Shop Talk

Retailers, consumers and prices

Check Out Line: No prescription for sluggish sales


WALGREEN/Check out the sluggish sales at Walgreen.
People filled more prescriptions at the drugstore chain, but didn’t buy much else.  August same-store sales rose only 1.9 percent, less than analysts had anticipated.
While many retailers have been experiencing sales declines, drugstores have generally done much better because an aging population  has been buying more prescriptions drugs.
But Walgreen’s sales of general merchandise fell 1.3 percent.
That could be a bad sign for other retailers that report sales this week. Walgreen is the third-largest retailer that reports monthly sales, behind only Costco and Target.
Overall, analysts are expecting a 3.8 percent drop in same-store sales when retailers report this week.
Also in the basket:
Zale identifies prior adjustments, delays results
Jos A Bank Q2 results top Street

Brown-Forman profit tops view
Tesco uses weather to predict sales (N.Y. Times)
Retail theft soars in economic downturn (WWD, subscription required)

(Reuters photo)

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


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


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.

Consumers learning frugal back-to-school lesson


JAPAN/Could Americans really be getting the hang of life without excess? According to two recent consumer studies, they just might be.

NPD Group Inc, a market research firm, said on Tuesday that it found consumers are starting their back-to-school shopping later, spending less, and shifting away from discretionary items like shoes, clothes, and beauty items. Instead, they are focusing on necessities like school supplies and calculators.

Coca-Cola’s tale of four cities


It was the best of times, it was the worst of times …

muhtar-kentWhen trying to determine how and when consumers will recover from the downturn, Coca-Cola CEO Muhtar Kent sees the world broken into four quadrants.  It’s “A Tale of Four Cities,” he said.

Think of four different quadrants, Kent said on a call on Tuesday after the company reported second-quarter results.

Check Out Line: Toy shares still best bet?


RETAIL-BLACKFRIDAY/Check Out this analyst’s view on the toy sector.

Tim Conder, an analyst with Wells Fargo Securities, said toy shares continue to offer the best “risk/reward” as those in his coverage, like Mattel, Hasbro and RC2 Corp, continue to gain relative market share.

“Despite on-going consolidation among retailers and investor concern about growing major retailer ‘clout’  via pricing pressure and private label toys, major toy manufacturers have gained share. Why?” Conder asked in his note.

Wal-Mart Marketside test feels economic hit


castrowrightNot too long ago, U.S. grocers were sprinting to be the first to get smaller stores up and running. Not any more.

Wal-Mart Vice Chairman Eduardo Castro-Wright said the world’s biggest retailer is taking its time testing its convenience store-sized Marketside grocery stores, due to the economy.

McDonald’s CEO (aka “hamburger guy”) on economy


skinnerronaldReuters asked the chief executive of McDonald’s, one of the world’s biggest companies and a closely watched gauge of consumer spending,  what every investor wants to know: Has the economy hit bottom?

“In the United States, there is some argument to say that these green sprouts that are showing relative to economic growth are pointing to the fact that we might have (hit) bottom and now it’s starting to grow.

Check Out Line: Wal-Mart flexing muscles amid recession


Check out the quarterly results at Wal-Mart.

The retail giant posted a flat profit in line with Wall Street’s expectations, but it gained market share in the recession as consumers sought to take advantage of the company’s low prices on necessities.  

Wal-Mart Chief Executive Mike Duke said the company remains cautiously optimistic about the timetable for the economic recovery, while Vice Chairman Eduardo Castro-Wright said a large part of its U.S. growth was coming from new customers.

Check Out Line: Green shoots sprouting?


Check out a glimmer of hope on the employment front. USA-ECONOMY/
Planned layoffs for U.S. firms fell in April to their lowest levels since last October, according to a  report from outplacement consultancy Challenger, Gray & Christmas
Okay, layoffs are still at recessionary levels, with U.S. employers announcing plans to cut 132,590 jobs in April.
But CEO John Challenger says the fact that they are falling could mean that employers are a little more confident about future business conditions.
If employers start feeling more confident and stop laying off people, that could spur more confidence in employees and eventually get them to spend more at retailers, which, after all, is what this blog is about.
In a report by Discover, the credit card issuer, the number of consumers saying the economy was getting better was 23 percent in April.  While that might not seem like much, it is still 8 percentage points better than in March.
Also, 51 percent of consumers said the economy was getting worse, down from 61 percent in March.
“Consumers continue to approach their spending with caution, albeit a little less so in April,” said Julie Loeger, senior vice president of brand and product management for Discover Financial Services.  “As they grow more confident in the economy and their finances, consumers may boost their spending; which should help with an economic recovery.”
Are these the “green shoots” of an improving economy, or just optimism waiting to get shot down?
Also in the basket:
Carlsberg Q1 doubles on Eastern Europe gains, cost cuts
In Target tussle, a store becomes a battlefield (N.Y. Times)
Barneys aiming to close two stores (Wall Street Journal)

(Reuters photo of job fair)