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.

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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.

Check Out Line: Bargain hunters trolling the web

Check out consumers stepping up their online bargain hunting ahead of the holiday shopping rush.

According to Hitwise, searches for retailer promo codes rose 19 percent last week compared with 2008.

Those numbers should rise headed into “Cyber Monday” – the Monday after Thanksgiving when retailers shift from in-store to online promotions.

Last year, Hitwise said searches on a portfolio of search terms for specific retailers (i.e. ‘target coupons’, ‘target coupon codes’ and ‘target free shipping code’) peaked during the week of Cyber Monday, up 76 percent from 2007.

So who is doing this searching? Hitwise looked at the demographics of online bargain hunters in the 8 weeks ending Dec. 27, 2008. It found the split is even for male and female searchers. Just over half of the searchers were between the ages of 25 to 44, and Hitwise said the younger searchers, aged 25 to 34, were more likely to search for retailer coupons than the rest of the online population.

It also found the greatest share of searches are from those making between $30,000-$60,000 and $60,000-$100,000.

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Latest back-to-school outlook brings little cheer

Citigroup retail analysts held a call with the media to discuss their outlook for this year’s back-to-school season and, as we’ve been hearing, there are few bright spots on the horizon.

Deborah Weinswig, who covers retailers including Costco, Wal-Mart and Nordstrom, said Citi expects back-to-school same-store sales for those retailers to fall 3 percent to 4 percent.

That compares with a gain of 0.9 percent last year.

“This is the first year since at least 1995 that we are projecting a decline in back to school same store sales,” she said. “In addition, if back-to-school sales don’t materialize early we believe that retailers could become very promotional in an attempt to drive traffic and sales.”

She said Citi’s proprietary back-to-school survey found that 45 percent of consumers plan to spend less for this year’s new school season than they did a year ago. The survey found that most consumers plan to buy apparel (75% vs. 79% last year), while the second most common purchase is expected to be a personal computer (15% vs. 19% last year) –although, as you can see, the percent planning to buy in both categories is down year-over-year.

J.C. Penney is one of Weinswig’s top picks for back to school – helped mainly by the fact that they have very easy comparisons to a year ago when sales fell.

Kimberly Greenberger, another analyst, said she is cautiously optimistic for improving sales and profit trends for the back to school season for softline retailers, or chains like Aeropostale and Pacific Sunwear. Greenberger said she was bullish on the outlook for American Eagle Outfitters and Urban Outfitters.

“Twilight” Vampire Love For Sale at Retail

Wannabe vampires can now suck up some “Twilight” love — ummm, read fashion — at department store Nordstrom. The retailer has announced a deal with Summit Entertainment for an exclusive clothing and jewelry collection inspired by the upcoming film “The Twilight Saga: New Moon.”

“Twilight,” of course, is the smash hit movie romance ($382 million global box office) about a teenager (Bella Swan) and her forbidden love for a vampire (Edward Cullen) and all the blood-sucking complications that can bring. “New Moon” is its sequel, due in theaters this November.

Shoppers can find their plaid tunics, “Team Jacob” T-shirts or “I love Edward” heart pendants starting October 1. The collection, created by Awake Inc, “reflects the mood and spirit of the film,” according to a press release. Prices range from $32 for a T-shirt to $58 for a jacket.

An Entertainment Weekly blog described the line as “supercute” but bemoaned the lack of life-size cutouts of heartthrob Robert Pattinson (Edward) in a suit for sale. That’s him at right with Kristen Stewart (Bella).

Nordstrom is also holding events in stores in advance of the release of the second installment of the vampire saga, including advance screening parties, and has launched an online countdown on a special website.

But if you’re trying to re-create a bare-chested werewolf look, don’t go to Nordstrom — there’s no love there. You’re on your own.

(Photo: Reuters)

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: Buying basics buoys big chains

Check out the ten largest U.S. retailers.

The National Retail Federation’s STORES magazine is out with its annual ranking of the top 100 retailers.

The list shows that U.S. consumers have been focused on bargains and basic necessities, such as food and medicine.  Wal-Mart tops the lineup, followed by Kroger and Costco.  Home Depot fell from No. 2 in 2007 to the fourth spot in 2008 as many shoppers decided to cut back on costly home-improvement projects.

Home Depot, Lowe’s and Sears Holdings were the only members of the top 10 to see their revenue fall in 2008.

Some other rankings that may interest you: Amazon.com is the 19th largest retailer, ranking higher than well-known chains such as J.C. Penney, 7-Eleven and Gap.  Apple’s stores and iTunes combined hold the 40th spot, topping chains such as Nordstrom, Whole Foods and Barnes & Noble.

The companies were listed by annual revenue, which may include estimates for private or closely-held companies.  Revenue from major non-retail operations were excluded when possible.

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Check Out Line: The hurt is spreading

Check out the latest sales reports, which show that consumers are still cutting back on discretionary spending as they shift to discounters for the basics.  Granted, that’s not exactly news anymore, but some of this morning’s sales tell us that even the discounters are starting to feel the heat.

“Sales for the month of May were somewhat below our expectations,” chief executive officer of Target, Greg Steinhafel, said in a statement.

He’s not alone.

Big boxers such as Target and BJ’s Wholesale reported steeper than expected drops in same-store sales, suggesting that the recession may have depended further than the luxury market.

Speaking of which, upscale department stores, such as Nordstrom and Neiman Marcus, saw sales slip while Macy’s fared slightly better than analysts had expected.  Abercrombie & Fitch, known for their strong hold on the younger markets saw same-store sales slide 28 percent, worse than the decline analysts had expected.  And teen/tween sensation Hot Topic, saw same-store sales fall 6.4 percent which were, again, steeper than analysts had predicted.

There were some bright spots, though: if you ignore gasoline sales, Costco Wholesale saw same-store sales rise one percent, and BJ’s Wholesale rose 4 percent.  And for apparel, Buckle Inc’s more casual teen market shopped the company’s same-store sales up 13.4 percent.

Even TJX, owner of TJ Maxx and Marshall’s among others, saw higher customer traffic translate into company gains even in the face of fluctuating international exchange rates.

Check Out Line: Apparel apathy endures

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)

If only All Mankind would buy Premium Denim

Premium jeans are a chic — and profitable — addition to department stores when consumers flush with cash are willing to shell out over $200 per pair. But when the economy goes south, stores and shoppers start to balk.      On Tuesday, VF Corp, maker of 7 For All Mankind jeans, said that brand’s total business was down about 10 percent in the quarter, thanks to the weak U.S. wholesale environment.      “It is absolutely a piece of the market that has been most challenged in this economy and that is the more premium luxury sector,” Chief Executive Eric Wiseman told analysts in a call following the release of first-quarter results, which were lower than the year-ago quarter.      7 For All Mankind competes with a small group of premium brands including True Religion, which announces quarterly results in early May.      The brand is sold in specialty shops, some of which are shuttering their doors in the recession, and upper-tier department stores, including Nordstrom, Bloomingdale’s and Saks Fifth Avenue.   “You see their comps so you see how they’re struggling right now to get traffic into the store,” Wiseman said.      VF’s international jeans business, too, is struggling for a good fit with the global economy.       The company, which makes Wrangler and Lee jeans sold around the world, said it was lowering its full-year earnings guidance in large part due to “a severe contraction” in the economies of Scandinavia and Eastern European countries, where jeans are apparently not at the top of the shopping list.