Retailers, consumers and prices
Check out the latest batch of grim data about the U.S. jobs market.
As if the consumer sector wasn’t nervous enough about a sputtering U.S. economy, the number of people filing new claims for unemployment insurance unexpectedly rose in the latest week to its highest level in close to six months.
Labor Department data showed the number of new claims for jobless benefits up 2,000 at 484,000 in the week ended August 7, the second straight increase. Economists polled by Reuters had expected claims to fall to 465,000 from the previously reported 479,000.
The news brings more pain to already angst-ridden retailers, who are hoping to pass on rising input costs to consumers with higher prices as companies try to guard margins in a tepid sales environment.
In July, retailers posted weaker-than-expected sales despite cutting prices to lure back shoppers, suggesting a rough back-to-school season.
By Nicole Maestri
Check out the ongoing struggle to sell clothes to recession weary Americans.
J.C. Penney and Abercrombie & Fitch both reported quarterly results that show consumers are still cutting back on non-essential items, with Penney also warning profit for the year would be worse than analysts expected.
Consumers have been hammered by the recession, mounting job losses and credit worries, and it appears they are sticking to shopping lists for groceries and other essentials, rejecting unnecessary purchases and seeking deep discounts.
While the conviction to buy only what they need has hit sales for department stores like Penney, consumers’ desire for bargains has battered Abercrombie, which has stubbornly kept prices higher than rivals, other than discounting clearance items.
“With a challenging economic environment, the consumer continues to show a reluctance to spend on premium brands; a price consciousness dictating shopping habits unlike anything I have ever seen,” said Abercrombie Chief Executive Mike Jeffries, a retail industry veteran. The teen clothing retailer posted a first-quarter loss wider than Wall Street’s expectations, and in an abrupt change, said it is conducting a strategic review of its struggling Ruehl chain. Meanwhile, Penney posted an in-line quarterly profit, but forecast second-quarter and full year results below analysts’ expectations. “We expect consumer spending and mall traffic to remain weak, which will be particularly evident against tough comparisons in the second quarter,” CEO Mike Ullman said. Also in the basket: Kohl’s, Nordstrom beat forecasts, raise 2009 views H&M April sales rebound boosts recovery hopes Target pilot pays employees to monitor health (Photo: Reuters)