The latest example of U.S. inflation seems likely to come from 99 Cents Only Stores, the Western retailer that stocks everything from canned beans to cleaning supplies, party favors and fresh vegetables — all for 99 cents or under.
    
On Monday, the City of Commerce, California-based company, with 277 stores in California, Texas, Arizona and Nevada, will announce what it calls “its first change to its price policy since its founding over 25 years ago.” The Los Angeles Times said this was most likely a precursor to price hikes.

99 Cents Only Stores isn’t fessing up just yet, but chances are prices won’t be getting any lower, given the rising price of food staples like milk, eggs and bread that the company sells.
    
The company’s most recent ad announces deals like 99 cent cantaloupes, Hannah Montana notebooks, microwave popcorn and reading glasses.
    
99 Cents Only Stores posted a net loss of $1.51 million in its most recent quarter despite a 4 percent rise in sales from a year-ago net profit of $2.96 million. Profit was hurt by rising operating expenses and higher cost of sales.

“We would like to assure our wonderful customers that they can continue to depend on 99 Cents Only Stores to have the best values on quality merchandise including food and other basic household items,” said Chief Executive Eric Schiffer in a statement.

The big question: If prices rise, what happens to the store’s name?

Check out what it costs National Football League fans to attend games.

The latest NFL season got under way Thursday night as the defending Super Bowl champion New York Giants opened their season with a win (pictured right). For their fans, there were some changes that affected their wallets.

The average ticket price to attend an NFL game rose almost 8 percent to $72.20, according to Team Marketing Report, a Chicago-area sports marketing firm. And if a family of four wants to take in a game played by the Giants, get ready to shell out almost $500 for tickets, beers, hot dogs and other items.

The increases are de rigueur nowadays as the various North American leagues continue to report record attendance and revenues, but cracks may be starting to appear as some fans have begun dialing back spending amid high prices for gasoline and food, and rising unemployment.

As long as the market will bear it, however, fans of the NFL and other professional sports will have to budget for the increases if they want their game-day fix.

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(Photo: Reuters)

Check out the fading influence of tax rebate checks.

Tax rebate checks helped boost June retail sales but their influence appears to have petered out by July, according to data released by the Commerce Department on Wednesday.

The figures showed that total sales at U.S. retailers declined 0.1 percent in July, which was in line with forecasts made by Wall Street economists. A big reason for the drop was a fall off in auto sales. Auto and auto parts sales fell 2.4 percent in the month, their biggest drop since April, and were off a whopping 10.5 percent from year-ago levels. 

But excluding autos, retail sales were up 0.4 percent in July. That was roughly in line with forecasts, but down from a 0.9 percent rise in June. 

Economists said before the numbers were released that spending has been supported by government stimulus checks but that the stimulus effect was waning in July because most of the checks already have been issued. Meanwhile, prices for many food items are on the rise and there was only a slight moderation in gasoline prices during the month. 

The Commerce Department said gasoline sales in July were up 0.8 percent after a 4 percent June jump. But reflecting higher prices, gasoline sales were 24.6 percent higher than in July last year. 

Excluding gasoline, retail sales in July fell 0.2 percent after a 0.1 percent June decline.

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Mechanism for Credit Is Still Stuck  (NYT)               

(Photo: Reuters)

Check out more signs of consumers being put in a vise.
 
Personal income rose 0.1 percent in June, the Commerce Department said. That was the lowest rise since April 2007.
 
And in fact, if it were not for the economic stimulus checks some consumers received in June, disposable income would have shrunk, the department said.
 
Meanwhile, costs continued to rise. The personal consumption expenditures price index — an inflation gauge — rose at its highest year-over-year pace since May 1991.
 
Consumer spending rose 0.6 percent in June, but actually fell 0.2 percent accounting for inflation. So consumers are spending more to get less.
 
Oh, and one more thing on the gloomy economic front, Challenger, Gray & Christmas Inc said planned layoffs at U.S. companies rose 26 in July from June.
 
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Retailer Boscov’s files bankruptcy, may be sold
 
Walgreen July same-store sales up
 
Burani says investor eyeing bid for 15-18 percent stake
 
Calvin Klein’s latest controversy (WWD)

(Photo: Reuters)

Check out how international sales and the weak dollar continue to lift quarterly results at U.S. companies.

Second-quarter profit at cosmetics firm Avon Products Inc more than doubled, as demand in Latin America and other overseas markets more than made up for sagging U. S. results.

Office Depot posted a 6 percent drop in North American retail sales, but a 13 percent rise in international sales during in its most recent quarter.

Still, investors are wondering when and if the United States’ economic malaise will spread to markets like Europe, Asia and Latin America.

Some cracks are already showing. Britain’s stressed housing market is putting pressure on consumer spending and Spain has reported a plunge in June retail sales amid a severe economic slowdown.

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(Photo: REUTERS/Jo Yong-Hak)

Check out the demise of the dollar menu as we know it?
 
McDonald’s, dealing with rising commodity costs in the U.S., said it is looking at changes to its popular Dollar Menu, which accounts for about 14 percent of U.S. sales.
 
“What fits on that menu will look different than now because it has to be profitable,” said McDonald’s Chief Operating Officer Ralph Alvarez on a conference call with analysts.
 
“We’ve got to make sure we’re pricing smart, not just pricing low. We’ll make the move at some point,” Alvarez said.
 
The comments from Alvarez come two months after Chief Executive Jim Skinnner said the company was willing to absorb some rising costs in order to ensure customer loyalty.
 
“This is not the time to be passing that on to consumers. They have long memories,” Skinner said.
 
One analyst said the popular double-cheeseburger could disappear from the Dollar Menu.
 
But pegging an offering, or even a business, to the dollar can prove to be a dicey proposal. The dollar has weakened and costs have gone up. Most “dollar” stores, for example, stopped capping prices at one dollar years ago.
 
But analysts do not see McDonald’s straying too far from the dollar.
 
“We do not expect McDonald’s to abandon the dollar price point, but rather evolve the menu with either new products at a near-dollar price point or adjust the pricing of select products that have seen significant cost pressures,” Goldman Sachs analyst Steven Kron said in a research note.
 
Perhaps calling it the “Mighty close (to a) Dollar Menu” would solve the problem. To long? Well, that could always be shortened to “McDollar Menu.”
 
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And the plot thinned… (N.Y. Times)

(Photo: Reuters)

Check out the earnings warning from Costco.
 
Warehouse clubs were supposed to be benefiting from the weak economy and soaring gas prices as consumers, hit by rising food costs and gasoline prices, looked to save money.
 
But it turns out that benefit might only be on the sales side, not the bottom line.
 
Costco said Wednesday that quarterly profit would be well below analysts’ estimates.
 
“Factors negatively affecting our fourth-quarter earnings outlook arise largely from inflation, particularly as to energy costs,” Chief Financial Officer Richard Galanti said in a statement.
 
The company is making less money on its gasoline operations and margins on its merchandise were also down as it tried to maintain prices that would attract customers, Costco said.
 
Warehouse clubs and discounters had been some of the better retail sales performers in recent months.

So is Costco’s warning specific to the company, or is the lower-priced part of the retail spectrum taking a hit now, too?
 
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A lean holiday season: stores cut inventories, but hope glitz is gold (WWD)

(Photo: Reuters)

Check out how much stuff costs.
 
Consumer prices rose 1.1 percent in June, the biggest monthly increase in 26 years. The culprits are the same as we have seen for months: energy prices rose 6.6 percent from May, with food up 0.8 percent.
 
Overall, prices were up 5 percent from a year ago. And not to whine about it, but it looks like more price hikes could be on the way, as food and consumer products companies continue to grapple with rising energy and commodity costs.
 
The news puts the Fed in a bind, economists said. Rising inflation means the Fed isn’t likely to be able to cut rates anymore, which means help for shoppers in the form of lower interest rates. But with the economy still weak, the Fed also may not be able to raise rates to tame inflation, which means prices could continue to soar and further pressure consumers.
 
“We have to get used to the idea of 5 percent (annual) headline inflation,” Alan Ruskin, chief international strategist at RBS Greenwich, said.
 
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Furniture Brands speeds up cost cuts, warns on ‘08

(Reuters photo)

Check out what Morgan Stanley is saying about retailers and restaurant owners.
 
It isn’t good. Morgan Stanley is cutting its 2009 earnings estimates and price targets, saying its retail sales lead indicator dropped 1.1 percentage points in June, and the key reasons — home prices, unemployment and food and fuel inflation — are not likely to improve anytime soon.
 
The indicator, which uses a bunch of factors to predict future retail sales, is down 3.7 percentage points from a year ago and the outlook for the second half of 2008 looks grim, Morgan Stanley said in a research report.
 
“We see the likelihood of a decelerating 2008 carrying over into 2009 growing,” Morgan Stanley said, adding that the tax rebate checks making their way into the system will not be enough to offset macroeconomic headwinds in 2009.
 
Tax rebate checks “may actually have a pull forward effect that could make conditions worse for retailers into 2009,” Morgan Stanley said.
 
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Chico’s June same-store sales fall 12.9 percent
 
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(Photo: Reuters)

Check out a couple more bleak consumer signals.
 
The Conference Board on Tuesday said that U.S. consumer sentiment fell to its lowest level in 16 years. One analyst, Dresdner Kleinwort Securities’ Dana Saporta, said the sentiment gauge has dropped 55 percent from its peak in July 2007, a bigger decline that seen after the Sept. 11 attacks and Hurricane Katrina.
 
So even with consumers getting those tax rebate checks, they might not be in much of a mood to ramp up spending in the face of soaring gasoline and higher food prices.
 
In fact, Citigroup retail analyst Deborah Weinswig lowered her estimates on department stores and several other retailers today.
 
“While (the second and third quarter)  could benefit from the tax stimulus checks, we expect current pressures facing the consumer, including across-the-board inflation, housing and credit concerns, and a deteriorating employment picture, to continue to weigh on consumers for at least the remainder of 2008 into 2009,” she said in a research note. 
 
Consumers are also showing some signs of cutting back at the grocery store.
 
Kroger said on Tuesday that it has seen an increase in sales of its private-label brands. That could be bad news for makers of brand-name foods. Both brand-name and private-label food prices have gone up as manufacturers try to offset soaring commodity costs.
 
The branded food companies have argued that as long as the gap between their price and the price of private-label products does not get out of whack, then consumers will still see the value in the branded products.
 
But if consumers are getting to the point where they just need to save money, even if it means giving up the brands they love, that could squeeze the big food companies.
 
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(Photo: Reuters)