Tax rebate checks are in the mail and some of the rebate cash has already made its way to consumers’ wallets. But will this cash infusion give the economy (and struggling retailers) a boost?

According to interviews Reuters conducted with consumers across the United States over the past week, the answer seems to be that most of the extra money will be heading toward the basics — like food, fuel and credit card payments — with just a little left over for splurges.

Here are some comments we rounded up:

• “I will almost certainly save it,” Courtney Hancock said outside a shopping center in the Buckhead section of Atlanta. “At this point there isn’t anything that I’ve been waiting to buy.” Her expected $600 rebate check will likely be used for a bigger purchase later. 
• Lisa Hasson, 39, free-lance pianist and mother of twin, 2-year-old boys in Cincinnati. “I’m probably just putting it in a savings account — holding onto it for the summer. Lean living for lean times.” 
• Ava Lee, 34, has been out of work in Los Angeles since December and says she’ll use her rebate check to pay for “necessary expenses” like food and gas. ”I’d use mine for everyday spending. I would not go out and say, ‘Ooh! I have extra money’,” said Lee, who has turned off her heat and air conditioning to keep expenses down. 
• Sarah Ortiz of Houston said she decided early on to use the tax rebate to pay debt. “I’m trying to get down to one credit card. They say we’re in a credit-crunch,” she said. 
• Daniel Pillow of Houston said he planned to use his rebate to pay his American Express bill, but admitted he’d already used the card to buy some extra clothes in anticipation of getting a check. “I may have spent a little bit, knowing that I was going to get a check,” said Pillow, an employee of the Houston Public Library system. 
• Morgan Lawson, 58, works at the Time-Life Building in New York supervising newspaper deliveries. ”The likelihood of saving it is slim,” he said, adding that prices seem to be rising across the board. He thinks he will have to spend it on necessities, like food and higher energy prices and clothes for his children. ”It sure doesn’t hurt,” to get the extra cash, he said, “But, it’s not a huge boost.” 
• Sergio Rivas, a computer network administrator from Hialeah, Florida, said he would put his rebate toward a deposit on a new apartment.  He said he’s looking for “something a little bit bigger, hopefully with some kind of patio.” 
• Paula Goehe, 61, retired administrative assistant in Indiana: “I’m sorry to tell you I’m not going to spend it. We need the money for retirement. We’ve been retired four or five years and we spent a lot to put our children through college, so we’ll be saving it — even though there is no interest at all.” 
• Dana Bulan, a teacher who lives in Chicago, said she will use her $300 rebate check to pay for her regular tennis lessons and won’t bother trying to save it. ”It’s such a small amount of money, it’s not worth, I think, trying to put it someplace else,” Bulan said.
• John Barker, 57, who installs swimming pools for the “super-rich” in the St. Louis area, said that although his business had not been affected by slowing economic growth, spiraling costs meant he had few plans for his rebate check. ”I’ll put it into my checking account and no doubt it will go for gas or food,” he said in the parking lot of a branch of Bank of America on the outskirts of St Louis. “Looking at the price of oil, I think I’ll need it to fill up my truck.” 

(Click here to read full story) 

(Photo: Reuters)

Last year, a tax refund might have been a perfect excuse to finally splurge on that luxurious Coach handbag, or dinner at that hot new restaurant downtown.

This year, that tax refund check likely means another sobering trip to the grocery store or gas station.

With shoppers feeling the burden of rising food costs, high gasoline prices, a slumping housing market, a weakening jobs picture, and the possiblity of a recession, many intend to use their tax refund this year to cover everyday expenses.

According to the Discover U.S. Spending Monitor – a monthly index of consumer spending intentions and capacity based on 15,000 interviews – of the 61 percent of adults surveyed who said they expect a tax refund this year, nearly 64 percent said they will use that cash to help pay for basic household expenses like gas, groceries or mortgages, or pay down credit card debt. 

Only 16 percent of consumers intend to put their refunds into savings, while 8.1 percent said they would use it to take a personal or family vacation.

So…how do you intend to spend your tax refund?

(Photo: Reuters)  

M-A-R-C-H S-A-M-E-S-T-O-R-E S-A-L-E-S.

The overwhelmingly dreary news today from U.S. retailers reporting March sales results was enough for Lazard Capital Markets analyst Todd Slater to utter the “R” word with gusto.

Referring to a recession in consumer discretionary spending, Slater said: “The numbers on consumer discretionary spending this month indicate that a recession is in full swing.”

According to the Free Dictionary , that means a recession is already “at the highest level of activity or operation.” Therefore, Slater reasoned, it may be time to start buying some retail stocks.

Slater was not alone. The Standard & Poor’s retail index was up more than 2 percent on Thursday afternoon.

According to Slater’s “Beat-O-Meter” only 30 percent of retailers posted March same-store sales that exceeded Wall Street estimates, well below the average of 50 percent. 

“While the first half of March was very strong, owing to early school vacations and the Easter shift, sales fell off precipitously at the end of the month, suggesting a bigger giveback than expected.”

But if you believe that things can only get better from here, Slater says investors should focus on companies that:

1) have strong top-line growth visibility, driven by increasing brand cachet and/or global exposure, such as American Apparel, Deckers Outdoor, Iconix Brand Group, Warnaco, Wolverine World Wide and VF Corp.

2) have already suffered through a self-imposed recession, have lowered expenses and inventory liability significantly and can meet/beat earnings estimates through margin expansion, even in a weak top-line environment, such as Limited Brands.

Case in point: Limited Brands said on Thursday that same-store sales at its Bath & Body Works chain fell 13 percent but that merchandise margins were up “significantly”.

Enchanted orchid or pineapple mango body cream anyone?

Check out the warning from J.C. Penney.
 
The retailer slashed its first-quarter earnings forecast and said Easter sales were well below expectations.
 
That may be a pretty good snapshot of where the American economy is right now. J.C. Penney says half of American families are its customers and those families are under pressure from higher energy costs, a deteriorating job market, the housing downturn and the credit crunch.
 
Not much news there. But according to J.C. Penny’s forecast, things are much worse than the company thought.
 
The warning comes the same week Williams-Sonoma Chief Executive Howard Lester said the economic environment was probably the worst he’s seen in the 30 years he has been in the business.
 
Oh, and Lester added this cheery note:
 
“We believe there are circumstances under which it could get progressively worse, particularly if we find ourselves in a protracted recession.”
 
Also in the basket:
 
Cash-rich retailers stand to gain in credit crunch
 
Li & Fung’s 3-Year Plan: Sourcing Giant Aiming For $20 Billion in Sales (WWD)
 
Office Depot Holder Group files proxy statement 
 

(Photo: Reuters)

Check out the weak quarters at American Eagle and Talbots.

Apparently the tough U.S. retail environment is not age-specific.

American Eagle Outfitters, which sells teen apparel said fourth-quarter profit fell more than 6 percent amid weak sales, higher markdowns and competition from rivals.

The retailer also forecast first-quarter earnings well below analysts’ expectations as it has had to take higher markdown.

Meanwhile, Talbots, which sells apparel for women who generally are not in their teens, posted a quarterly loss, hurt by a charge related to its J. Jill business, store closings and declining sales.

But the company still posted a loss even without the charges. The company, like its rivals that also sell classic clothing to women over the age of 40, has struggled for more than a year with slow consumer traffic and declining sales.

Talbots said it is planning conservatively for 2008, with leaner inventories, better pricing and “more compelling” clothes in the fall, all of which it hopes will lead to a profit this year.

Also in the basket:

Economy faces recession, probably in Q1

Pilgrim’s Pride closing chicken facilities

Making the grade at meat judging (Wall Street Journal)