Shop Talk

Retailers, consumers and prices

Check Out Line: It’s a bad idea to raise the turkey you sell

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turkey.jpgCheck out why Heinz didn’t suffer like Hormel did in the past quarter.

H.J. Heinz came in with a quarterly profit that beat Wall Street expectations, helped by price increases and new product sales, while Jennie-O turkey seller Hormel Foods saw its earnings dip.

Food companies have found it tough going as commodity costs shoot up, but Hormel was particularly hard hit. The reason? It raises the turkeys that it eventually sells — meaning spiking corn feed costs hurt its results. 

Also in food news –  Burger King reported quarterly numbers that easily beat analysts’ expectations, as consumers headed to its restaurants for a burger or two. It also issued a fiscal 2009 outlook within Wall Street’s expectations.

On the apparel end, Children’s Place posted a small quarterly profit, helped by summer clothing sales and cost cuts. Still, the kids’ apparel retailer said it expects further pressure on consumer spending due to the weak U.S. economy.

Check Out Line: Battling booksellers

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books.jpgCheck out those coupons from Borders.
 
In a new report, J.P. Morgan analyst Charles Grom begins tracking the promotional cadence at book sellers. Grom said he is keeping a close eye on discounts and promotions as the price war among book retailers extends into the first half of 2008 and Borders prepares to launch its own e-commerce site.
 
 
The view so far?  “Borders is still clearly focused on driving the top line, perhaps at the expense of margins, as it remains the most promotional retailer in bookselling today,” Grom wrote.
 
Borders averages about two coupons per week, with spikes in broad-based discounts during the holiday, quarter-end and month-end periods, Grom said. The company put more promotional focus on specific categories in February and March.
 
Barnes & Noble’s rewards program, unlike Borders’, is subscription based, with members paying $25 and receiving discounts,
 
“As such, Barnes & Noble’s direct marketing campaign serves more as a reminder of discounts rather than a limited time offer,” Grom said. But he added that he’s seen some special offers from Barnes over the past several weeks, including a 40-percent discount on kids’ books.
 
Grom sees the pace of discounts at Borders continuing in the first half as it ramps up e-commerce sales and faces macroeconomic headwinds.
 
Also in the basket:
 
The latest in fashion: pink slips (NYTimes)
 
Wendy’s reports lower quarterly same-store sales
 
Constellation Brands profit tops view

 (Photo: Reuters)

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