Shop Talk

Check Out Line: How Lowe’s can you go?

Check out the weaker-than-expected earnings at Lowe’s.

Giving fuel to pessimists about the U.S. economy, Lowe’s, the No. 2 home improvement chain behind Home Depot, posted a quarterly profit and sales that missed analysts’ expectations, and also forecast lackluster earnings in the current quarter, underscoring “limited visibility into near-term demand.”

Sales at companies like Lowe’s had benefited immensely from the homeowner tax credit and cash for appliances programs, but now more and more uncertainty seems to be the watchword.

Last week, retailer J.C. Penney forecast a full-year profit below Wall Street’s expectations, stoking fears it would need further discounts to clear out inventory. That was a day after department stores Kohl’s and Nordstrom gave conservative profit outlooks.

“We are taking a relatively conservative approach to the economic climate and especially the moderate consumer,” Chief Executive Myron Ullman said.

U.S. retail sales rebounded in July but showed hints of lingering economic softness. However, investors can search for more clues this week with earnings from retail giant Wal-Mart Stores.

Also in the basket:

Check Out Line: Department stores ready to duke it out

Check out department stores’ forecasts coming in below expectations as they try to gain market share.

On Friday, JC Penney became the latest chain to issue outlook that falls a little bit short of what Wall Street had already expected.

Thursday we saw mid-priced chain Kohl’s and upscale department store operator Nordstrom issue their own modest expectations.

Wait, wasn’t March a great month?  Weren’t shoppers coming back?  What gives?  Let’s take a look at what the executives had to say.

“We know that our customers remain concerned about their budgets,” but like new, trendy merchandise at “compelling prices,” JCPenney Chairman and CEO Myron “Mike” Ullman III said in a statement.

Kohl’s CEO Kevin Mansell told analysts “we don’t want to get ahead of ourselves.” He also told Reuters: “Demand in the categories in which we operate is flat or down over the last couple of years. Therefore, the successful retailers are going to have take business from others.”

Now it looks like chains are revving up to do their best to grow at the expense of rivals as consumers keep close tabs on their spending.

J.C. Penney discounts go mobile

J.C. Penney discounts are going mobile as the department store takes aim at younger, tech-savvy shoppers.

Just in time for the crucial holiday shopping season, the company is testing a discount program from Cellfire that will allow Penney’s Houston-area shoppers to use their cell phones to download coupons that can be presented at checkout for savings.

The move comes as Penney gears up for the holiday shopping season — a crucial sales period for department stores and other retailers.

“It’s another way we’re innovating to enhance the customer’s shopping experience,” Mike Boylson, the company’s chief marketing officer said in a statement.

J.C. Penney’s test currently is limited to the Houston metro area. A promotion on Cellfire’s website reads: “Take $10 off a single purchase of $25 or more in store, jcp.com & catalog when you use your JCPenney card.”

Cellfire’s website also shows coupons for other area stores stores such as Sears and Kroger.

Shoppers who have downloaded Cellfire will have access to the same discounts that Penney sends via snail mail, and new offers will be available nearly every week. 

Check Out Line: Retailers’ ad strategies face “Tipping point”

Check out the quickly shifting media landscape putting retailers’ ad strategies at risk.

In a research note this week, Credit Suisse analyst Michael Exstein examined what changes in the media world mean for retailers who are used to reaching consumers through traditional channels — like the newspaper.

In the past five years, there has been a modest shift from print toward digital media, but Exstein warned that: ”We may in effect be reach a ‘tipping point’ where past media strategies will no longer be sustainable.”

Promotional national retailers that cater to a younger demographic and rely on national media to communicate to customers may be most exposed to changes in the media landscape, he said.

“This is a particularly acute problem for retailers that are used to (some would say dependent on) driving sales and marketshare through promotions such as Target, Kohl’s, Macy’s, and JCPenney,” he said.

“How will they promote in the future if the Sunday newspaper can not be counted on to distribute an insert or an television network can not be counted on to deliver an audience at a specific time/day?”

Retailers like Target that have a large number of younger shoppers — shoppers who rarely, if ever, read a newspaper and instead spend large amounts of time using Facebook or Twitter – there is less time to respond to the changing way consumers consume media, he said.

Check Out Line: Penney pinching in Manhattan

Check Out J.C. Penney’s new store in Manhattan.

On July 31, J.C. Penney will open its first Manhattan store in the midtown area, promising to deliver trendy yet affordable items for New York’s notoriously savvy shoppers.

Penney is taking direct aim at rival Macy’s, whose flagship Herald Square store is a block away.

In fact, the department store chain, which signed the lease for the space in December 2007 just as the U.S. slipped into recession, hopes the store will give its sales a much-needed boost and help it snag some of the city’s higher-income shoppers, just when they may need it most. 

“I think they will be glad to save some money too, don’t you, especially if they are bankers?” Penney District Manager Pete Sadler said during a walk-through of the store ahead of its opening later this month.

The store, located inside the Manhattan Mall at 34th Street, occupies a space that once included a food court.

The 153,000 square foot store is smaller than some other J.C. Penney stores and stocks merchandise ranging from women’s clothing and accessories to home goods. It has a Sephora makeup boutique, and fine jewelry store and will even deliver to people’s homes for a $15 charge.

Check Out Line: Sales fall again

Check out the generally dismal sales in June, sprinkled with drops of hope.

The rain that hampered play at last month’s U.S. Open golf championship also pressured the retail industry.

Sales dropped at several U.S. chains as consumers stayed out of the rain and out of the stores.  Still, some of those focused on discounts once again reaped the rewards as those who did go out searched for deals.

TJX, which runs chains such as T.J. Maxx, raised its earnings outlook after sales at stores open at least a year rose 4 percent.  Analysts on average had expected those sales to fall 0.6 percent.

Maybe things are starting to pick up even at chains where sales fell, as companies find ways to trim costs.  Target, which said same-store sales fell 6.2 percent still said earnings should come in at or above Wall Street’s expectations.  Over at J.C. Penney, same-store sales fell 8.2 percent, but that was better than the company’s forecast for a 9 percent to 12 percent drop. J.C. Penney also raised its second quarter guidance.

Also in the basket:

Amazon cuts Kindle price to $299

Luxury apparel, redefined

American luxury retail has been, well, in shambles.

Since department store revenues began to plummet in September, luxury’s glossy image transformed to one that brings to mind strewn-about merchandise on a Saks Fifth Avenue floor.

Pricing structures have come under pressure as shoppers seek deep discounts, or worse, question price guidelines after aggressive reductions at the end of last year.  In the spring, markdowns crept dangerously close to the start of the season.  Clearly, discounts really are not what designers want their labels to be known for.

“For younger, newer designers, image is everything,” said fashion consulting firm Launch Collective’s Rob Spira, who recently co-curated the New York City Save Fashion pop-up shop to celebrate independent designers.

“Before, designers were coming to us for ideas to build funding,” Spira told Reuters at the Save Fashion store, which popular style Web site Refinery29 also co-curated.  “Now they’re looking for creative ways to sustain in this kind of environment.”

Refinery29 Editorial Director Christene Barberich said many rising designers complained recently that upscale department stores were canceling orders despite interest in their brands.

Check Out Line: Back to buying

Check out some strong sales.

Sure, sales are still down at most chains.  Still, anything that’s down less than expected is a good sign in this economy, right?

Sales at Wal-Mart‘s U.S. stores open at least a year jumped 5 percent, topping analysts’ average expectation for a 2.9 percent rise.  And in a sign that improving sales are leading to better profitability, retailers including J.C. Penney, TJX and Kohl’s raised their profit expectations for their just-completed first quarter.

Also, it looks like kids whose parents didn’t have the money for family vacations over spring break spent some of their time in shopping malls.  Some of the biggest surprises came from Aeropostale and The Buckle, which cater to teens.  Both posted double-digit gains in same-store sales.

Also in the basket:

Sara Lee profit beats estimates, helped by U.S. bakery business

Wendy’s/Arby’s posts first-quarter loss

Wal-Mart shows its strength on Black Friday

Wal-Mart flexed its retail muscle on Black Friday to the delight of deal-seeking shoppers who spoke with our reporter Nicole Maestri in Columbia, Maryland.

Early bird buyers with shopping carts stuffed with toys, electronics and clothes stood 10 deep in checkout lines and the parking lot was packed with cars at 7:30 in the morning. In Valley Stream, Long Island, the crush turned tragic when a temp worker was killed by the crowd surging through a Wal-Mart’s doors.

The Friday after Thanksgiving, known as Black Friday, kicks off the Christmas shopping season and marks what is traditionally the busiest retail day of the year. But what began to emerge from shoppers’ stories was that even if they were willing to look for deals elsewhere, they kept coming back to Wal-Mart.

Marathon shoppers April Richards, 26, and her mom, Diana Eichhorn, 49, started their holiday gift hunt at the Thanksgiving Day sale at Kmart, which was out of the pajamas they hoped to buy. From there they went to Arundel Mills, that features outlet and discount stores, at midnight. They also stopped by Kohl’s at 4 a.m.

But at Wal-Mart they found deals on everything from a sewing machine to $8 jeans and $4 pajamas. The duo said the store’s discounts were so good that they bought jeans and other items that they normally would have purchased elsewhere.

Wal-mart is expected to be one of the few companies to prosper this holiday shopping season, which is feared to be the weakest since the early 1990s as a credit freeze and home price implosion hit consumers’ wallets.

In Oakland, California, shoppers who lined up in the darkness to be first to get their hands on deals when the store opened at 5 a.m. sprinted for the electronics and computer departments.