Retailers, consumers and prices
Check 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.”
Indeed, Wal-Mart Stores posted its fifth consecutive quarterly drop in U.S. same-store sales (sales at stores that were open for at least a year) and said that trend may not reverse itself in the current quarter, Home Depot cut its full-year sales view and Kohl’s, which caters to middle-income consumers, and BJ’s Wholesale cut their profit forecasts.
“The landscape hasn’t changed, and you can make the case that perhaps it has worsened,” Kohl’s Chief Executive Kevin Mansell told Reuters last week.
Check out the upbeat but cautious forecasts for holiday sales in the U.S. and the U.K. ahead of their release later this week.
Most U.S. retailers are set to post December sales later this week and let us know just how much better things have gotten since the disastrous 2008 holiday season. They’ll need all the good news they can get — holiday sales can account for as much as 40 percent of annual sales.
Check out the latest sales reports, which show that consumers are still cutting back on discretionary spending as they shift to discounters for the basics. Granted, that’s not exactly news anymore, but some of this morning’s sales tell us that even the discounters are starting to feel the heat.
“Sales for the month of May were somewhat below our expectations,” chief executive officer of Target, Greg Steinhafel, said in a statement.
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)
Check out the cool and wet weather that hit U.S. retailers in September as the month will go into the books as the fifth coolest in the last seven years and much cooler than last year, according to Planalytics Inc, a business weather tracking company.
While the mean September temperature in the 96 largest U.S. metro areas fell about 4 points from last year to 64.2 degrees, retailers selling rainwear (demand up 29 percent based purely on weather), pants (up 13 percent), dehumidifiers (up 10 percent) and hot cereal (up 2 percent) benefited, Planalytics said.
Late last month, Costco warned its quarterly profit would miss Wall Street estimates as soaring costs and inflationary pressures ate into its margins.
While the cost of the goods it sells was going up, the No 1 U.S. warehouse club operator said it was delaying passing along price increases to shoppers in order to boost its sales and appeal to cash-strapped consumers.
The “flight to necessities” by the U.S. consumer was on display as BJ’s — which sells food and fuel — posted a 26 percent jump in quarterly profit.