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.

He’s not alone.

Big boxers such as Target and BJ’s Wholesale reported steeper than expected drops in same-store sales, suggesting that the recession may have depended further than the luxury market.

Speaking of which, upscale department stores, such as Nordstrom and Neiman Marcus, saw sales slip while Macy’s fared slightly better than analysts had expected.  Abercrombie & Fitch, known for their strong hold on the younger markets saw same-store sales slide 28 percent, worse than the decline analysts had expected.  And teen/tween sensation Hot Topic, saw same-store sales fall 6.4 percent which were, again, steeper than analysts had predicted.

There were some bright spots, though: if you ignore gasoline sales, Costco Wholesale saw same-store sales rise one percent, and BJ’s Wholesale rose 4 percent.  And for apparel, Buckle Inc’s more casual teen market shopped the company’s same-store sales up 13.4 percent.

Even TJX, owner of TJ Maxx and Marshall’s among others, saw higher customer traffic translate into company gains even in the face of fluctuating international exchange rates.

With all of that in mind, it’s important to note that Wal-Mart ceased to report monthly sales as of April, giving some investors headaches, and others a chance to focus on smaller company’s sales data.

Also in the basket:

Signet profit up; Harry Winston beats view

L’Oreal sees 2009 market flat to slightly growing

(Reuters photo)

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.

September also was the 11th wettest since 1961, driven by six tropical storms, including Hurricane Ike, the consulting firm said. Some cities, such as Chicago, St. Louis and Wichita, Kansas, had their wettest Septembers ever recorded, while Houston, Kansas City and Little Rock, Arkansas, had months that still ranked among the the 10 wettest.

“The tropical systems that pummeled both the Gulf and Atlantic coasts became the real weather story of the month. Despite challenging economic times, businesses that supply pre- and post-hurricane staples such as gas, ice, water, non-refrigerated foods, generators, tarps, plywood, and chainsaws experienced brisk sales in the affected areas, driven by need-based purchases” Fred Fox, Planalytics CEO Fred Fox said in a statement. “In addition, foot traffic into grocery stores, restaurants, and hotels was robust along evacuation routes.”

The weather was a favorable factor for 78 percent of the publicly traded companies tracked by Planalytics, with the biggest positive comparisons seen at BJ’s Wholesale Club (store traffic up 24 percent), Family Dollar Stores (up 22 percent), Shoe Carnival (up 16 percent) and Target (up 13 percent).

More broadly, the index for retailers that sell a broad line of merchandise was up 14 percent based solely on weather, and it rose 8 percent for retailers that sell mostly apparel, Planalytics said. On the down side, were indices for home centers (off 4 percent) and restaurants (off 6 percent). 

Also in the basket:

Global Fears of a Recession Grow Stronger (New York Times)

Home Depot Learns to go Local (Wall Street Journal)

Safeway third-quarter profit rises

(Photo/Reuters)

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.

“It is times like this, painful as it may be, that holding off on price-increasing certain key items, by even a few weeks, we believe helps and strengthens our business for the longer term,” Costco Chief Financial Officer Richard Galanti said at the time.

BJ’s Wholesale, the No 3 U.S. warehouse club operator, said on Wednesday that it is  keeping an eye on what its competitors are doing when it comes to marking up their prices.

“Inflation is a huge challenge for all retailers as we try to manage pricing in such a way that we recoup our costs while continuing to deliver value,” said BJ’s CEO Herb Zarkin on a call with analysts. “Our overall goal is to maintain our margin rate but it is quite a balancing act.”

But one thing is clear — BJ’s does not intend to undermine its profits by selling goods below cost.

“No rational retailer can accept these kind of increases and expect to make a profit. It’s just not going to work,” he said.

Prices for flour, rice, cooking oils, paper towels, household cleaners, and health care items have soared this year, driven higher the cost increases in energy, raw materials, transportation and labor, BJ’s said.

But general merchandise — which includes jewelry, electronics, tires, books, furniture and toys —  is getting in on the act as well.

“Overall, we are experiencing inflation in most of the general merchandise categories that come from overseas and those items are just hitting the floor,” said President Laura Sen.

What might that mean heading into the holidays for retailers that sell general merchandise, which tends to be more discretionary in nature and the type of purchases that consumers are overlooking these days?

“The promotional environment is going to be brutal,” Sen said.

(Photos: Reuters)

Check out a busy day for retailers as earnings — or losses – poured in from BJ’s Wholesale, Talbots, Charming Shoppes and Brown Shoe. 

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.

But for businesses steeped in discrection, the quarter was no cakewalk.  Talbots posted sharply lower quarterly net profit; Charming Shoppes reported a quarterly loss and Brown Shoe posted a lower first-quarter profit.

With the U.S. environment a tough one to navigate, retailers are looking to add or subtract businesses to put themselves in a better position. 

Spectrum Brands announced plans to sell its global pet supply business to a subsidiary of Salton Inc; the Wall Street Journal reported that Barnes and Noble Inc is looking into a possible bid for competitor Borders Group; and Dutch office supplier Corporate Express is seeking to buy French rival Lyreco for 1.4 billion euros ($2.2 billion), as it fends off a hostile bid from U.S. rival Staples.

(Photos: Reuters)