Retailers, consumers and prices
Check out the latest quarterly earnings for signs of a recovery.
Whirlpool and PepsiCo both reported better-than-expected quarterly profits and pointed to improving trends, lending hope to optimists that the economy is slowly improving.
While citing continuing macroeconomic challenges, PepsiCo, which makes Tropicana juice, Frito-Lay snacks and Quaker Oats in addition to its namesake cola, posted stronger-than-expected results and affirmed its earnings per share growth target for the fiscal year.
“We are benefiting from both the acquisition of our anchor bottlers earlier this year and from improving trends across our global business. As planned, we have stepped up incremental investments around the world to capitalize on untapped consumer demand,” Chief Financial Officer Hugh Johnston said in a statement.
Meanwhile, Whirlpool beat profit and sales estimates on strong demand in Asia and Latin America, prompting the world’s largest appliance maker to raise its outlook for the year.
Check out the latest wave of strong quarterly earnings from the consumer world.
Under Armour, Coca-Cola Enterprises, Estee Lauder, Ford Motor, Energizer Holdings and Group 1 Automotive were among the consumer-focused companies reporting stronger-than-expected profits, supporting the view that a corner has been turned in the economy.
Athletic clothing and shoe maker Under Armour posted higher-than-expected quarterly profit fueled by strong apparel and online sales, and raised its earnings outlook for the full year. The largest bottler of Coke beverages, Coca-Cola Enterprises, with growth in European markets, did the same.
Check out the renovations being planned by U.S. homeowners this year.
According to an American Express Spending & Saving Tracker poll, 62 percent of homeowners plan to tackle remodeling and renovation projects in 2010 to improve their home’s appearance and value (the top two motivators, respectively). However, many (53 percent) also believe a return to a seller’s market in real estate is not expected for two or more years.
Even with the soft housing market, 85 percent of homeowners consider their home as their most valuable asset and will spend an average of $6,200 to enhance it, according to the monthly study.
Check out a survey showing that younger U.S. consumers are trimming travel plans as well as turkeys during Thanksgiving.
More young professionals (37 percent) are adjusting their Thanksgiving travel and spending plans than the affluent and general population (both 30 percent), according to a survey by American Express. Young professionals are defined as less than 30 years old, having a college degree and a minimum annual household income of $50,000.
The young guns also are pulling back in other areas:
* 11 percent of young professionals plan to drive instead of flying, compared to 7 percent of the general population and 6 percent of the affluent, who are defined as having a minimum annual household income of $100,000.
* 8 percent of young pros plan to shorten their stay for the Thanksgiving holiday weekend, compared to the affluent and general population (both 3 percent).
* 7 percent of young pros will use rewards points, miles and special offers to offset the cost, versus 4 percent of the affluent and 3 percent of the general population.
Overall, American Express found 30 percent of U.S. consumers plan to adjust this year’s travel plans for Thanksgiving — historically one of the busiest travel days of the year — but only 21 percent expect those expenses to decline from last year.
Those who are changing their plans said they will rely more on travel by car, stay for a shorter time and cash in rewards to help pay for holiday trips as they become more selective amid the high unemployment and soft housing market.
However, in a positive sign, sales at U.S. retailers excluding vehicle sales rose for the second straight month in September, raising cautious optimism consumer spending could support the economic recovery.
The American Express survey also showed that the young professionals are cutting back for Halloween, when consumers spent $5.8 billion last year according to the National Retail Federation.
* 36 percent of young pros are buying less expensive costumes and decorations. The rate is 16 percent among the affluent group and 15 percent among the general population.
from MacroScope:John Burns Real Estate Consulting in Irvine, California. The consultants, who provide advice for builders, developers and banks, are calling for a "W"-shaped recovery, marked first by the plunge that Americans living off of home equity would rather forget.
America has breathed a sigh of relief since April, as the summer selling season kicked in and the $8,000 first-time homebuyer credit nudged consumers off the fence into the most affordable market in years. These factors, along with easy financing from the Federal Housing Administration, was the first leg up for the "W," said Lisa Marquis Jackson, a vice president at John Burns.
The onset of the weaker selling months, a building pipeline of foreclosures and expiration of the tax-credit on Nov. 30 will likely bring rising prices upturn to a halt, creating a "false peak" and fresh downturn, the group says. Federal efforts have slowed foreclosures but have not addressed many issues including unemployment and underwater mortgages, leaving a heavy "shadow inventory" set to knock prices to fresh lows.
Nooyi — on a conference call with analysts after the maker of Pepsi-Cola and other sodas and Tropicana juices reported a better-than-expected quarterly profit – said she has met with convenience store CEOs who told her the weak U.S. housing market has resulted in fewer construction workers stopping by for sports drinks and other snacks on their way to the job.
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.
Check out the not-so-chipper news in the retail world.
Restaurant chain Burger King reported lower profits and cut its full-year forecast due to the currency fluctuations, while cosmetics and perfume companies Estee Lauder and Elizabeth Arden rang up lower, albeit better-than-expected, profits and said they would cut jobs.
Indeed, retailers overall posted the second weakest monthly same-store sales performance since Thomson Reuters began tracking the data in 2000 as heavy job losses, weakness in the U.S. housing sector and the still-tight credit markets have many consumers closing their wallets.
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.
Check out the Whirlpool of woe.
Five thousand. That’s the number of jobs Whirlpool plans to cut by the end of next year as it faces falling sales in North America and a potential global recession.
Appliance makers have already been hammered by the U.S. housing collapse. Now the credit crunch is likely to keep demand down, the world’s largest appliance maker said.
“The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy,” Whirlpool Chief Executive Jeff Fettig (pictured left) said in a statement.
Some of the job cuts had already been announced. Others were new. They all add to a slew of job cuts announced by corporate America in recent weeks.
That creates a spiral of people not being able to buy the goods the manufacturers make, which could cause manufacturers to cut more jobs as the economy keeps swirling down the drain.
Also in the basket:
Sam’s Club opening new store called Mas Club
Retailers slash Blu-ray player prices (WSJ)