Check out the recession. It appears it was still alive and well at Saks in the second quarter.
 
The upscale retailer posted a $54.5 million loss in the quarter, wider than the $32.7 million seen a year earlier.
 
Same-store sales fell 15.5 percent in the quarter and Saks expects that measure to fall in the mid-to-high single digits in the second half of the year.
 
The company has been cutting expenses and controlling inventory. The loss also was not as bad as analysts expected.
 
But unless a Versace dress becomes the “must-have” back to school item, the tough sales environment at Saks is likely to continue.
 
Also in the basket:
 
Cost cuts help Home Depot beat estimates
 
Big part of U.S. back-to-school sales still ahead: NRF
 
CKE same-store sales off 3.6 pct in latest four weeks
 
Target profit falls, but beats Wall Street view

(Reuters photo)

Check out the ten largest U.S. retailers.

The National Retail Federation’s STORES magazine is out with its annual ranking of the top 100 retailers.

The list shows that U.S. consumers have been focused on bargains and basic necessities, such as food and medicine.  Wal-Mart tops the lineup, followed by Kroger and Costco.  Home Depot fell from No. 2 in 2007 to the fourth spot in 2008 as many shoppers decided to cut back on costly home-improvement projects.

Home Depot, Lowe’s and Sears Holdings were the only members of the top 10 to see their revenue fall in 2008.

Some other rankings that may interest you: Amazon.com is the 19th largest retailer, ranking higher than well-known chains such as J.C. Penney, 7-Eleven and Gap.  Apple’s stores and iTunes combined hold the 40th spot, topping chains such as Nordstrom, Whole Foods and Barnes & Noble.

The companies were listed by annual revenue, which may include estimates for private or closely-held companies.  Revenue from major non-retail operations were excluded when possible.

Also in the basket:

General Mills profit tops view, outlook strong

Constellation Brands earnings beat expectations

Goldman raises Yum Brands to buy

Turf War at the Hot Dog Cart (New York Times)

(Reuters photo)

Check out how less bad is the new good.

The latest example of this new reality is Home Depot’s revised profit outlook.

The world’s biggest home improvement retailer said this year’s earnings from continuing operations could be flat to down 7 percent.  That compares with its earlier call for a fall of 7 percent.

Home Depot Chief Executive Frank Blake said in a meeting with analysts that economic indicators are signaling that the worst of the housing downturn is over.

Home Depot still expects sales to fall by about 9 percent this year, with sales at stores open at least a year down in a high-single-digit percentage range. It expects gross margins to be flat to slightly higher.

Also in the basket:

Rising U.S. mortgage rates sap loan applications

Pimco bond manager sees “green shoots” of recovery

Gap and Stella McCartney to launch new kids line

P&G taps Army vet as new CEO

(Photo: Reuters/Rick Wilking)

Check Out better-than-expected quarterly results from Home Depot and Saks, as retailers across the spectrum succeed in cutting costs. 

Home Depot, the top specialty home improvement retailer, said its quarterly profit was 35 cents per share in the first quarter, excluding items, topping Wall Street estimates for profit of 28 cents.

Aggressive cost cuts - such as closing its Expo Design Center chain and laying off about 7,000 workers - helped offset a 9.7 percent decline in sales.

The same phenomenon occurred at high-end retailer Saks, whose 3 cent-per-share loss, excluding items, blew away analysts’ average expectation for a loss of 26 cents per share.

Saks shares jumped nearly 13 percent in premarket trade, while Home Depot shares slumped 1.7 percent as the results, while still better than expectations, were not as good as those from rival Lowe’s, which reported better-than-expected profit on Monday due to strong sales of outdoor goods.

Saks raised its target for cost cuts, even as it expects sales to decline throughout the rest of the year.

Also in the basket:

American Apparel posts Q1 loss; may restate results

Dick’s Sporting Q1 beats Street

TIMELINE-Marks & Spencer’s profit decline

(Photo: Reuters)

The recession is leading many consumers to sharpen their do-it-yourself skills, opting to work on their cars and homes themselves rather than hire professionals.

Home Depot said it is gearing up for spring with a wide assortment of lawn equipment and fertilizer products, looking to cash in should consumers cancel their contracts with professional landscaping companies.

The company said some consumers in cold-weather climates bought snowblowers in the fourth quarter, opting to clean their own driveways and save money instead of calling on snow-removal services.

“We wonder if that might not happen in the spring in the garden business,” Chief Financial Officer Carol Tome said in an interview. “If that were to happen, we’ll be ready with a broad assortment.”

Home Depot, which posted better than expected results for the fourth quarter adjusted for charges on Tuesday, gave insights on how its consumers are spending. During the fourth quarter, it said purchases of $500 or more fell in double-digit percentages. But average purchases of less than $20 fell only about 3 percent, suggesting consumers are still spending on basic home repairs.

“Consumers in general are being pretty careful,” Tome said. “We’ve seen savings rates increasing so that will impact consumer spending, too.”

While the rate of sales declines in hard-hit housing markets such as California and Florida has eased, Home Depot is not yet ready to say weakness in those states has hit bottom. Now, malaise has spread to areas that used to be more solid. For example, sales in the Ohio Valley and Pacific Northwest have softened considerably, Tome said.

One area where sales are rising is the U.S. Gulf Coast, where residents continue to rebuild after devastating hurricanes.

Home Depot also noted strong sales in vinyl flooring, roll carpet and cleaning, types of products that tend to go in homes that are being rented.

(Photo: Reuters)

Home Depot is hoping that U.S. President-Elect Barack Obama will take actions that will help bring the housing market out of its years-long slump.

As recent as early September, the retailer’s top executive said the housing market may be nearing the bottom of its decline. But that was before the financial crisis and rising unemployment took a toll on consumer confidence.

Now, the world’s largest home improvement chain says it is not seeing the better trends it had expected and noted that some housing markets, such as the U.S. Northwest, have worsened compared with a year ago.

“We think it’s prudent to be cautious,” Chief Financial Officer Carol Tome said in an interview this week after Home Depot posted better-than-expected third quarter results.

Though she didn’t give specifics on what the incoming U.S. president could do to aid the housing market, she expressed hope that Obama would do something.

“Anything the Obama administration can do for housing is certainly something we’d support,” Tome added.

She said rising unemployment now poses a major threat to consumers, who are cutting back their use of credit and paying more with cash.

Tome noted that during previous U.S. recessions, it was ultimately the strength of consumers that helped lead the economy out of a slump. But this time, they are the ones hurting the most.

“If they’re losing their jobs, it’s hard to see how they’ll take us out (of recession),” she said.

(Photo: Reuters)

Check out the mixed messages from Home Depot.
 
The retailer posted better-than-expected quarterly profit. But that was still a 31-percent drop.
 
The company also said it expected sales to drop more this year than it previously thought.
 
Home improvement retailers were the leading edge of the retail slump, getting hit by the housing slowdown before the rest of the economy fell into what is likely a recession.
 
But with rival Lowe’s and now Home Depot both beating expectations, there could be signs of of a turnaround.
 
“Hardline retail stocks have historically begun their recoveries when expectations begin to be achieved, and this may be happening for Home Depot and Lowe’s,” Credit Suisse analyst Gary Balter said in a research note.
 
Also in the basket:
 
Wal-Mart says gas price drop helping store traffic
 
Saks third-quarter loss wider than expected
 
Gift card sales seen down 6 percent this holiday

(Reuters photo)

Sears, Roebuck is looking to grow home-goods sales by adding stores away from malls as shoppers flock to new retail centers.

That off-mall strategy includes more dealer stores located in smaller, rural markets, and home appliance showrooms in big cities.

Sears has about 860 dealer stores and 24 appliance showrooms, in addition to its more than 900 traditional mall-based stores. This year, the retailer is adding 75 dealer outlets and about 50 appliance showrooms, said Steve Titus, vice president of Sears Dealer Stores, in an interview.

The Hoffman Estates, Illinois, retailer is the top-selling U.S. appliance chain but has seen its dominance challenged as home-improvement stores such as Home Depot and Lowe’s expand their offerings.

Now, as Home Depot and Lowe’s cut their store growth in the slowing U.S. economy, Sears Holdings is looking to grow key businesses in hopes of benefiting when conditions improve.

The appliance showrooms (pictured), which include as much as 5,000 square feet, are located in high-traffic retail strips that also include other big-box stores such as Target.

Sears is hoping the appliance showrooms, which are currently in Minneapolis, Dallas, Houston, Atlanta and some other big cities, will help fill the gaps in areas not served by its mall stores or existing dealer stores.

“If we pull this off right, it could really help us grow our appliance business,” Titus said.

The dealer stores are locally owned and operated. Owners pay rent and expenses and Sears provides the products and pays a commission for selling them.

Even in the slow economy, “we have several hundreds of people requesting ownership of these stores right now,” Titus said.

Photo/Sears

Home Depot is hoping that Joey Logano, the new face of its NASCAR sponsorship beginning next year, will prove just as popular and profitable for the company as his predecessor, Tony Stewart.

The home improvement retailer has signed on to a multiyear deal with Joe Gibbs Racing under which it’ll continue to sponsor the Nascar Sprint Cup No. 20 Toyota. Driver Logano, just 18 years old, will be replacing Stewart, who is leaving Joe Gibbs at the end of this season to become an owner and driver with Stewart-Haas Racing.

Logano (pictured) has a tough act to follow. Stewart, who has steered the Home Depot No. 20 Toyota since 1999, has won two NASCAR Cup Series championships and prevailed in more than 30 NASCAR races.

“Tony was an exceptional driver that had a lot of fan loyalty and created a lot of excitement among the customer base,” said Home Depot Chief Marketing Officer Frank Bifulco.

He’s confident that Logano is up to the challenge.

“Joey is a driver with capability and poise beyond his years,” Bifulco said. “We have a lot of optimism and confidence that Joey will prove himself on the track.”

Logano will drive a special No. 02 Home Depot car in three races this year, including an appearance this weekend at New Hampshire Motor Speedway. He’ll have the No. 20 Home Depot car all to himself next season.

(Photo courtesy of Home Depot)

Check out some positive signs for home improvement stores?
 
Goldman Sachs raised its rating on Lowe’s to “buy” from “neutral,” citing, in part, stabilization in the housing market.
 
“Stabilization” might be a stretch. But Goldman noted that home sales fell 15.5 percent in July, following a 17.9 percent decline in June. The drop was the smallest since July 2007 and marked the fifth consecutive monthly improvement.
 
The tumbling U.S. housing market has clobbered both Lowe’s and Home Depot, so any signs that the worst might be over could be a good thing for those companies.
 
Relatively calm hurricane seasons in the last two years have also hurt the retailers, Credit-Suisse analyst Gary Balter said.
 
Both retailers historically receive bumps from hurricanes, with Katrina, Rita and Wilma in 2005 “having a measurable impact not just on near term sales trends but on rebuilding for nearly one year past the hurricane event,” he said in a research note.
 
Gustav, Hanna, Ike, Josephine and what is currently a tropical depression could lift sales for Lowe’s and Home Depot, he said,
 
“Among natural disasters, hurricanes rank as the most sales impactful because unlike major winter storms, earthquakes or tornadoes, they are predictable providing a sales lift on both sides of the event,” Balter wrote.
 
He did note that both companies keep prices and margins low during natural disasters, but the impact of rebuilding still works its way to the bottom line.
 
Also in the basket:
 
Apparel insiders fear death by “safe” fashion
 
Onward buys Jil Sander owner
 
Back-to-school is looking like a flop (N.Y. Post)

 (Photo: Reuters)