Retailers, consumers and prices
Check out the falling same-store sales at Costco.
Okay, October was a pretty rancid month for most retailers, and most did worse than Costco.
But the warehouse club operator had a 1 pct same-store sales decline in October that was its worst performance since Thomson Reuters began tracking such data for Costco in 1997.
Warehouse clubs had been holding in with cash-strapped consumers looking to save money with bulk purchases of toilet paper, food and other essential items.
But consumers have really cut back on the nonessentials, so sales of items like computers, toys and jewelry suffered.
Wonder how the 1,000-count bottles of aspirin are selling as consumers cope with the economic headache.
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Check out the October monthly sales results due this week.
Retail chains, like Wal-Mart, Costco and J.C. Penney, will release October results on Wednesday and Thursday, and Thomson Reuters is forecasting a decline of 0.1 percent.
Sam’s Club and Costco work as membership clubs. Shoppers pay an annual fee that allows them to shop in the warehouses and get discounts on everything from diamond rings and big screen TVs, to bulk-sized packages of toilet paper or bottled water.
Check out disappointing September retail sales
Many U.S. retailers posted worse-than-expected sales at stores open at least a year on Wednesday, and some cut their profit outlooks and said things won’t improve anytime soon as consumers remain shaken by the financial crisis, job worries and the housing slump.
Discounter Wal-Mart Stores and warehouse clubs managed the best sales performances in September as shoppers sought bargains on necessities. Wal-Mart, the world’s biggest retailer, stood by its third quarter earnings forecast.
Last month, in a poll conducted by SheSpeaks, a women’s insights marketing firm, almost 50 percent of respondents said they would spend less this holiday. That was up from nearly 30 percent who answered the same way last year.
In a new poll, SheSpeaks asks where shoppers intend to spend fewer dollars. Here are the results from the updated poll:
Late last month, Costco warned its quarterly profit would miss Wall Street estimates as soaring costs and inflationary pressures ate into its margins.
While the cost of the goods it sells was going up, the No 1 U.S. warehouse club operator said it was delaying passing along price increases to shoppers in order to boost its sales and appeal to cash-strapped consumers.
Check out the earnings warning from Costco.
Warehouse clubs were supposed to be benefiting from the weak economy and soaring gas prices as consumers, hit by rising food costs and gasoline prices, looked to save money.
But it turns out that benefit might only be on the sales side, not the bottom line.
Costco said Wednesday that quarterly profit would be well below analysts’ estimates.
“Factors negatively affecting our fourth-quarter earnings outlook arise largely from inflation, particularly as to energy costs,” Chief Financial Officer Richard Galanti said in a statement.
The company is making less money on its gasoline operations and margins on its merchandise were also down as it tried to maintain prices that would attract customers, Costco said.
Warehouse clubs and discounters had been some of the better retail sales performers in recent months.
So is Costco’s warning specific to the company, or is the lower-priced part of the retail spectrum taking a hit now, too?
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Markdowns? No good for Sears. The company, controlled by Eddie Lampert, posted a surprise loss, hurt by discounts and floundering sales at its Kmart and namesake stores. Immediate respite is not in sight, Sears said, as consumers juggle higher gasoline and food prices.
That situation has sparked food riots in several African countries, Indonesia, and Haiti. United Nations Secretary-General Ban Ki-moon has warned that higher food prices could hurt global growth and security.