Shop Talk
Retailers, consumers and prices
Check Out Line: “Insult to injury” for retailers
Check Out one analyst’s list of retail names at risk.
Around this time last year, stimulus checks amounting to more than $100 billion started landing in cash-strapped consumers’ bank accounts, giving them a chance to spend and boosting sales for many retailers.
But this year’s stimulus entails lower withholding taxes and not ”hard checks,” which means “the effects of this year’s stimulus on retailers will be a far cry from 2008,” Pali Capital analyst Stacey Widlitz said in a research note to clients.
As retailers already face thrifty consumers, tough comparisons versus a year ago could put some retailers at risk this time around, adding “insult to injury,” she said.
For example, electronics retailer RadioShack offered consumers a 10 percent discount on purchases over $50 when a stimulus check was used between May 4 and July 12 last year. That along with sales of TV converter boxes helped sales, Widlitz said.
Check Out Line: Value in Vogue
Check out mixed news from discount retailers.Warehouse clubs turned in a diverging earnings performance on Wednesday but overall results still showed the strength of this business model as consumers search for bargains.No. 1 U.S. warehouse club operator Costco Wholesale reported a lower profit as non-food sales weakened, but smaller rival BJ’s Wholesale eked out an earnings gain.As both retailers look to preserve and grow their business, that could bode even better for cost-conscious customers.Costco has said it will cut prices to keep shoppers, while BJ’s said one of its top priorities this year is to gain market share.Close-out chain Big Lots also posted profit that topped Wall Street forecasts – and investors eagerly snapped up its shares.Also in the basket:Liz Claiborne outlook weak More mortgage borrowers are ‘underwater’Kindle access from iPhone(Photo: Reuters)
Black Friday ads popping up online
It’s that time of year again – supposed Black Friday ads are now starting to appear on online.
Numerous websites have cropped up in recent years that publish what they claim are copies of the newspaper ads retailers will run for Black Friday — the day after Thanksgiving that marks the ultra-competitive launch of the holiday shopping season.
Product cost inflation is real, it’s very real
During Big Lots’ conference call, the closeout retailer was asked what it is seeing in terms of product cost inflation, especially when it comes to merchandise that is sourced in Asia.
CEO Steve Fishman was unambiguous in his answer: “That’s real. That’s very real”
Check Out Line: Big gains for Big Lots and Wal-Mart
Low price retailers appear to be in. The top performing stock in the first quarter among components of the Dow Jones Industrial Average, through Friday, was Wal-Mart, with a 9.66 percent gain — one of only five stocks up in the index.
And in a much wider group, Big Lots is the big winner in the S&P 500 with a 40.25 percent gain in through Friday. The shares of the company, which specializes in the sale of excess inventory, posted a 33 percent increase in March alone.
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