Retailers, consumers and prices
Check Out Pier 1′s sudden offer to buy Cost Plus for $88.4 million in stock, just as the home decor retailer is trying to cut its own losses from previous quarters by shutting stores, cutting jobs and spending less on marketing.
Pier 1′s chief executive officer Alex Smith thinks Cost Plus is an “excellent” fit and that a deal would improve Cost Plus’ s operating margin due to synergies with Pier 1 in areas like store operations and shared services.
From its end, Cost Plus, which sells home furnishings and gourmet food, said it would meet with its financial and legal advisors to review the proposal.
Another 27,000 retail jobs disappeared in May, according to the U.S. government’s monthly employment report. That makes 152,000 retail jobs eliminated since the beginning of the year.
Overall, nonfarm payrolls fell by 49,000. But even more worrisome for the economy and for retailers could be the jump in the unemployment rate to 5.5 percent. That half-point jump was the largest such move in 22 years and brought the unemployment rate to its highest level in 3-1/2 years.
Retailer’s May sales reports yesterday were mostly better than expected, causing some analysts to think they could signal the beginning of a consumer turnaround.
But others said it just showed a blip in spending that was caused by the tax rebate checks consumers have begun to receive.
Economic concerns could still linger after all that stimulus money is gone, they say, and things could get worse if consumers, already hit by $4-a-gallon gasoline, soaring food prices and falling home values really start to worry about their jobs.
Wonder how a half-point jump in the unemployment number plays into that?
Meanwhile, to take your mind of the jobs report, there’s always the company pep rally that masquerades as the Wal-Mart annual meeting. The world’s-largest retailer flies in employees from all around the world to help pack the basketball arena at the University of Arkansas, where stars entertain the crowd (this year’s acts include Miley Cyrus), everybody does the Wal-Mart cheer, and, oh yeah, shareholders get to ask questions.
Also in the basket:
New Wal-Mart director may herald changing of the guard (Wall Street Journal, subscription required)
Target grows makeup artist brands, adds testers (WWD)
This year, that tax refund check likely means another sobering trip to the grocery store or gas station.