Shop Talk

Retailers, consumers and prices

Starbucks drops the axe — is your store next?

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starbucksstore2.jpgCalifornia, Florida and Texas — the states with the biggest populations and the most Starbucks outlets — are losing the most stores as the coffee chain slashes more than 600 stores in a bid to boost slumping U.S. results.

While big states are losing the most, few markets — even Starbucks’ hometown of Seattle — are immune.

The axe is coming down everywhere, from Manhattan’s cityscape and California’s beaches to the downtrodden Motor City and burghs in the U.S. heartland, according to a store closure list released by Starbucks.

Here’s a state-by-state list of closures:

Alabama 12
Arkansas 8
Arizona 1
California 88
Colorado 9
Connecticut 5
Washington, D.C. 1
Delaware 1
Florida 59
Georgia 13
Hawaii 5
Iowa 7
Idaho 2
Illinois 25
Indiana 23
Kansas 3
Kentucky 6
Louisiana 13
Massachusetts 7
Maryland 12
Maine 2
Michigan 18
Minnesota 27
Missouri 17
Mississippi 7
North Carolina 10
North Dakota 4
Nebraska 7
New Hampshire 1
New Jersey 5
New Mexico 4
Nevada 18
New York 39
Ohio 9
Oklahoma 15
Oregon 6
Pennsylvania 21
South Carolina 1
Tennessee 13
Texas 57
Utah 4
Virginia 5
Washington 19
Wisconsin 6
West Virginia 1

Check Out Line: Summer sizzle, summer fizzle

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girlplay2.jpg Check out how discounts, rebate checks and sweltering summer weather are helping some retailers thrive in the down economy.

Wal-Mart posted June sales that topped expectations and boosted its second-quarter earnings forecast after rebate check-wielding shoppers filled their carts with food, medicine and flat-screen TVs.

Check Out Line: 2009 doesn’t look that great, either

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clouds.jpgCheck out what Morgan Stanley is saying about retailers and restaurant owners.
 
It isn’t good. Morgan Stanley is cutting its 2009 earnings estimates and price targets, saying its retail sales lead indicator dropped 1.1 percentage points in June, and the key reasons — home prices, unemployment and food and fuel inflation — are not likely to improve anytime soon.
 
The indicator, which uses a bunch of factors to predict future retail sales, is down 3.7 percentage points from a year ago and the outlook for the second half of 2008 looks grim, Morgan Stanley said in a research report.
 
“We see the likelihood of a decelerating 2008 carrying over into 2009 growing,” Morgan Stanley said, adding that the tax rebate checks making their way into the system will not be enough to offset macroeconomic headwinds in 2009.
 
Tax rebate checks “may actually have a pull forward effect that could make conditions worse for retailers into 2009,” Morgan Stanley said.
 
Also in the basket:
 
Chico’s June same-store sales fall 12.9 percent
 
M&S’s Rose faces stormy showdown with shareholders 
 
(Photo: Reuters)

Check Out Line: Rite Aid’s June sales

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pharmacy.jpgCheck out how generic drugs cut into June pharmacy sales at Rite Aid.

The No. 3 U.S. drugstore chain said its pharmacy same-store sales fell 0.5 percent, as generic drugs were introduced and allergy medicine Zyrtec was switched to over-the-counter status.

Generic drug rollouts hurt rival Walgreen as well. That company said a day earlier those drugs cut into its pharmacy same-store sales by 2.1 percentage points. 

Check Out Line: Kroger Kroger rides lower prices, gas discounts to higher profit

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kroger.jpgCheck Out the quarterly profit at Kroger Co.

The largest U.S. grocery chain posted a higher quarterly profit on Tuesday, thanks to its emphasis on lower prices and gasoline discounts – music to its shoppers’ ears and higher sales for itself.

“Kroger continues to help customers stretch their budgets in a number of ways, including lower prices and our expanded generic drug and gas discount programs,” chief executive David Dillon said in a statement.

Check Out Line: Walgreen’s 3rd-quarter results propel stock

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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 rewalgreen.jpgported quarter, Zyrtec was switched to over-the-counter status.

Check Out Line: Anheuser-Busch in the news (again)

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bud1.jpgCheck Out more news from the Anheuser-Busch front.

The company, which owns half of Mexico’s Groupo Modelo, said Modelo’s chief executive Carlos Fernandez resigned from Anheuser’s board, even as the American beer company tries to thwart an unsolicited takeover bid from Belgian-Brazilian brewer InBev NV.

Modelo is an important player here — it has been approached by Anheuser about a possible combination, according to the Wall Street Journal, while Reuters’ sources, who are familiar with the situation, have said that InBev also courted the Mexican company.

Check Out Line: Rain, rain, go away

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flood.jpgCheck out a flood of fresh trouble.
 
Consumers are already being clobbered by soaring food and fuel prices, and that has kept them from shopping for things like clothes.
 
But the floods in the Midwest over the past week are likely to make things even tougher on consumers. The floods have hit millions of acres of soybean and corn farms, removing more supply from an already tight market.
 
That is likely to add more to inflation, meaning less money in shoppers wallets, analysts said.
 
“CPI readings for the remainder of 2008 will be slightly higher than otherwise,” Citigroup economist Steven Wieting said in a  report. “This reduces real incomes and can also affect financial market expectations at the margin.”

The consumer price index, or CPI, measures the change in prices that consumers pay for goods and services.
 
So much for the rebate bump.
 
Also in the basket:
 
Staples win EU okay for Corp Express takeover
 
General Mills sees 2008 earnings above targets
 
Same-sex marriages boost California stores (WWD)

Check Out Line: It’s the Reuters Retail Summit

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clothes.jpgCheck out a bunch of retail executives talking about the state of the industry, economy and the outlook for holiday shopping.
 
It’s the Reuters Consumer and Retail Summit, being held this week in New York, featuring top executives from Borders, Best Buy, Toys “R” Us, Jones Apparel, Perry Ellis and others.
 
The executives meet with Reuters reporters as most retailers are struggling to attract consumers that have been clobbered by $4-a-gallon gasoline, falling home prices, a credit crunch and rising food costs.
 
Sales got a bit of a boost in May as consumers started to spend their tax rebates. But analysts say that bump could be fleeting, with consumers still under pressure after the rebates have been spent.
 
To find out what retailers think, check out the Retail Summit page all week.
 
Also in the basket:
 
InBev cautions Bid about striking Modelo deal
 
Trust chairman sees change, but no sale, at Hershey
 
CostPlus rejects Pier 1 acquisition offer
 
Starbucks says international growth to cushion U.S. weakness
(Photo: Reuters)

Check Out Line: Benign inflation, if you don’t eat or drive

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gasoline.jpgCheck out inflation.
 
That $4-a-gallon gasoline really drives up consumer prices. The Consumer Price Index rose 0.6 percent in May, the largest increase since November. Year-over-year, consumer inflation was up 4.2 percent.
 
The so-called “core” index, which excludes food and energy, rose only 0.2 percent in May and 2.3 percent year-over-year.
 
But most consumers eat, drive and use heat or air conditioning. So soaring prices for energy and rising food prices — up 0.3 percent in May and 5.1 percent year-over-year — cut into what consumers can spend on clothes, home goods and other discretionary items. 
 
It also could mute the impact of the tax rebates consumers are receiving.
 
“Consumers are spending more to buy food and energy,” Lindsey Piegza, market analyst at FTN Financial, said. “The tax rebate is just offering them a cushion. They are not buying wide-screen televisions.”
 
Also in the basket:
 
Anheuser in talks with Grupo Modelo (WSJ, subscription required)
 
Battling a bumpy road” economic downturn (WWD)

Higher price for Anheuser not a sure thing

Budweiser could pay price for being “America’s Beer”

 (Photo: Reuters)

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