Retailers, consumers and prices
Check out rising prices even at Wal-Mart.
Pressures created by rising costs have caused even the world’s largest retailer, known for its ”rollback” discounts, to boost the prices that consumers pay for groceries.
Wal-Mart Stores raised average prices on supermarket items by about 6 percent in a month, according to a recent J.P. Morgan study in Virginia that compared the prices of 31-item goods sold at its supercenters, and at supermarket rivals Kroger, Safeway, Harris Teeter and Whole Foods.
Specifically, the study found that prices at a supercenter in Virginia rose 5.8 percent, the most significant sequential increase since JP Morgan started price comparisons in January 2009.
While the world’s largest retailer remains the cheapest among supermarkets, rivals such as Kroger and Safeway are gaining ground, according to J.P. Morgan.
Rising costs of raw materials and oil are pressuring companies to pass on costs to consumers with higher prices.
Indeed, clothes makers such as Nike, VF Corp and Hanesbrands are facing the same conundrum. And British baker Greggs said soaring wheat prices were set to push up costs, emphasizing a theme that may be repeated for such food makers as General Mills, Kellogg, Kraft and Sara Lee.
However, the timing is not good as the state of the U.S. economy is still uncertain and unemployment remains stubbornly high, leading many consumers to still be wary about spending. U.S. retailers in July posted weaker-than-expected sales despite increased discounting.
Also in the basket:
Check out Campbell Soup’s better-than-expected profit .
The world’s largest soup company posted operating earnings of 30 cents a share in the fourth quarter of fiscal 2009.
That was four cents better than Wall Street had expected, thanks to higher prices and increased sales of condensed soup and Prego pasta sauce as people ate at home more to save money during the economic slump.
Check Out the lineup at Reuters Food and Agriculture Summit 2009.
Executives from various food firms are slated to speak at the Reuters Summit in Chicago beginning today, with the first handful of executives from companies such as Wal-Mart Stores, Campbell Soup and Hormel.
With the economy front and center, executives are expected to discuss the tug of war to keep food prices at current levels, even as they fight hard to entice shoppers to buy their products on a tight household budget.
Demand in the Los Angeles area has risen 41 percent from a year ago, said Michael Flood, president and chief executive at the Los Angeles Regional Food Bank.
“Thanksgiving food prices are up about 6 percent compared to last year,” said Corinne Alexander, a Purdue University agricultural economist.
Alexander said grocery store prices are increasing at a pace of 7.6 percent, compared with restaurants’ rise of 4.5 percent.
Check out retailers’ profits and forecasts.
A discerning shopper, or investor for that matter, could browse the aisles of the retail financial world and come away with very different messages on the strength of the U.S. economy depending on which company’s results they chose.
On the plus side, upscale jeweler Tiffany posted a better-than-expected profit and raised its full-year outlook, although that was driven by strong sales overseas. Tiffany expects U.S. same-store sales to return to growth in the fourth quarter. Shoe and hat retailer Genesco, and home-appliance and consumer-electronics retailer Conn’s also topped Wall Street’s views and boosted their forecasts.
Check out how high gas and commodity costs are crimping Hershey and Best Buy.
However, the largest U.S. chocolate company, which is meeting with analysts, said the pressures it faces — soaring prices for cocoa , energy and other commodities — remain the same.