of August, the menu boards at Starbucks’ 2,600-plus drive thrus in the United States and Canada will have more pictures and fewer words. Fast-food chains like McDonald’s, which has been going after the Seattle coffee company’s core business with espresso drinks, frappes and smoothies,  commonly use simple, photo-based menus to tempt diners.

Check Out Line: More corporate earnings to parse

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walmart1Check out the latest raft of quarterly earnings.

With investors and denizens of Main Street alike dissecting various government reports and company press releases for hints on the relative strength or weakness of the U.S. economy, the latest slew of quarterly earnings arrived to parse, including better-than-expected results from Wal-Mart Stores and Home Depot.

Wal-Mart posted a better-than-expected profit helped by cost cuts and growth in international markets as sales at U.S. stores open at least a year fell. The world’s largest retailer also raised its full-year profit forecast.

Check Out Line: How Lowe’s can you go?

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lowes1Check out the weaker-than-expected earnings at Lowe’s.

Giving fuel to pessimists about the U.S. economy, Lowe’s, the No. 2 home improvement chain behind Home Depot, posted a quarterly profit and sales that missed analysts’ expectations, and also forecast lackluster earnings in the current quarter, underscoring “limited visibility into near-term demand.”

Sales at companies like Lowe’s had benefited immensely from the homeowner tax credit and cash for appliances programs, but now more and more uncertainty seems to be the watchword.

Check Out Line: Choice words in Barnes & Noble saga

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EARNINGS/Check out some of the smack talk from documents and statements made yesterday in the ongoing Barnes & Noble saga.

First, some of the basics.

Billionaire and boldfaced name Ron Burkle owns 19.2 percent of Barnes & Noble and wants to take it over. But standing in his way is Len Riggio, the chairman and the guy who built it into the largest U.S. bookstore chain, who owns nearly 30 percent (he’s the top shareholder, ahead of Burkle) and put in an anti-Burkle poison pill last year. The two have some bad feelings going way further back than this.

Check Out Line: Jobless claims rise, again

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Jobless1Check out the latest batch of grim data about the U.S. jobs market.

As if the consumer sector wasn’t nervous enough about a sputtering U.S. economy, the number of people filing new claims for unemployment insurance unexpectedly rose in the latest week to its highest level in close to six months.

Labor Department data showed the number of new claims for jobless benefits up 2,000 at 484,000 in the week ended August 7, the second straight increase. Economists polled by Reuters had expected claims to fall to 465,000 from the previously reported 479,000.

Check Out Line: Inflation? Deflation? Conflagration?

PHILIPPINES-ECONOMY/CONSUMPTIONCheck out the economic cross-currents swirling around U.S. consumers, retailers and manufacturers.
 
So, what’s it going to be? Inflation, deflation or just a big squeeze all around?
 
The U.S. economy is still suffering from high unemployment and sluggish consumer spending and sentiment. On Tuesday, the Fed said it would buy more government debt in the face of the weakening recovery.
 
“The pace of recovery in output and employment has slowed in recent months,” the Fed said after a one-day policy meeting. 
 
There is some concern about deflation, especially in bigger ticket items, with prices falling and cash-strapped consumers holding off on purchases expecting further price cuts, which just leads to more falling prices.
 
“Just when it looks like buyers were starting to come back, now they have another reason to wait,” Robert Yerex, chief economist at workforce management company Kronos, said. He pegs the chances of deflation in the United States at as much as 20 percent.
 
But there are also conditions that point to inflation for consumers instead, including rising costs for commodities like wheat, which may be starting to drive up the price of some products on grocery store shelves.
 
An analysis by J.P. Morgan showed  that the price of a 31-item basket of goods at Wal-Mart rose 5.8 percent in July from June. Analysts think Wal-Mart may be pulling back from the aggressive price cuts it made earlier this year and that could lead to other grocers raising prices.
 
Down the road, rising costs in for cotton, freight and for labor in China could also push prices up for clothes, analysts said.
 
But a key question is whether consumers, who are used to receiving big discounts, willing to pay more in a weak economy. 
 
The other question is, do consumers really watch closely enough to know when they are paying more in time to push back? Or can prices go up as long as retailers are willing to put the 50 percent off sign out there when products don’t sell?
 
Also in the basket: 

Macy’s raises forecast as profit beats Street

Grocer Metro profit rises on operations, sales

Maidenform Q2 beats Street
 

Nestle and CSM caution over higher input costs

 (Photo: Reuters)

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