Retailers, consumers and prices
Check out the quarterly results at Wal-Mart.
The retail giant posted a flat profit in line with Wall Street’s expectations, but it gained market share in the recession as consumers sought to take advantage of the company’s low prices on necessities.
Wal-Mart Chief Executive Mike Duke said the company remains cautiously optimistic about the timetable for the economic recovery, while Vice Chairman Eduardo Castro-Wright said a large part of its U.S. growth was coming from new customers.
Others have accepted the new reality of thrifty shoppers as well, as upscale, natural grocer Whole Foods blew past analysts’ profit expectations thanks partly to cost controls and lower-priced fare. Department store operator Kohl’s, which typically has lower-priced items than other chains and uses discounts to lure shoppers, also just topped Wall Street’s profit expectations.
Hopes the economy will soon emerge from recession were dented this week by a government report that showed sales at U.S. retailers fell for a second straight month in April.
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.
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.
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.
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.
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.
(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.
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.
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.