Check out how international sales and the weak dollar continue to lift quarterly results at U.S. companies.

Second-quarter profit at cosmetics firm Avon Products Inc more than doubled, as demand in Latin America and other overseas markets more than made up for sagging U. S. results.

Office Depot posted a 6 percent drop in North American retail sales, but a 13 percent rise in international sales during in its most recent quarter.

Still, investors are wondering when and if the United States’ economic malaise will spread to markets like Europe, Asia and Latin America.

Some cracks are already showing. Britain’s stressed housing market is putting pressure on consumer spending and Spain has reported a plunge in June retail sales amid a severe economic slowdown.

Also in the basket:

Los Angeles City Council passes fast-food ban

Oil slide, US glimmers of hope boost stocks

Jones Apparel 2nd-qtr profit tops estimates

(Photo: REUTERS/Jo Yong-Hak)

Check out the quarterly results at Walgreen, one of the largest U.S. drugstore operators.

The company posted a 2 percent increase in quarterly profit, amid a weak U.S. economy and slowing growth in sales of prescription drugs —  in the reported quarter, Zyrtec was switched to over-the-counter status.

And a slower-than-usual flu season — (good for you and me) – wasn’t so good for Walgreen. The company also pointed to the milder flu period for a slowdown in prescription drug sales volume in the quarter.

The company said it is on track to beat its goal of opening 550 new drugstores this year — and perhaps even come to the rescue of cash-strapped shoppers in the process.

“We’re adding neighborhood locations for today’s customer who is searching for value and struggling with high gas prices,” President Greg Wasson said in a statement on Monday.

As of May 31, the company operated 6,727 store locations in 49 states, but will be in all 50 states when it opens its first Alaska stores in 2009.

Also in the basket:

Bunge to buy Corn Products for $4.4 billion

Costco plans Australia foray to challenge duopoly

Busch family member backs ’strong’ Anheuser Busch

Jones Apparel takes stake in Asian partner

(Photo: Reuters)

The U.S. government is currently putting $100 billion into consumers’ hands in the form of tax rebates, hoping the fresh cash will stave off a recession.

It’s a plan similar to the once the government followed in 2001, except at that point, the economy was already in a recession.

Back then, the National Bureau of Economic Research said the U.S.  economy entered a recession in March 2001. To get the economy out of its funk, the government passed a stimulus package and mailed out rebate checks over a ten-week period from late July to the end of September 2001, according to research conducted by Thomson Reuters.

When looking at the monthly year-over-year changes, U.S. retail sales started slumping in the beginning of 2001 and reached their lowest level in September 2001, according to the research report. The Thomson Reuters Same Store Sales Index registered a rise of just 0.8 percent in September 2001, but then began to bounce back once the rebate checks were mailed out, with October notching a 1.6 percent gain.

“When comparing the sectors within our retail universe, we find that the discount sector performed the best during the 2001 recession and remained within the 3 percent - 6 percent growth range,” the Thomson Reuters report states. “It registered its strongest same store sales result ever of 9.5 percent in February 2002.”

The report said similar trends are being repeated now as middle class consumers cut back on spending and head to discount stores.

“In 2001, Wal-Mart beat Target’s same store sales results 11 out of 12 months. Today, we’re witnessing a similar trend as Wal-Mart has smashed Target’s comps over the last six months,” the report stated.

During the 2001 economic slowdown, the apparel sector performed the worst and posted its weakest comp ever of -9.5 percent in September 2001, the research shows. It also said the teen apparel group and department stores underperformed and posted sluggish comps during the period leading up to September 2001, but were able to bounce back shortly after.

“If past behavior is a good indicator of future behavior, we are likely to continue to see an increase in consumer spending in the short-term while the 2008 rebate checks are distributed,” the report states. “This in return could help improve the overall economy since consumer spending accounts for about 2/3 of GDP. The discount group is expected to post a 3.1 percent comp, but analysts continue to look for an even stronger 3.5 percent result excluding Wal-Mart.”

(Photo: Reuters)

Check out the loss of more retail jobs. 

Another 27,000 retail jobs disappeared in May, according to the U.S. government’s monthly employment report. That makes 152,000 retail jobs eliminated since the beginning of the year.
 
Overall, nonfarm payrolls fell by 49,000. But even more worrisome for the economy and for retailers could be the jump in the unemployment rate to 5.5 percent. That half-point jump was the largest such move in 22 years and brought the unemployment rate to its highest level in 3-1/2 years.
 
Retailer’s May sales reports yesterday were mostly better than expected, causing some analysts to think they could signal the beginning of a consumer turnaround.
 
But others said it just showed a blip in spending that was caused by the tax rebate checks consumers have begun to receive. 
 
Economic concerns could still linger after all that stimulus money is gone, they say, and things could get worse if consumers, already hit by $4-a-gallon gasoline, soaring food prices and falling home values really start to worry about their jobs.

Wonder how a half-point jump in the unemployment number plays into that?
 
Meanwhile, to take your mind of the jobs report, there’s always the company pep rally that masquerades as the Wal-Mart annual meeting. The world’s-largest retailer flies in employees from all around the world to help pack the basketball arena at the University of Arkansas, where stars entertain the crowd (this year’s acts include Miley Cyrus), everybody does the Wal-Mart cheer, and, oh yeah, shareholders get to ask questions.
 
Also in the basket:
 
New Wal-Mart director may herald changing of the guard (Wall Street Journal, subscription required)
 
Target grows makeup artist brands, adds testers (WWD)

 (Photos: Reuters)

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)

March’s weather was not exactly a friend to retailers.

It was cold, damp and even snowy in parts of the country — not quite ideal weather conditions for retailers trying to sell new spring goods, like dresses, sandals, or even fertilizer. (We saw the extent of their struggles on Thursday, when retailers reported dismal March sales figures)

While weather is obviously a very local phenomenon, April so far has not been much kinder than March. According to weather tracking firm Planalytics, this weekend – April 12th and 13th — will be a repeat of most Eastern weekends this spring — a mixture of storminess and cooler temperatures.

But wait … could an upper air pattern be coming to the rescue?

Planalytics said its meteorologists see a change in the upper air patterns between April 16th and 20th. That should result in warm, fair conditions over much of the East and Southeast, extending westward into Texas and as far north as southern Ontario and Quebec, the firm said. 

“Pent-up demand is strong in the East, from the Carolinas to the major Canadian cities of the St. Lawrence, where consumers have been anxious to get out and about. Their gardens need tending, bicycles tuning, and kids want out of the house,”  Planalytics said.

Get ready for surging demand for shorts, sundresses, fertilizer, grass seed, bottled water – even beer — Planalytics said, as people flock to the stores or enjoy the outdoors.

But we can’t all enjoy better weather.

“Unfortunately, the same change turns the Northwest cool and stormy and keeps many of the western and central Canadian provinces out of the fair weather,” the firm said.

(Photo: Reuters)

Check out Old Navy sales getting torpedoed from within.
 
There’s a lot of weakness out there as retailers report March sales today, with cold, wet weather keeping the already skittish consumer from the stores.
 
But one chain that stands out is Gap’s Old Navy division, which is looking more like McHale’s Navy than a mighty Armada.
 
The unit posted a 27-percent decline in same-store sales in March and at least some of the damage appears to be self-inflicted.
 
A company spokesman said on a recorded message that the brand has put too much emphasis on women’s fashion, at the expense of more basic items. He said the company plans to adjust the mix to achieve more of a balance.
 
But Old Navy has a tough course to navigate as it faces competition form a host of other brands that also sell basic apparel for the family, like shorts, cargo pants and T-shirts.
 
The company brought in well-known designer Todd Oldham last fall as creative director and in February the division’s president, Dawn Robertson, left Gap in what the company called a mutual decision. Tom Wyatt, president of Gap Inc’s outlet division, took over while a search for a permanent replacement was launched.
 
But will Old Navy’s new skipper find anything seaworthy?

Also in the basket:
 
Sales from Wal-Mart, JC Penney, Target, Aeropostale, Costco and others
 
JC Penney CEO doesn’t see US downturn ending soon
 
Rite Aid posts Q4 loss on charge; outlook disappoints