Shop Talk

Retailers, consumers and prices

Check Out Line: Earnings season in full swing

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Check out this morning’s lineup of quarterly results.

hersheyHershey said price increases helped offset rising cocoa costs, but was silent on the biggest news in the chocolate world — will Cadbury be acquired?

Meanwhile, cigarette makers Philip Morris International and Reynolds American topped expectations and raised their full-year forecasts.

Who else did the same thing?  Kimberly-Clark.  It wasn’t sales of Kleenex tissues that drove its better than expected results.  The company got a boost from sales of face masks as H1N1 takes hold.

Hungry for more?  How about results from McDonald’s?  The fast food giant said sales rose in all regions, and it expects sales at existing locations to remain positive in October.

Check Out Line: At Tiffany, the cut is in the costs, not the diamonds

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TIFFANY & CoCheck out cost cuts at Tiffany.
 
it is (was?) a recession and people aren’t buying as much expensive jewelry. Sales at Tiffany fell 16 percent in the latest quarter.
 
But even though profit also fell almost 30 percent, Tiffany shares still rose.
 
Cost cuts helped Tiffany beat analyst expectations. The company said SG&A expenses fell 14 percent. It’s also slowing its pace of store openings because of the recession.
 
“Breakfast at Tiffany’s?” Right now, it might be an Egg McMuffin and coffee from the deli on the corner.
 
Also in the basket:
 
Consumer spending lifted by “cash-for-clunkers”
 
L’Oreal H1 beats forecasts, ready to make purchase

(Photo: Reuters)

Check Out Line: Retail profits surprise, but still down

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Check out the Retail Metrics earnings snapshot. ARCANDOR/

About two-thirds of the way through the second-quarter earnings season, retailers are beating earnings expectations by 5.1 percent on average, the research firm said.

But those were pretty low expectations and earnings are still down 6.4 percent compared with a year earlier. It is even worse when Wal-Mart is excluded. Then earnings are down 9.8 percent, Retail Metrics said.

Check Out Line: Nobody’s buying nothin’

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COACH/Check out the lack of interest in pens and purses.
 
Retailers as varied as Coach and Office Depot reported lower quarterly sales, continuing to show that despite some forecasts that the recession may be at an end, consumers are cutting back on just about everything.
 
Coach sales fell 1 percent and profit, excluding one-time items, dropped 21 percent.
 
Sales at Office Depot fell 22 percent and the company posted a wider than expected loss, sending its shares down 14 percent.
 
Oh, and it isn’t just office supplies and fancy bags consumers are cutting back on.
 
Grocery chain operator Supervalu reported a 4.5 percent drop in quarterly sales as it cut prices to try to keep consumers from going to stores like Walmart.
 
Economists are looking for “green shoots” everywhere these days, but the consumer still doesn’t seem to be buying it … or anything.
 
Also in the basket:
 
CIT courts creditors, plans large debt exchange
 
Under Armour posts surprise second-quarter profit
 
PepsiAmericas Q2 profit beats estimates, ups FY outlook
 
Italian group makes offer for Christian Lacroix (N.Y. Times)
 
(Reuters photo)

Check Out Line: Several companies ring up strong profits

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shack1Check out the better-than-expected profits at Alberto Culver, Lorillard and RadioShack.

Alberto Culver, the maker of VO5 shampoo and Mrs. Dash seasoning, said its third-quarter profit, excluding one-time items was 30 cents a share, a penny above what analysts had expected, thanks to strong demand for its TRESemme shampoo.

Check Out Line: The hurt is spreading

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TARGET/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 Line: Spam does it again

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JAPAN/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.

Check Out Line: Hitting an easy Target

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USA/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 Line: Retailers’ results surprise Street

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CANADA/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.

Check Out Line: Signs of stability at Coach

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coach1Check 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.

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