Shop Talk

Check Out Line: Surprise, surprise, a discount retailer is doing well

Check out the strong quarterly profit at discount retailer Dollar General.

The company, which prices most of its merchandise below $10, posted a stronger-than-expected profit thanks to bargain-seeking consumers who spent more per visit. Company executives talked of building sales momentum during the quarter and sales results in the current three-month period were encouraging.

As a result, Dollar General, which has received a boost from high U.S. unemployment rates, raised its full-year earnings forecast.

U.S. consumer spending rose in July at the strongest pace in four months, offering hope that consumers will be able to keep contributing to a modest economic recovery.

Meanwhile, overseas the message was mixed as Carrefour, Europe’s top retailer, said the summer sales trend was mixed in Europe but demand was holding up in emerging markets. Company executives acknowledged sales trends in Europe in August were slightly disappointing after a satisfactory July. 

French luxury goods group Hermes posted a 52-percent rise in first-half operating profit, boosted by leather goods and slightly raised its full-year financial targets, while in Australia retail sales were surprisingly strong in July, suggesting the economy there looks solid.

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Check Out Line: Value is still in

Check out the consumer thriftiness still reflected in corporate announcements.

McDonald’s, the world’s largest hamburger chain, posted a higher quarterly profit that beat analysts’ expectations.

It also said April same-store sales were trending at least as strong or better than first-quarter sales in every part of the world.

The fast food giant has benefited from consumers cutting back amid the recession as they look for lower-priced fare, including the company’s Dollar Menu items.

McDonald’s Chief Executive Jim Skinner said last week that the financial climate was improving, citing “some thawing.” 

The world’s second biggest retailer, Carrefour, wants in on that action. The French company unveiled its own low-cost brand to compete for increasingly cost-conscious customers. The products, mostly food, will be launched in France starting at the end of May.

On the other end of the spectrum, Kimberly-Clark, the maker of Kleenex tissues and Huggies diapers, reported a lower quarterly profit that was pressured by weaker demand for higher-end products. 

Check Out Line: Circuit City starting to connect?

Check out the tiny profit at Circuit City.   The electronics retailer surprised investors by not posting a loss in the fourth quarter. The company had a $4.85 million profit, even though sales fell 7.7 percent.   Faced with a push by investor Mark Wattles to oust chief executive Philip Schoonover  (pictured), the company is trying to simplify store operating procedures and sell more add-on services like home theater installations and warranties.   But the company is still facing what it calls the worst macroeconomic environment in years. And now that it has completed a store overhaul, the company needs to show it can improve customer service before Circuit City can show some juice.   Also in the basket:   New Nestle CEO faces billionaire’s dilemma   Retailers’ costs rise faster than prices-Carrefour   Signet year profit down, outlook tough   Candid Camera: Trove of videos vexes Wal-Mart (WSJ, subscription required)

 (Photo: Reuters)