Retailers, consumers and prices
The department store operator also said same-store sales would improve during 2010 — it expects same-store sales to be flat in the first quarter and up in the “low-single digits” for the full fiscal year.
Like many retailers, Penney kept inventories tight to avoid having to slash prices to clear merchandise. That helped to boost its profits even as sales lagged.
Still, the company has underperformed several of its main competitors. Its same-store sales fell 3.8 percent in December and 4.6 percent in January, even as rivals such as Kohl’s and Nordstrom saw their sales shoot up. Penney has been hampered by a higher exposure to malls, where traffic has suffered particularly during the downturn.
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:
Check Out luxury department store Neiman Marcus saying their sales took a hit as even wealthy customers feel the pinch of the troubled U.S. economy, although the quarter was somewhat bolstered by customers digging out old gift cards.
Neiman Marcus‘ quarterly sales dropped 4.9 percent to $1.03 billion and comparable-store sales were down 1.4 percent.
It’s Christmas already at Macy’s and yes, indeed, the holiday is on sale.
More than a month ahead of Halloween, the U.S. department store chain has dragged out its colorful collection of ornaments, baubles and beads and discounted the price by 25 percent.
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.
Might Saks be taken over at some point? This rumor got new life on Friday when Citigroup analyst Deborah Weinswig noted that Iceland’s Baugur Group has consolidated and/or rolled over forward contracts for Saks shares into new ones that mature in July.
“We view this news as an incremental positive for our investment thesis for Saks as it increases our confidence that there is a probability of a takeout deal in Saks’s future,” Weinswig said in a research note.
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)
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.
Check out Dillard’s plunging profit.
In case you missed it, the department store chain operator reported a 94 percent drop in quarterly profit after the closing bell on Thursday.
“The weak economic conditions, particularly in Florida, made it extremely difficult to achieve profitable sales levels,” Chief Executive William Dillard said in a statement.
Check out the 50 percent drop in quarterly profit at JC Penney.
The mid-tier department store operator had warned in late March that its first-quarter profits would be hammered after a drop in store traffic and dismal Easter sales forced it to cut prices to clear out unsold merchandise.
Penney shoppers can expect more price cuts on future visits to the retailer.
The department store operator said it is now trying to get inventory in its stores to better match the weak sales environment, meaning it will roll out more promotions and cut future merchandise orders.