Retailers, consumers and prices
Today it is Family Dollar and Costco — both being places where people usually shop to save money.
Family Dollar saw sales rise in the quarter, though sales at stores open at least a year were less than expected as the company has been reorganizing its stores to stock more food and other items that shoppers want as they stick to necessities.
Costco sales fell and so did its profits, in part due to a stronger dollar, higher labor costs and also because of the weak economy.
But its earnings still beat Wall Street’s expectations and Costco’s stock rose in the morning.
Thursday’s sales reports showed that some consumers have started to buy their little luxuries again, a trend retail industry experts say is crucial for sales to rebound this fall and winter.
Michael Koskuba, Portfolio Manager for Victory Capital Management‘s Victory Large Gap Growth Fund, recommended that investors look into discount names with a discretionary bent, such as Target, which he owns in his fund.
Check out the ten largest U.S. retailers.
The National Retail Federation’s STORES magazine is out with its annual ranking of the top 100 retailers.
The list shows that U.S. consumers have been focused on bargains and basic necessities, such as food and medicine. Wal-Mart tops the lineup, followed by Kroger and Costco. Home Depot fell from No. 2 in 2007 to the fourth spot in 2008 as many shoppers decided to cut back on costly home-improvement projects.
Check out the latest sales reports, which show that consumers are still cutting back on discretionary spending as they shift to discounters for the basics. Granted, that’s not exactly news anymore, but some of this morning’s sales tell us that even the discounters are starting to feel the heat.
“Sales for the month of May were somewhat below our expectations,” chief executive officer of Target, Greg Steinhafel, said in a statement.
Check out mixed news from discount retailers.Warehouse clubs turned in a diverging earnings performance on Wednesday but overall results still showed the strength of this business model as consumers search for bargains.No. 1 U.S. warehouse club operator Costco Wholesale reported a lower profit as non-food sales weakened, but smaller rival BJ’s Wholesale eked out an earnings gain.As both retailers look to preserve and grow their business, that could bode even better for cost-conscious customers.Costco has said it will cut prices to keep shoppers, while BJ’s said one of its top priorities this year is to gain market share.Close-out chain Big Lots also posted profit that topped Wall Street forecasts – and investors eagerly snapped up its shares.Also in the basket:Liz Claiborne outlook weak More mortgage borrowers are ‘underwater’Kindle access from iPhone(Photo: Reuters)
Both food makers cut their profit forecasts for the current year, citing the pain they expect from the stronger U.S. dollar decreasing the value of sales from international markets.
How quickly thing change, especially in the world of electronics.
This year, as TV makers confront excess supply and shoppers show a reluctance to splurge on big-ticket items, Costco is selling bundles of two flat screen TVs, pricing two for basically the price of one.
Check out the basically flat profits at Costco.
Well, at least they are not falling, like many other retailers. But one of the reasons is something that is kind of hard to emulate at, say a Neiman Marcus or J Crew — selling gasoline.
Many of Costco’s warehouse clubs sell gas and the way the company operates that business gives it an advantage when fuel prices fall.
Costco replenishes its supplies on a daily basis, unlike traditional gas stations that bring in new fuel weekly. That means that when fuel prices fall, it is selling gas purchased at a more current, cheaper price, which helps margins, while competitors are selling gas they paid more for.
Okay, it probably doesn’t fit the business model of Macy’s. But if it needs the help, maybe Diesel could start selling diesel.
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The financial crisis of the past two months has rocked retailers, and many are now planning to hire fewer seasonal workers and roll out promotions earlier than planned to try to salvage holiday sales, according to a recent survey by the Hay Group.
The human resources consulting firm conducted an informal survey in September with 20 of the top American retailers, including Best Buy, JC Penney, Costco, and Macy’s to get a glimpse into their plans for the holiday season.
The group then ran the survey again this month to find out how those plans may have changed given the recent financial crisis. Here is what the they found: