Retailers, consumers and prices
Wal-Mart, which helped promote the adoption of those funny-looking “green” lightbulbs, is making more room in its Sam’s Club warehouse stores for environmentally friendly products — including a water-saving toilet that has one button for flushing liquids and another for flushing solids.
Employees at a Sam’s Club in the discounter’s home town in Bentonville, Arkansas, have emptied shelves of things like power tools to make way for a variety of green products. Similar efforts have taken place in Sam’s Clubs across the United States.
“Our members need and are looking for things that will help them mitigate their energy bills,” said Joel Heiligenthal, buyer of home efficiency products at the club store chain.
Wal-Mart launched its own private-label compact fluorescent lightbulbs (CFLs) in 2007 and has been selling them in thousands of stores.
Check out the earnings warning from Costco.
Warehouse clubs were supposed to be benefiting from the weak economy and soaring gas prices as consumers, hit by rising food costs and gasoline prices, looked to save money.
But it turns out that benefit might only be on the sales side, not the bottom line.
Costco said Wednesday that quarterly profit would be well below analysts’ estimates.
“Factors negatively affecting our fourth-quarter earnings outlook arise largely from inflation, particularly as to energy costs,” Chief Financial Officer Richard Galanti said in a statement.
The company is making less money on its gasoline operations and margins on its merchandise were also down as it tried to maintain prices that would attract customers, Costco said.
Warehouse clubs and discounters had been some of the better retail sales performers in recent months.
So is Costco’s warning specific to the company, or is the lower-priced part of the retail spectrum taking a hit now, too?
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Check out inflation.
That $4-a-gallon gasoline really drives up consumer prices. The Consumer Price Index rose 0.6 percent in May, the largest increase since November. Year-over-year, consumer inflation was up 4.2 percent.
The so-called “core” index, which excludes food and energy, rose only 0.2 percent in May and 2.3 percent year-over-year.
But most consumers eat, drive and use heat or air conditioning. So soaring prices for energy and rising food prices — up 0.3 percent in May and 5.1 percent year-over-year — cut into what consumers can spend on clothes, home goods and other discretionary items.
It also could mute the impact of the tax rebates consumers are receiving.
“Consumers are spending more to buy food and energy,” Lindsey Piegza, market analyst at FTN Financial, said. “The tax rebate is just offering them a cushion. They are not buying wide-screen televisions.”
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