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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.

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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)

“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.

The Saks takeover rumor picked up steam last year, when Baugur disclosed in an October filing that it could make a joint bid for the parent of Saks Fifth Avenue with Dubai-owned Landmark Group. Baugur repeated that in a filing this week.

The executive chairman of Baugur, Jon Asgeir Johannesson, told Reuters at the World Retail Congress in April that his company was content with its Saks holding and did not intend to make a takeover bid. Baugur, Johannesson and Landmark own about 9.7 percent of Saks common shares.

Saks shares shot up about 4 percent on Friday. Spokeswoman Julia Bentley said in an email that Saks doesn’t comment on rumors or speculation.

Stay tuned.

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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)

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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)

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.

If you didn’t know Dillard’s was reporting earnings on Thursday, you weren’t alone.

The company didn’t disclose that they planned to report until less than three hours before they released results. To put it in perspective, if you gave your doctor that little notice before canceling your check up, you would still have to pay for the appointment.

While the vast majority of public companies give at least several days notice for when they plan to report earnings and often have the date on their public calendars months in advance, Dillard’s typically does not.

The retailer also shuns other modern investor-friendly practices like making executives available to answer analysts’ questions in a quarterly conference call.

But the company has been right on top of the trend of department stores getting clobbered by the weak economy. The stock is down 54 percent since the end of June, compared with the 42 percent drop by rival Macy’s and 32 percent drop by Nordstrom.

Dillard’s spokeswoman Julie Bull did not return a call seeking comment on the company’s communications policies.

Also in the basket:

Sales Everywhere: Designer Stores Join the Markdown Race  (WWD) 
 

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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.

Based on its forecast, Penney is expecting profits to decline yet again in its second quarter.

It forecast earnings per share of 38 cents–a dramatic drop from the 78 cents per share of earnings from continuing operations it reported a year ago.

Also in the basket:

Tiffany ups payout, sees 1st-qtr topping estimates

Tyson sees less, but more expensive, chicken

Blockbuster swings to profit in first quarter 

(Photo: Reuters)

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(Photo: Reuters)

The warning came the same day that the Reuters/University of Michigan Surveys of Consumers showed that U.S. consumers’ confidence weakened to the lowest in 16 years in March, pointing to recession. 

The news battered retail shares as investors’ hope faded that business would improve in the second half of the year. Here is a collection of comments on Penney’s warning:   

KIMBERLY PICCIOLA, ANALYST AT MORNINGSTAR :

“It seems as though the macro environment is really creating a much more challenging retail environment then maybe what was anticipated.” 

She said J.C Penney’s product line is made up of items consumers can hold off on buying in a weak economy. 

“The first half of the year is definitely going to be rocky for most retailers that have a very discretionary assortment. Consumers are very cautious right now in terms of their discretionary  spending.” 

CRAIG JOHNSON, PRESIDENT OF CUSTOMER GROWTH PARTNERS:

“J.C. Penney operates in a very challenged part of the retail sector.”

“The mid-tier mall-based department stores are the center of the retail sector difficulties. … They are the bull’s eye of it.”

ADRIANNE SHAPIRA, RETAIL ANALYST AT GOLDMAN SACHS:

“The direction of today’s revision was not a surprise, given our already below consensus and management guidance view on the quarter. That said, the magnitude of comp declines was worse and does imply that department store top-lines could be facing more near-term ‘core’ sales pressure than initially thought.”

“Importantly, we would remind investors that 1Q contributes the lowest amount of sales to the full year making it more susceptible to deleverage if top-line falls short making extrapolation to the full year incorrect.”

“Importantly, our thesis concerning 1H as being the trough of this down cycle remains unchanged, especially with stimulus checks on the way in 2 months time. As sales recover, we continue to believe that stocks will follow.”

MARSHAL COHEN, CHIEF INDUSTRY ANALYST AT NPD GROUP 

He said the bad Easter season was due to three factors: “It’s early. It’s cold. And the consumer is throttling back.” 

“So you’ve got these three things converging to create the perfect storm.”

He said Penney was being wise, preparing the market to expect less-than-stellar earnings results.  

“We’ve entered into an interesting time at retail. It’s called ‘create lower expectations and exceed them and your stock will jump’. We’ve seen several big retailers do this now over the last couple reporting periods. It’s good. They’re being fiscally responsible.”  

(Photo: Reuters)