Retailers, consumers and prices
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.
Check out the Whirlpool of woe.
Five thousand. That’s the number of jobs Whirlpool plans to cut by the end of next year as it faces falling sales in North America and a potential global recession.
Appliance makers have already been hammered by the U.S. housing collapse. Now the credit crunch is likely to keep demand down, the world’s largest appliance maker said.
“The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy,” Whirlpool Chief Executive Jeff Fettig (pictured left) said in a statement.
Some of the job cuts had already been announced. Others were new. They all add to a slew of job cuts announced by corporate America in recent weeks.
That creates a spiral of people not being able to buy the goods the manufacturers make, which could cause manufacturers to cut more jobs as the economy keeps swirling down the drain.
Also in the basket:
Sam’s Club opening new store called Mas Club
Retailers slash Blu-ray player prices (WSJ)
Check Out Coca-Cola Enterprises feeling the pinch as cash-strapped consumers buy fewer soft drinks.
The world’s largest Coca-Cola bottler cut its full-year outlook on Thursday, even though third-quarter results met Wall Street’s view.
In one of the more chilling consumer spending anecdotes thus far, a Wal-Mart executive told a lunch crowd in Los Angeles that more of its customers are waiting to have paychecks or government assistance checks in hand before they buy necessities like baby formula.
“We have started to see some very disturbing behavior,” said Eduardo Castro-Wright, president and chief executive of Wal-Mart’s U.S. operations.
Check out retailers’ profits and forecasts.
A discerning shopper, or investor for that matter, could browse the aisles of the retail financial world and come away with very different messages on the strength of the U.S. economy depending on which company’s results they chose.
On the plus side, upscale jeweler Tiffany posted a better-than-expected profit and raised its full-year outlook, although that was driven by strong sales overseas. Tiffany expects U.S. same-store sales to return to growth in the fourth quarter. Shoe and hat retailer Genesco, and home-appliance and consumer-electronics retailer Conn’s also topped Wall Street’s views and boosted their forecasts.
Second-quarter profit at cosmetics firm Avon Products Inc more than doubled, as demand in Latin America and other overseas markets more than made up for sagging U. S. results.
The No. 3 U.S. drugstore chain said its pharmacy same-store sales fell 0.5 percent, as generic drugs were introduced and allergy medicine Zyrtec was switched to over-the-counter status.
Generic drug rollouts hurt rival Walgreen as well. That company said a day earlier those drugs cut into its pharmacy same-store sales by 2.1 percentage points.
“Kroger continues to help customers stretch their budgets in a number of ways, including lower prices and our expanded generic drug and gas discount programs,” chief executive David Dillon said in a statement.
Another 27,000 retail jobs disappeared in May, according to the U.S. government’s monthly employment report. That makes 152,000 retail jobs eliminated since the beginning of the year.
Overall, nonfarm payrolls fell by 49,000. But even more worrisome for the economy and for retailers could be the jump in the unemployment rate to 5.5 percent. That half-point jump was the largest such move in 22 years and brought the unemployment rate to its highest level in 3-1/2 years.
Retailer’s May sales reports yesterday were mostly better than expected, causing some analysts to think they could signal the beginning of a consumer turnaround.
But others said it just showed a blip in spending that was caused by the tax rebate checks consumers have begun to receive.
Economic concerns could still linger after all that stimulus money is gone, they say, and things could get worse if consumers, already hit by $4-a-gallon gasoline, soaring food prices and falling home values really start to worry about their jobs.
Wonder how a half-point jump in the unemployment number plays into that?
Meanwhile, to take your mind of the jobs report, there’s always the company pep rally that masquerades as the Wal-Mart annual meeting. The world’s-largest retailer flies in employees from all around the world to help pack the basketball arena at the University of Arkansas, where stars entertain the crowd (this year’s acts include Miley Cyrus), everybody does the Wal-Mart cheer, and, oh yeah, shareholders get to ask questions.
Also in the basket:
New Wal-Mart director may herald changing of the guard (Wall Street Journal, subscription required)
Target grows makeup artist brands, adds testers (WWD)