Check out how generic drugs cut into June pharmacy sales at Rite Aid.

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. 

Drugstores, in general, have been facing more competition from grocery stores and discounters like Wal-Mart, which have been offering discounts on a slew of prescription drugs.

Also in the basket:

Adidas eyes 6,300 stores in China by 2010

Blockbuster may do Circuit City deal later (New York Post)

Circuit City faces tough road but Chapter 11 not near

(Photo: Reuters)

Check out a couple more bleak consumer signals.
 
The Conference Board on Tuesday said that U.S. consumer sentiment fell to its lowest level in 16 years. One analyst, Dresdner Kleinwort Securities’ Dana Saporta, said the sentiment gauge has dropped 55 percent from its peak in July 2007, a bigger decline that seen after the Sept. 11 attacks and Hurricane Katrina.
 
So even with consumers getting those tax rebate checks, they might not be in much of a mood to ramp up spending in the face of soaring gasoline and higher food prices.
 
In fact, Citigroup retail analyst Deborah Weinswig lowered her estimates on department stores and several other retailers today.
 
“While (the second and third quarter)  could benefit from the tax stimulus checks, we expect current pressures facing the consumer, including across-the-board inflation, housing and credit concerns, and a deteriorating employment picture, to continue to weigh on consumers for at least the remainder of 2008 into 2009,” she said in a research note. 
 
Consumers are also showing some signs of cutting back at the grocery store.
 
Kroger said on Tuesday that it has seen an increase in sales of its private-label brands. That could be bad news for makers of brand-name foods. Both brand-name and private-label food prices have gone up as manufacturers try to offset soaring commodity costs.
 
The branded food companies have argued that as long as the gap between their price and the price of private-label products does not get out of whack, then consumers will still see the value in the branded products.
 
But if consumers are getting to the point where they just need to save money, even if it means giving up the brands they love, that could squeeze the big food companies.
 
Also in the basket:
 
Hollywood Labor strike: Retailers dread impact of walkout by actors (WWD)
 
Athletic-Wear Firm’s Olympic Dream Fades (Wall Street Journal) 
 
(Photo: Reuters)

Check Out the quarterly profit at Kroger Co.

The largest U.S. grocery chain posted a higher quarterly profit on Tuesday, thanks to its emphasis on lower prices and gasoline discounts – music to its shoppers’ ears and higher sales for itself.

“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.

The price cuts, he said, were helping Kroger’s customers save $1 billion annually, at a time when shoppers deem every last dollar precious, as they face skyrocketing prices for necessities such as gasoline.

Kroger also raised its outlook for the full year, based on the strength of the results from the reported quarter.

Also in the basket:

ConAgra sees higher than expected fourth quarter profit

Dollar Tree recalls 470,000 China-made glue guns

Williams-Sonoma is trimming its catalog mailings (WSJ - subscription needed)

 J.C. Penney Faults Fake Ad on YouTube (WSJ - subscription needed)

(Photo: Reuters)

Check out the quarterly results at Walgreen, one of the largest U.S. drugstore operators.

The company posted a 2 percent increase in quarterly profit, amid a weak U.S. economy and slowing growth in sales of prescription drugs —  in the reported quarter, Zyrtec was switched to over-the-counter status.

And a slower-than-usual flu season — (good for you and me) – wasn’t so good for Walgreen. The company also pointed to the milder flu period for a slowdown in prescription drug sales volume in the quarter.

The company said it is on track to beat its goal of opening 550 new drugstores this year — and perhaps even come to the rescue of cash-strapped shoppers in the process.

“We’re adding neighborhood locations for today’s customer who is searching for value and struggling with high gas prices,” President Greg Wasson said in a statement on Monday.

As of May 31, the company operated 6,727 store locations in 49 states, but will be in all 50 states when it opens its first Alaska stores in 2009.

Also in the basket:

Bunge to buy Corn Products for $4.4 billion

Costco plans Australia foray to challenge duopoly

Busch family member backs ’strong’ Anheuser Busch

Jones Apparel takes stake in Asian partner

(Photo: Reuters)

Check out inflation.
 
That $4-a-gallon gasoline really drives up consumer prices. The Consumer Price Index rose 0.6 percent in May, the largest increase since November. Year-over-year, consumer inflation was up 4.2 percent.
 
The so-called “core” index, which excludes food and energy, rose only 0.2 percent in May and 2.3 percent year-over-year.
 
But most consumers eat, drive and use heat or air conditioning. So soaring prices for energy and rising food prices — up 0.3 percent in May and 5.1 percent year-over-year — cut into what consumers can spend on clothes, home goods and other discretionary items. 
 
It also could mute the impact of the tax rebates consumers are receiving.
 
“Consumers are spending more to buy food and energy,” Lindsey Piegza, market analyst at FTN Financial, said. “The tax rebate is just offering them a cushion. They are not buying wide-screen televisions.”
 
Also in the basket:
 
Anheuser in talks with Grupo Modelo (WSJ, subscription required)
 
Battling a bumpy road” economic downturn (WWD)

Higher price for Anheuser not a sure thing

Budweiser could pay price for being “America’s Beer”

 (Photo: Reuters)

Upon entering Wal-Mart Stores annual shareholder meeting, an observer might be forgiven for thinking they had just walked into a lively, national political convention.

Patriotic red and blue buntings covered the 16,000-seat arena at the University of Arkansas, the music hardly stopped and the crowd was treated to a constrant stream of well-tuned public relations bullet points — in this case, sustainability, community relations and saving shoppers money.

Associates — the word the world’s largest retailer uses to describe its 2 million employees – whooped and hollered at every chance, especially whenever an executive uttered the word “proud.”

(An associate later told Reuters that staff had been told to react whenever they heard that word — even when it meant interrupting the speaker, presumably.)

“We’re just having fun!” said Mike Miller of Scott Depot, West Virginia, whose group of fellow Sam’s Club associates donned funny hats with stars and stripes, reminiscent of a patriotic Dr. Seuss character.

Large balloons emblazoned with the company slogan “Save People Money So They Can Live Better” bounced back and forth between the bleachers, and enthusiastic associates waved flags.

Even Master of Ceremonies Queen Latifah seemed moved by the euphoria. After a number in which singers sang “One World” as representatives from different countries took to the stage in a mini-U.N, the performer beamed and sighed: “One world — a Wal-Mart world.”

The associates’ enthusiasm waned somewhat during presentations by the companies’ financial mucky-mucks — shares up 26 percent since January, ho hum, etc — but revived somewhat with a performance by Dreamgirls’ Jennifer Hudson (picture at right).

She sang, fittingly, “And I Am Telling You I Am Not Going.”

Just like Wal-Mart. – Reporting by Alexandria Sage

(Reuters photos)

Check out the loss of more retail jobs. 

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)

 (Photos: Reuters)

Check Out lower quarterly results at Neiman Marcus — the latest in a string of results proving that high-end stores are running into the same trouble as their lower-tier peers.  

The company, known for its namesake and Bergdorf Goodman stores, said on Wednesday that quarterly sales fell almost 1 percent to $1.06 billion, while net profit fell nearly 7 percent to $55.4 million.

Less than a month ago, upscale department store operator Nordstrom reported lower profit and sales, citing a challenging retail environment — a sign that luxury retail, considered more insulated from economic volatility, may not be fully immune, as rich but increasingly wary consumers witness skyrocketing gasoline and food prices, and plummeting homes values.

Even Saks reported a lower-than-expected profit last month, as markdowns hurt gross margins.

Also in the basket:

Smucker to buy Folgers from P&G for $3 billion

Williams-Sonoma posts lower quarterly profit

Corporate Express to open books for Staples bid: paper

U.S. retailers expected to post scant May sales

More U.S. retailers victims of organized crime - survey

Kingfisher aims to revive B&Q in tough markets

(Photo: Reuters)

(Note: Neiman Marcus results links to release on Business Wire)

Check out Staples’ higher offer for Corporate Express.

The U.S. office supplies retailer offered to buy the Dutch company for $2.65 billion – up from its previous unsolicited offer of about $2.34 billion — even as Corporate Express is trying to fight off the takeover bid with a bid of its own.

The Dutch company said in May that it would buy French rival Lyreco for about $2.2 billion, creating the largest business-to-business distributor of office supplies in Europe, North America and Asia Pacific.

On Tuesday, Staples raised its offer, contingent on Corporate Express shareholders rejecting the Lyreco bid. Corporate Express said it would carefully review Staples’ offer and respond in due course.

Analysts think the U.S. retailer’s bid might bear fruit this time around, although Corporate Express could still try to delay it.

Also in the basket:

Anheuser-Busch hires financial advisers

U.S. chain store sales fall 0.8 percent last week - ICSC

Walmart.com offers free classified ads

(Photo: Reuters)

Check out how Tiffany sparkles overseas.
 
Forget the United States (where Tiffany does not expect sales to improve until later this year). They are still buying baubles in Europe.
 
Sales in Europe rose 30 percent in the first quarter. And that was on a CONSTANT CURRENCY basis. No help from the weak dollar in that number. The company added four more stores, which helped, as did the 12 percent increase in same store sales.
 
Asia also saw a 10 percent increase in sales on a constant currency basis.
 
The U.S. consumer may be under pressure. But apparently there are still sales and profits to be mined overseas.
 
Also in the basket:
 
April personal spending up, flat after inflation 
 
J Crew cuts year earnings outlook, shares drop 15 pct

NexCen cuts 25 pct of New York workforce, mulls options 

Coach’s gateway to growth in China (WWD)

(Photo: Reuters)