Retailers, consumers and prices
Check out the latest retailer to benefit from the earlier Easter and a mild March.
Family Dollar’s profit in the quarter that ended in February came in higher than analysts’ anticipated, as the discounter extended hours at its stores and sold more private label goods, which carry better margins.
The retailer is already seeing other benefits this quarter. Sales at stores open at least a year rose a whopping 11 percent in March, aided by Easter falling earlier in April this year than it did last year. Some nicer weather also helped, it said.
Family Dollar’s third-quarter and full-year forecasts suggest profits could top analysts’ expectations throughout the remainder of fiscal 2010.
Family Dollar has boosted its sales by stocking more of what shoppers want in a recession — low priced consumables, like food, household cleaners and beauty aids.
The retailer, which sells merchandise priced at $10 or below, is also encouraging shoppers to spend more in its stores by accepting an expanded number of payment options – like credit cards or food stamps.
Today it is Family Dollar and Costco — both being places where people usually shop to save money.
Family Dollar saw sales rise in the quarter, though sales at stores open at least a year were less than expected as the company has been reorganizing its stores to stock more food and other items that shoppers want as they stick to necessities.
Ahead of the recession, dollar stores thought it would be a good idea to try to lure shoppers into their stores more frequently by stocking an increased selection of food. Many of them began installing refrigerated coolers in their stores so they could sell things like eggs, milk and dairy.
Check out the higher profits at discounter Family Dollar Stores.
Family Dollar, which prices most of its merchandise below $10, and other discounters like Wal-Mart and Dollar Tree, have been flourishing in the recession as consumers turn to them for low-priced essentials like food and cleaning supplies.
Family Dollar’s success in turn pleased shareholders, who pushed up the company’s shares in pre-market trading.
Check out Bernstein Research talking about signs of a bottom for retail stocks.
In a research note, Bernstein says that as the broader market recovered a strong 8.5 percent in March, retailers logged another month of robust performance, with a 15.9 percent return for the month.
Family Dollar is seeing more consumers buy food at its stores. It is also seeing more consumers use food stamps amid the recession.
It would seem like a winning opportunity for Family Dollar to attract more shoppers with its low prices. There’s just one hitch - less than half of the company’s stores currently accept food stamps.
Check out the cool and wet weather that hit U.S. retailers in September as the month will go into the books as the fifth coolest in the last seven years and much cooler than last year, according to Planalytics Inc, a business weather tracking company.
While the mean September temperature in the 96 largest U.S. metro areas fell about 4 points from last year to 64.2 degrees, retailers selling rainwear (demand up 29 percent based purely on weather), pants (up 13 percent), dehumidifiers (up 10 percent) and hot cereal (up 2 percent) benefited, Planalytics said.
Check out the reallocation of consumer spending.
Pricey coffee? Out. Spending at the dollar store? In.
Family Dollar posted a better-than-expected quarterly profit, helped by tight control of inventory and expenses, and said June sales were better than expected as consumers received their tax rebate checks.
While traffic was down, customers were spending more on each trip.
Meanwhile, as the economy softens, so has Starbucks’ business.
The coffee shop operator now says it will close 600 U.S. stores, six times the number it had targeted in January.
Gone are the days when a Starbucks on every corner worked for the company. Most of the stores to be closed are near other locations, so pruning the underperforming locations might help the others grow.
” ‘Reverse cannibalization’ should be felt in the relatively near future as the bulk of stores are located within close proximity of another unit and will be closed by the first half of 2009,” J.P. Morgan analyst John Ivankoe said.
Also in the basket:
EXCLUSIVE-Kraft reps all over stores to boost sales
ANALYSIS-UK grocers to shun price war as shoppers trade down
Stores look to lure millennial generation (WWD)