Shop Talk
Retailers, consumers and prices
Check Out Line: Penney gives market positive surprise
Check out the better-than-expected quarterly results and earnings forecast from J.C. Penney.
The department store operator also said same-store sales would improve during 2010 — it expects same-store sales to be flat in the first quarter and up in the “low-single digits” for the full fiscal year.
Like many retailers, Penney kept inventories tight to avoid having to slash prices to clear merchandise. That helped to boost its profits even as sales lagged.
Still, the company has underperformed several of its main competitors. Its same-store sales fell 3.8 percent in December and 4.6 percent in January, even as rivals such as Kohl’s and Nordstrom saw their sales shoot up. Penney has been hampered by a higher exposure to malls, where traffic has suffered particularly during the downturn.
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.
This holiday’s shiny new toy: social media
Companies that cater to consumers are always chasing after the latest consumer technology trend (anyone remember Second Life?), and this holiday season that means following them into the world of social media.
Companies ranging from Wal-Mart and Panda Express to J.C. Penney and Target are experimenting with Facebook, Twitter, YouTube or Flickr. Some are tweeting special coupons or limited-time deals, while others are doling out fashion advice or providing play-by-plays from product launch parties on Facebook. M.A.C. said it is using its Facebook page to feature artists, color collections, and what is happening backstage at fashion shows.
How about some lipstick to go with that lawn mower?
Sears, the low-priced retailer known for its selection of Craftsman tools and kitchen appliances, is jumping on the beauty bandwagon.
The retailer is debuting beauty departments — called Sears Beauty — in 13 mall locations in Chicago, Los Angeles and New York.
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.
Check Out Line: Can a $298 laptop jump-start back-to-school?
Check out efforts to get serious back-to-school shopping underway.
Wal-Mart announced plans to start selling on Sunday a Compaq Presario laptop for $298.
Gary Severson, Wal-Mart U.S.’s senior vice president of home entertainment, told Reuters he thought the deal represented a “screaming value.”
Check Out Line: Consumer spending shows a tiny rise
Check out a government report showing that U.S. consumer spending rose 0.3 percent in May after an upwardly revised flat reading in April.
It was the first gain in spending since February, as government stimulus pushed incomes higher.
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)
Check Out Line: This week in retail wasn’t pretty
Check out a stream of extremely sobering news from – and for – retailers.
This week, quarterly reports came in from Macy’s, Kohl’s, Nordstrom, JC Penney, Charlotte Russe, and Abercrombie & Fitch.
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