Retailers, consumers and prices
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.
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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
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.
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.
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.
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Onward buys Jil Sander owner
Back-to-school is looking like a flop (N.Y. Post)
Late on Wednesday, Starbucks said it would slash U.S. coffee store openings through 2011 as it adjusts to slower U.S. growth.
The coffee giant blamed the domestic housing crisis for a significant quarter-over-quarter deterioration in U.S. customer traffic and said it saw early signs of a potential traffic slowdown in the United Kingdom, which may be related to economic problems there.