Shop Talk

Retailers, consumers and prices

Check Out Line: Economy rains on Macy’s parade

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macys.jpgCheck Out Macy’s slashing its 2008 profit outlook as it eyes the gathering storm clouds ahead.

Macy’s, which also runs the Bloomingdale’s chain, is the latest retailer to see consumers shy away from purchases of new fall clothes as they try to stay afloat in the economic downturn. Several clothing chains and department stores posted dismal September same-store sales earlier this week.

Macy’s same-store sales, or sales at stores open at least one year, fell 5.8 percent in August and September combined.  If trends remain weak, same-store sales could fall 3 percent to 6 percent for the entire fall season, Macy’s warned.  That’s well off its previous forecast for such sales to be flat to down 1 percent.

Also in the basket:

U.S. consumers lose faith in Fed, financial system

Takashimaya, H2O plan to merge in three years

Charming Shoppes lowers third-quarter outlook

(Photo: Reuters)

When the going gets tough, men go for chocolate

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Seems like the business men who are dealing with the market fallout may be learning something from the fairer sex when it comes using food to boost their mood.

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According to a Brand Keys survey, men are reaching for chocolate bars more frequently these days. Every one of the 750 men in the survey, taken Friday through Sunday, said they were eating more chocolate.

Check Out Line: Rite Aid drags down Jean Coutu results

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eckerd.jpgCheck Out poor sales at U.S. pharmacy chain Rite Aid dragging down quarterly results at Jean Coutu Group, the Canadian drugstore chain that owns about a third of Rite Aid and reported its quarterly results today.

Jean Coutu, which is required by Canadian law to include Rite Aid’s results with its own, reported a steep second-quarter loss of 16 Canadian cents a share for the quarter ended Aug. 30, compared with a profit of 3 Canadian cents a share for the comparable quarter last year.  ($1=$1.08 Canadian)

Check Out Line: Who needs groceries when you’ve got KFC?

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kfc.jpgCheck Out KFC challenging the American people to create a family dinner for under $10, the same price as their Value Meal.

Consumers have been eating at home more often as high food and gas prices and a decline in home values pressure budgets. KFC is trying to win back those customers by convincing families it’s just as cheap to buy its value meal, priced at $9.99, as it is to buy dinner at the supermarket and cook at home.

Christmas is coming early this year, but not at Starbucks

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starbucksholiday.JPG Christmas may be starting early for many retailers, but that isn’t the case at Starbucks.

While department stores like Macy’s are already in full holiday mode — hoping to get a jump on what is expected to be a dismal holiday season — the Seattle coffee shop chain is waiting until after Halloween and after Thanksgiving to serve up its holiday cheer.

Check Out Line: Old gift cards boost Neiman Marcus

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neiman-marcus.jpgCheck 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.

Check Out Line: Fewer burrito buys at Chipotle

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chipotle.jpgCheck out Chipotle blaming poor sales on the lackluster U.S. economy.

Like other restaurants, Chipotle is struggling to attract customers as high gas and food prices leave people with less disposable income to spend on going out to eat. Discounters like Wal-Mart are capitalizing on that trend by pushing products like its cook-at-home pizza and other ready-to-eat dinner products.

For Chipotle, high food costs are a double whammy, as they must pay more for the ingredients to make the food that people are buying less of.

99 Cents? Maybe Not For Long …

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The latest example of U.S. inflation seems likely to come from 99 Cents Only Stores, the Western retailer that stocks everything from canned beans to cleaning supplies, party favors and fresh vegetables — all for 99 cents or under.
    
On Monday, the City of Commerce, California-based company, with 277 stores in California, Texas, Arizona and Nevada, will announce what it calls “its first change to its price policy since its founding over 25 years ago.” The Los Angeles Times said this was most likely a precursor to price hikes.

99 Cents Only Stores isn’t fessing up just yet, but chances are prices won’t be getting any lower, given the rising price of food staples like milk, eggs and bread that the company sells.
    
The company’s most recent ad announces deals like 99 cent cantaloupes, Hannah Montana notebooks, microwave popcorn and reading glasses.
    
99 Cents Only Stores posted a net loss of $1.51 million in its most recent quarter despite a 4 percent rise in sales from a year-ago net profit of $2.96 million. Profit was hurt by rising operating expenses and higher cost of sales.

Check Out Line: August sales offer same old look

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sell.jpgCheck out the same old sales story
 
Wal-Mart and other discounters: good. Saks and other high-priced retailers: bad.
 
The pattern seen over the past several months held again for August as cash-strapped consumers sought back-to-school bargains. 
 
Generally speaking, it’s bad form for little Johnny to show up for school naked and without notebooks and pens and pencils. So parents have to shop at least a little bit when school starts.
 
But as expected, they shopped where they could save money.
 
Back-to-school season can also set the trend for the key holiday shopping season. So the question becomes whether this will be a discount Christmas.
 
Employers are cutting back as much as they can, in order to be more profitable. That has led to a huge jump in productivity, but at the expense of jobs.
 
The August jobs report on Friday is expected to show that employers continued their job cutting in August.
 
Not a great sign for holiday cheer.
 
Also in the basket:
 
U.S. chicken industry still hurting – Sanderson farms
 
Polman a surprise pick to revive Unilever fortunes

The view from the executive suite

    Consumer products and retail executive spoke at conferences hosted by, respectively, Lehman Brothers and Goldman Sachs on Wednesday. Here is some of what they had to say:

    “There is no option not to take price,” — David Moran, president and CEO, Heinz North America, said on the the likelihood of more price increases.
    
    “The macroeconomic conditions will be worse than they were 12 months ago. Our expectation is for caution,” — Tim Boyle, chief  executive of Columbia Sportswear, when asked how the environment six to 12 months ahead looks to the sportswear and outerwear maker.
    
    “We think that despite what is happening in the environment, to neglect your store base and not keep it competitive is the wrong thing to do,”  — Kohl’s Chairman Larry Montgomery on the department store’s is commitment to remodel 36 stores in 2008 and about 60 in 2009, as well as opening 50 new stores next year.
    
    “We don’t think it’s as dire as other people are saying. We’re fairly resistant. Eighty-five percent of our sales are in RX (prescriptions). The remainder are in toothpaste and deodorant and hopefully people will keep buying those.” –    Thomas Ryan CVS Caremark chief executive and board president.

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