Check out more bad news in the retail sector.

U.S. retail sales slumped for the second straight month, coming in weaker than analysts had expected due to sluggish gasoline and electronic goods purchases. Meanwhile, U.S. foreclosure activity in April jumped to a record high, further pressuring home prices and making a recovery tougher.

Fashion company Liz Claiborne posted a deeper-than-expected quarterly loss as retail sales remained weak in the recession. The owner of Juicy Couture, Kate Spade, Lucky Brand and Mexx labels is cutting jobs, scaling back expansion and offering more lower priced items to combat the slowdown.

Meanwhile, General Growth chose a company to provide its bankruptcy financing. The No. 2 U.S. mall owner filed for bankruptcy in April when it could not refinance its maturing loans due to tightness in the credit markets.

Even overseas, retailers in emerging economies are opening special shops for the poor as the recession squeezes the fledgling middle classes.

Some companies are benefiting from the consumer cutbacks, however, as General Mills, a maker of cereal, yogurt and soup, said it expects consumers who have been eating more meals at home to keep doing it even after the economy recovers.

And consumers obviously love their soft drinks as Dr Pepper Snapple reported a higher-than-expected quarterly profit on demand for value-priced drinks.

Also in the basket:

AnnTaylor sees 1st-qtr better than Wall St view

Macy’s posts wider quarterly net loss

When ‘Local’ Makes It Big (New York Times)

Is ‘Made in the U.S.A.’ Enough? (WWD, subscription required)

(Reuters photo)

Check out the list of things consumers are still spending money on during the recession.

Auto repairs, home repairs and going to the dentist are among the seven areas consumers are still spending their money even as consumers worry about their jobs, according to Sageworks.

Auto repair shops’ sales grew an average of 2.4 percent over the last 12 months, compared with a 9.7 percent decline at car dealerships, Sageworks said. Meanwhile building equipment contractors, such as electricians and plumbing and heating contractors, saw sales rise 4.6 percent in the last year, while home builders’ sales fell more than 5 percent in the same period.

Grocery stores were more popular than eating out as the former had average sales growth of 6.7 percent over the last 12 months, compared with growth of 3.9 percent at sit-down restaurants, Sageworks said.

Others areas of growth:

* Trade and technical schools saw their sales grow 7.8 percent in the last 23 months, compared with growth of 5.9 percent in 2007.

* The average dentist office experienced sales growth of 6.9 percent in the last 12 months, up from 4.9 percent growth in 2007.

* Hair salons, barber shops, nail salons and skin-care providers saw an average of 4.5 percent sales growth in the last 12 months.

* Accounting firms saw average revenue grow 10.2 percent in the last 12 months, ranking the industry among the 20 fastest growing in the country.

Also in the basket:

Ackman says Target proxy not about him

Warnaco profit tops Wall Street view

Target matches competitors’ prices in pilot program

Sara Lee names interim CFO

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(Reuters Photo)

Check Out Americans’ dwindling faith in supermarket food.

A higher percentage of people doubted the safety of supermarket food in 2008 compared to 2004, even as a larger, but steadier, number continue to have qualms about what they eat at restaurants, according to a study by market research firm NPD Group.

The study’s results come as U.S. consumers cut back on restaurant visits and head to stores to buy items toward cooking more meals at homes to save money.

As supermarkets offer more prepared meals to cater to such cash-strapped consumers, they also face more questions about how the food was handled until it was served up, said Harry Balzer, chief industry analyst at NPD.

In 2008, 63 percent of Americans felt that supermarket foods were safe — same as 2007, but a 5 percent drop from 2004.  In contrast, while only 48 percent of those surveyed in 2008 agreed that restaurant fare was safe, that was only 1 percent below 2004.

“I believe that consumers’ slipping confidence in the safety of supermarket food is less about food safety and more about supermarkets expanding food service operations and offering more prepared, ready-to-eat foods,” Balzer said.

Consumers’ top worries – Salmonella and E. Coli. Eighty percent of the roughly 13,000 adults surveyed put those two as their top safety concerns in 2008.

Also in the basket:

Russia luxury down with a bump in 2009

Many smaller cities dodge credit crunch in consumer lending - WSJ

Esprit returns to California - WWD (subscription required)

(Photo/Reuters)

Check out the latest, somewhat confusing, figures on consumer spending.

The Commerce Department said U.S. consumer spending increased 0.2 percent in February, in line with market expectations, after rising 1 percent in January. That makes two straight months of gains.

However, after adjusting for inflation, consumer spending in February fell 0.2 percent.

The data also showed that incomes fell by 0.2 percent after January’s revised 0.2 percent rise. Analysts polled by Reuters had forecast incomes to fall 0.1 percent.

So is this good news or bad news about the state of the consumer?

Here is what Robert Blake, senior currency strategist at State Street Global Markets, had to say:

“There were some revisions to the prior month. In real terms, January was now even stronger than we first thought, but the February number in real terms was actually weaker. Net-net, we are looking at possible spending in the first quarter in real terms that was positive, possibly, a 1 percent gain…which would signal that the consumer has gone a long way to recover from the absolute calamity in the second half of last year when consumer spending dropped 4 percent at an annual rate. So it was a positive report.”

And here is a somewhat different take from David Sloan, an economist with 4Cast Ltd:

“Personal spending was reasonably strong with upward revisions but that was to be expected given the retail sales data we have already seen. The fact that personal spending has outpaced income in the last two months raises the question whether it can be sustained. I would not say we have seen a bottom, the economy is probably not declining as quickly as it was, but I think the economy is still declining. I think consumer spending could manage a marginal increase in the first quarter but I don’t think we can be confident there will be another increase in the second quarter — there was exaggerated weakness in the fourth quarter and we have seen a bit of a correction in the first quarter.”  

Also in the basket:

Finish Line quarterly profit tops Street view

J.C. Penney Seeks Recessionista Brides with OurWeddingDay.com  (The Dallas Morning News)

A Downturn Wraps a City in Hesitance (nytimes.com)

(Photo: Reuters)

Check out the benefit of lower fuel prices on consumer spending.

Wal-Mart Stores continues to stand out as consumers go for bargains in the recession. The top retailer led other chains with a better-than-expected 5.1 percent rise in sales at stores open at least a year in February, and announced it was boosting its dividend.

Relief from high gasoline prices is giving consumers more money to spend on discretionary items, Wal-Mart said.

Other retailers weren’t so lucky, with apparel and department store chains posting some of the biggest sales drops for February. While lower gas prices appear to be giving lower-end consumers a break, weak financial markets are still leading wealthier shoppers to pull back, hurting Saks and Nordstrom.

Also in the basket:

Mortgage delinquencies still rising

Blockbuster same-store sales up

Gymboree has bleak outlook

(Photo: Reuters)

Check out leprechauns and the rest of us spending less green this year.  According to the National Retail Federation’s St. Patrick’s Day Consumer Intentions and Actions Survey, people celebrating the March 17 holiday plan to spend an average of $32.80, down from an average of $35.04 in 2008.  Still, that spending on decorations, food, drinks and clothing is expected to total $3.29 billion.
    
Who will spend the most?  According to the report, the 25-34 year-old crowd is expected to spend an average $39.42 per person.  Those 18-24 years of age are cutting back by nearly 15 percent, expecting to spend $36.05 each this year, down from $42.20 last year.

“Increased concern about the economy among young adults has forced many of them to pull back on discretionary spending,” said NRF President and CEO Tracy Mullin.

Still, many plan to party.  More than 66 percent of those 18-24 said they plan to celebrate St. Patrick’s Day, compared with just 49.1 percent of the 25-34 crowd.

What’s the most popular way to celebrate?  Wearing a bit o’ green.  Nearly 82 percent of those surveyed said they would don the color.  Maybe some of those revelers will be out in Chicago, where the river will be dyed green.  Really.  Watch it here.
 
The survey of 8,426 consumers 18 and older was conducted by BIGresearch from Feb. 3-10 and has a margin of error of plus or minus 1 percent. 
 
Also in the basket:
 
U.S. chain store sales fell last week
 
February auto sales seen hovering at 27-year lows
 
Walgreen’s February same-store sales fall 1.9 percent

(Reuters photo of the Chicago River being dyed in 2007)

(Adds comments from Friday afternoon)

Shoppers thronged stores to pick up discounted flat-screen TVs, electronics and clothes as panicked retailers pull out the stops in what is traditionally the biggest shopping weekend in the United States. Reuters reporters are out in force, gauging consumer sentiment. Here are our favorite quotes so far:

“I’m not going for the Santa Claus award,” said college student Corey Talley, 24, who was shopping at the Mall at Prince George’s in Hyattsville, Maryland, and plans to spend less this year because he bought a four-unit apartment building in a low-income neighborhood in November 2007 and had only one tenant.

Nursing students Williamena Davids, 23, and Vivian Teah, 25, arrived at the mall at 5:12 a.m.
“I thought there was going to be some sales. No luck,” said Davids, who had been working for Geico as a customer service representative but lost her job this year.
Teah said her budget was also pinched: “I have a big family. I have to make sure that everybody gets something. It’s fun (to go shopping). We just wish we had money.”

“I will not go near stores on Black Friday. People are crazy,” said Lori Kirby, who was in Kmart near Manhattan’s Penn Station on Thursday to pick out a last-minute holiday outfit for her aunt. “Unless you get there first, it’s like running with the bulls or something.”

“The recession is kicking in,” said Tammy Williams, 36, as she waited before dawn to enter a Kohl’s in West Paterson, New Jersey. “I’m just looking for a bargain, anything to save a couple of dollars. I’ll save the rest for food shopping.”

“I think everybody is waiting for deeper discounts. I certainly am,” said Cheri Tenfel, a nurse, who was shopping at a Best Buy in Racine, Wisconsin.

“I’m horribly worried about the economy. It’s going to take a long time to recover, I think,” said Carri Bissen, who was shopping at a Racine mall. She said her husband is out of work and that she’s only getting gifts for their children this year. “My kids are getting more clothes and shoes rather than the fun stuff they’d normally get.”

Alice Hughes, 45, was out shopping in Columbia, Maryland, and said she was not impressed with Black Friday prices and that she expects the discounts to deepen as Christmas approaches: “They tell you they’re marking down but they’re really not.”

“I just want to buy everything on sale today,” said Marjorie Daube, 59, of New York, who is expecting her husband’s bonus to be smaller this year. “We are cutting down, buying necessities and things on sale for my daughters … Shopping was never fun at all, and it’s less fun now.”

“It’s almost like a guilty feeling when I hand over my money,” said Janet Duran, who was visiting from Scotland and shopping at an Old Navy store in midtown Manhattan. “I think: Should I be doing it?”

Jen O’Neil, 18, and her friend Lauren Chin, 17, arrived at the Roosevelt Field Mall in Long Island, New York, at about 9:30 a.m. on Black Friday and were loaded down with bags by noon. About half of their purchases were for themselves and the other half were holiday gifts. “I got less (spending money) from my parents this year, but I put in my own money,” Chin said.

Mandeep Singh, 14, was also at the Roosevelt Field Mall, where he bought a jacket and jeans. “As a kid I don’t have the much (money) in the first place, and this year it goes a lot further,” Singh said.

Marisol Quinones came from the Bronx to shop at the Atlantic Center Mall in downtown Brooklyn at 4:30 in the morning and didn’t find the deep discounts she expected. 
 
“It was alright … I thought it would be cheaper.” Quinones and her friends all said they planned to spend less on holiday gifts than last year. “Food is going up, everything’s going up, but money’s still the same. Things (prices) are so high, so being with family is better than spending all that money.”

(Photos\Reuters; Reporting by Aarthi Sivaraman, Diane Bartz, Nicole Maestri, Michelle Nichols, Karen Jacobs, Ellen Wulfhorst, Alexandria Sage, Ilaina Jonas and Martinne Geller)

This Thanksgiving shopping weekend,  the weather may be one element not giving retailers a headache.

Retailers are geared up for the crucial three-day Thanksgiving shopping weekend, and many have already slashed prices to kick-start sales and rouse wary shoppers into spending mode.

While this holiday sales season could be the worst in years as declining home values, higher food prices, a credit crunch, and rising unemployment curtail consumer spending, weather tracking firm Planalytics has some good news for retailers — it predicts that most major population centers in North America should experience favorable weather conditions during the Thanksgiving weekend. 

In addition, the current cold weather in the Midwest and East Coast have put consumers into a holiday mindset earlier than last year, Planalytics said, boosting demand for seasonal items. 

“While, for some areas, snow flurries and precipitation events are likely over the weekend, they will reinforce to consumers that the holiday season has arrived,” Planalytics stated.

There could be some ”traffic limiting” events in the Midwest and Great Lakes as weather systems resulting in a wintry mix could keep people close to home, the firm said. But it said the Southeast should experience seasonal conditions, and the eastern half of North America should anticipate strong demand for seasonal items like scarves, hats, gloves, sweaters, skiwear, soups, hot beverages, and lip care. 

Planalytics also said the overall trend in the West supports favorable demand for seasonal apparel and consumables, such as food and household cleaning products.

Finally, a bright spot for retailers ahead of the Thanksgiving weekend! 

(Photo/Reuters)

How's this for a merry little Christmas?

Before the U.S. holiday shopping season even begins, Morgan Stanley's chief U.S. economist has given up on consumer spending -- not only through Christmas '08 but all the way until next summer at the earliest.

"As we see it, the current collapse in consumer spending likely will be the most severe and longest in the postwar (World War Two) period," economist Richard Berner wrote in a note to clients. "The recovery in consumer spending likely will be moderate as consumers embark on a long period of rebuilding thrift.

Why so grim? Well, between the 1.2 million jobs lost since the beginning of the year and the downdraft in the housing and stock markets, income is taking a hit and household wealth is down about $7 trillion. Yes, trillion with a 'T.' Oh yeah, and there's that credit crunch.

Berner calls this the "perfect consumer storm" and says it will rage until mid-2009.

Now that you're thoroughly depressed, we should mention the silver lining. The drop in gasoline prices to $2.45 per gallon from $4 represents $225 billion in consumers' pockets. Add in another round of fiscal stimulus and it should limit -- though not offset -- the other strains on the system.

"Done right, and coupled with other policies to mitigate the credit crunch and foreclosures, these steps should promote a modest recovery beginning in 2010," Berner said.

Check out quarterly results being dished up with a big side of caution.

Polo Ralph Lauren reported higher second quarter profit, citing increased sales and a lower tax rate.

Polo, whose brands include Polo, Chaps and Club Monaco, affirmed its earnings outlook for fiscal 2009, but it tempered its full-year sales forecast. It now expects a low single-digit increase in 2009 revenue, instead of a low-to-mid single digit increase as earlier expected.

Meanwhile, Maidenform Brands posted better-than-expected third-quarter results as it sold more of its undergarments to department stores and national retail chains.

But as customers like Boscov’s and Mervyns go out of business, it cut its 2008 earnings per share forecast to $1.17 to $1.21 from a prior outlook of $1.22 to $1.30. Maidenform also expects full year net sales to be flat to down 1 percent, compared with a previous view for net sales to be down 1 percent to up 1 percent.

K-Swiss posted better-than-expected quarterly results, helped by the acquisition of Palladium SAS, and raised its 2008 outlook. But the company, which sells its products under the K-Swiss and Royal Elastics brands in the United States and Europe, said the uncertainty caused by the credit markets disruption and likely recession present substantial challenges.

“Excluding Palladium, our financial results and backlog confirm the deteriorating global outlook for K-Swiss in 2008 and 2009,” according to Chairman Steven Nichols.

The results come a day after online jewelry retailer Blue Nile posted lower quarterly profit, as higher diamond prices and tightened credit hurt sales.  It also withdrew a full-year outlook, citing uncertainty over consumer spending, and it expects a “very challenging” holiday season.

“The extensive weakening of the U.S. economy and tight credit conditions faced by consumers hampered our growth,” said Blue Nile Chief Executive Diane Irvine. “The credit freeze has impacted purchases of high-ticket items, as traditional avenues of financing have now closed.”

Also in the basket:

Consumer spending hit by crisis: MasterCard (Reuters)

Private sector cuts 157,000 jobs in Oct (Reuters)

Papa John’s net profit rises but below Street (Reuters)

McQueen Kicks Off Target Design Effort (WWD, subscription required)

(Photo: Reuters)