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.

He’s not alone.

Big boxers such as Target and BJ’s Wholesale reported steeper than expected drops in same-store sales, suggesting that the recession may have depended further than the luxury market.

Speaking of which, upscale department stores, such as Nordstrom and Neiman Marcus, saw sales slip while Macy’s fared slightly better than analysts had expected.  Abercrombie & Fitch, known for their strong hold on the younger markets saw same-store sales slide 28 percent, worse than the decline analysts had expected.  And teen/tween sensation Hot Topic, saw same-store sales fall 6.4 percent which were, again, steeper than analysts had predicted.

There were some bright spots, though: if you ignore gasoline sales, Costco Wholesale saw same-store sales rise one percent, and BJ’s Wholesale rose 4 percent.  And for apparel, Buckle Inc’s more casual teen market shopped the company’s same-store sales up 13.4 percent.

Even TJX, owner of TJ Maxx and Marshall’s among others, saw higher customer traffic translate into company gains even in the face of fluctuating international exchange rates.

With all of that in mind, it’s important to note that Wal-Mart ceased to report monthly sales as of April, giving some investors headaches, and others a chance to focus on smaller company’s sales data.

Also in the basket:

Signet profit up; Harry Winston beats view

L’Oreal sees 2009 market flat to slightly growing

(Reuters photo)

Check out sales of Spam staying strong in the recession, as consumers eat more meals at home rather than going to restaurants. 

Hormel Foods, maker of the iconic canned ham, posted a better-than-expected quarterly profit on Thursday and sprinkled a bit more optimism on its full-year forecast.

Spam said it expects its full-year profit to be near the upper end of its previously announced range of $2.15 to $2.25 per share. In the second quarter, which ended April 26, the company earned 59 cents per share, topping analysts’ average estimate of 50 cents.

But the company did say it had some issues with exports, since the H1N1 flu virus prompted some countries to ban imports of U.S. pork products.

Also in the basket:

Barnes & Noble results beat view; outlook raised

Ross Stores Q1 profit rises; Q2 view tops market

Workers at Obama suit maker pin hopes on new offer (Forbes)

Giorgio Armani recovering from illness (WWD) — subscription required

(Reuters photo)

Check out Target maintaining retail margins.
 
That counts as a win in retail these days. The discounter was able to better manage markups and markdowns than last year, helping it keep gross margin steady, even though consumers are spending more on less profitable staples and less on discretionary items.
 
The company soundly beat analysts earnings estimates for the quarter. But profit still fell 13.3 percent in the quarter, not necessarily a good thing when you are in a proxy fight with an activist investor.
 
The story from Target was the same as the story from most retailers during this recession. Sales are sluggish or falling, they are controlling inventories and trying to rein in expenses.
 
AnnTaylor had the same story and reported a smaller-than-expected loss.
 
But it’s outlook was also cautious as the recession keeps women from buying work clothes and luxury apparel.
 
The question is, if consumers keep on the sidelines, how much more cost cutting can retailers do to limited the bleeding.
 
Also in the basket:
 
Tween brands posts narrower-than-expected Q1 loss
 
BJ’s Wholesale profit tops view; forecast raised
 
Sodas a tempting tax target (N.Y. Times)

(Reuters photo)

Check Out better-than-expected quarterly results from Home Depot and Saks, as retailers across the spectrum succeed in cutting costs. 

Home Depot, the top specialty home improvement retailer, said its quarterly profit was 35 cents per share in the first quarter, excluding items, topping Wall Street estimates for profit of 28 cents.

Aggressive cost cuts - such as closing its Expo Design Center chain and laying off about 7,000 workers - helped offset a 9.7 percent decline in sales.

The same phenomenon occurred at high-end retailer Saks, whose 3 cent-per-share loss, excluding items, blew away analysts’ average expectation for a loss of 26 cents per share.

Saks shares jumped nearly 13 percent in premarket trade, while Home Depot shares slumped 1.7 percent as the results, while still better than expectations, were not as good as those from rival Lowe’s, which reported better-than-expected profit on Monday due to strong sales of outdoor goods.

Saks raised its target for cost cuts, even as it expects sales to decline throughout the rest of the year.

Also in the basket:

American Apparel posts Q1 loss; may restate results

Dick’s Sporting Q1 beats Street

TIMELINE-Marks & Spencer’s profit decline

(Photo: Reuters)

Check out signs of stabilizing demand at U.S. handbag and accessories maker Coach.

The leather goods company posted a lower quarterly profit, but said business was stabilizing at its North American stores at pre-December levels. The company has refrained from deep profit-sapping discounts in a strategy that has preserved the status of its brand but hurt sales.

Chief Executive Lew Frankfort said consumers have some optimism that the worst of the uncertainty is behind them and Coach has greater visibility into how shoppers will behave in the coming months.

Coca-Cola also reported a lower profit, but its results met analysts’ expectations. That came a day after rival PepsiCo posted a better-than-expected quarterly profit and offered $6 billion to buy the remaining stakes in its two largest bottlers as it seeks to better control its distribution and cut costs.

Signs have been mixed as some companies still point to pressure on consumers, and even top Federal reserve policy makers have different opinions.

Also in the basket:

Chili’s parent Brinker posts quarterly profit

Wal-Mart China management restructuring hits snag

Target Corp board seat seeker calls for single ballot

Pepsi move could shake up U.S. drinks industry

Food Firms Cook Up Ways to Combat Rare Sales Slump (WSJ)

A New Approach: Spring Markdowns Sprout Early (WWD, subscription required)

(Reuters photo)

Check out the trifecta of profits that topped Wall Street views.

Expectations have been pretty low for the consumer and retail sector given the tough economy, cash-strapped consumers and the overall funk in the market keeping shoppers away.

On Thursday, a few companies managed to beat expectations.  Is it a signal that things are finally picking up?

Best Buy’s quarterly profit plunged 23 percent.  Still, adjusted results topped Wall Street estimates as the retailer said it got a boost from stronger-than-expected consumer demand.

“We prepared for reduced consumer spending, and we were pleased when the quarter finished stronger than it began,” Best Buy CEO and Vice Chairman Brad Anderson said in a statement.

Over at ConAgra, price increases and cost cuts helped profitability in the consumer foods business.

And Dr Pepper Snapple is riding high with its low-cost drinks, such as Crush.  Still, higher-end beverages such as Snapple are feeling a pinch.

Also in the basket: 

Estee Lauder promotes Freda to CEO

Ecko hires investment bank Peter J. Solomon (NY Post)

Dress with $30 million price tag spurns economic crisis

(Reuters photo)

Check out the falling profits at Whirlpool and Hasbro.
 
Whether the ovens you make cook with gas like Whirlpool’s or with a light bulb like Hasbro’s Easy-Bake, it’s hard to make much money when people don’t want to buy anything.
 
Whirlpool profit fell 76 percent in the fourth quarter as sales in North America dropped 18 percent. The world’s biggest appliance maker also said it expected industrywide shipments of appliances to fall 10 percent in 2009.
 
Hasbro, which makes littler appliances, as well as G.I. Joes and Transformers, saw a 30 percent drop in quarterly profit as shoppers bought fewer toys for the holidays.
 
The company plans to focus on cutting costs this year, as are many, if not most companies in the United States. 
 
But wait, is that G.I. Joe coming to the rescue? A G.I. Joe movie this year is expected to help lift sales of the action figures and other toys Hasbro sells under those names.
 
Perhaps they can work some kitchen scenes into the script and help out Whirlpool. C’mon, at least a trash compactor to deal with the bad guys?
 
Also in the basket:
 
McDonald’s same-store sales rise
 
Saks upends luxury market with strategy to slash prices (WSJ)

(Reuters photo from 2002)

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.
 
Also in the basket:
 
Recession to worsen, deflation a risk: report
 
P&G keeps profit forecast, says sales may fall short
 
Lululemon posts higher profit, cuts 2008 outlook

(Reuters photo)

Macy’s is still finding ways to celebrate in what could be a dark winter for retail this year. Customers entering Macy’s flagship store in New York City’s Herald Square it opened today were met by the pounding beats of the Soul Tigers Marching Band, lots of red balloons and a barrel full of exploding ribbons.  

CEO Terry Lundgren was there cutting a ribbon promising another 150 years for the department store, to tack onto its current 150th birthday. A gaggle of employees sang “Happy Birthday Macy’s!”, threw confetti and danced.

Macy’s birthday celebration comes at the same time most retailers are struggling with flagging sales as consumers pressured by a global financial crisis, a housing market crash, rising food prices and a credit crunch cut back spending on non-essential items.   

Macy’s recently cut its own forecasts, but is also reaching out to a bit more investors. Last week, it announced it will temporarily reinstate monthly reports of its sales to keep the market updated during uncertain times.

Rowland Hussey Macy opened his first store in 1858 at 6th Avenue and 14th Street in New York and made $11.06 in sales its first day, or around $345 in today’s dollars. The company reported 2007 sales of $26.32 billion and operates more than 850 stores including both Macy’s and Bloomingdale’s.   

(Photo/Reuters)

Check out Coach opening stores.
 
The pricey leather handbag maker saw earnings fall in the quarter and also ratcheted down its sales forecast for fiscal 2009. But that sales forecast still calls for a 10 percent increase from a year ago.
 
And even in what some economists say is already a U.S. recession, the company is moving ahead with dozens of store openings and, in fact, those openings are ahead of the company’s plan, CEO Lew Frankfort said.
 
Coach plans to open 40 stores in this year in North America, 10 in Japan and five in China.
 
“Our new store openings are profitable from the first day,” Frankfort said in an interview. “All new stores are opening ahead of plan.”
 
And that isn’t just because it’s easier to get better terms from landlords as other retailers go bankrupt. Frankfort told Reuters the retail bankruptcies have had no near-term impact on Coach’s leasing arrangements, though the company should be able to get better terms over the midterm.
 
Like other retailers, Coach is also managing expenses. While there is not a hiring freeze, the company is tightly managing recruitment of new personnel through a “hiring frost,” Frankfort said.
 
Ahh, the first frost of the season. Can Christmas be far?
 
Also in the basket:
 
Ferragamo says uncertain on Q4, no IPO hurry
 
Brinker quarterly profit falls on weak demand
 
Owners say franchisers are passing on more costs (WSJ)
 
Fashion trends toward Obama in presidential race (WWD, subscription  required)
 
(Reuters photo)