Check out the boost Coach is getting from its new Poppy line.

The leather goods retailer reported higher than expected quarterly profit and sales on Tuesday.

Coach said its new Poppy line, which is aimed at younger women with its bright colors and lower prices, helped increase store traffic from the previous quarter.

The average price of a Poppy bag is $260, about 20 percent less than the usual Coach purse. The line’s introduction is part of a plan by Coach to reduce overall prices by 10 to 15 percent and appeal to more cost-conscious shoppers.

Coach Chief Executive Lew Frankfort told Reuters in an interview that he expects earnings per share to show gradual improvement for the balance of the fiscal year when compared with the prior year.

“Consumers are starting to feel a bit more confident that the economy is stabilizing, that the outlook is no longer dire,” he said, adding that he expected a stronger holiday shopping season for the overall industry.

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US retail holiday sales seen up 1.6 pct - ShopperTrak

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(Photo: Reuters)

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.

Sears Beauty will sell cosmetics, skin care, bath and body products, and fragrances by brands like L’Oreal, Maybelline, and CoverGirl. The offering, Sears says, is designed to help shoppers “achieve their ideal beauty results.”

Sears isn’t alone in wanting to help shoppers put their best face forward. JC Penney has installed Sephora locations inside many of its department stores, while Wal-Mart has reached a deal to sell an exclusive line of Hard Candy makeup in its discount stores.

Retailers look at cosmetics as a way to drive consumers into their stores more frequently, because shoppers typically need to purchase a new lipstick or restock their favorite body wash more often than they need to buy a new suit or replace their ride-on lawn mower.

To mark the opening of the beauty departments, Sears is offering a free cosmetic bag and brush set with any $25 cosmetics, fragrance or bath purchase, and a $10 Sears reward card with any $50 cosmetics, fragrance, or bath purchase.

(Photo: Reuters)

Check out the cost cutting formula failing at Sears.

In the past few weeks a slew of retailers, ranging from Target to Macy’s to Dillard’s, have posted results that were better than Wall Street expected, helped by cost cuts.  Retailers have done everything from freezing executive salaries to eliminating jobs to slowing store expansion plans.

But on Thursday, Sears reported a surprise loss in its second quarter while analysts were expecting a profit.

The company, controlled by hedge fund manager Edward Lampert, cut total costs and expenses 8 percent. But revenue fell 10.3 percent to $10.55 billion.

Sales at its Sears stores continued to suffer from the faltering housing market, which has sapped demand for its Craftsman tools and Kenmore appliances.

Same-store sales at Sears fell 12.5 percent, while Kmart’s same-store sales slid 3.9 percent. Overall, same-store sales fell 8.6 percent, and the decline accelerated after slowing during the past two quarters.

“Ouch,” wrote Morgan Stanley analyst Gregory Melich in his note reviewing the results. “This morning’s 2Q miss was pretty much across the board, with weak comps and lack of gross margin expansion standing out.”

Bottom line, he said, Sears remains a weak retail asset.

Or, as Credit Suisse analyst Gary Balter put it in his note entitled “Put a Fork In It” — “We continue to view Sears Holding as the most overvalued stock in our coverage.”

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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.”

The retailer also plans to cut the price of an Acer laptop with an 8-hour battery by $50 to $548. The computer has 3 gigabytes of memory, a 320 gigabyte hard drive and qualifies for a free upgrade to the Windows 7 operating system when it is released.

Retailers ranging from Wal-Mart, to Target, to J.C. Penney have outlined their plans to lure back-to-school shoppers. Penney is using a special website, jcp.com/teen, to reach web-savvy teenagers who shop for themselves in the back-to-school period but may have less money to do so this year.

But retailers are confronting cash strapped shoppers, who are watching their pennies as the unemployment rate rises and the housing market remains depressed.

Asked for his view of the back-to-school season, the Chief Executive of UPS, Scott Davis, said on a conference call it was too early to tell.

“We’ve not seen a lot of signs yet based on the air freight market and ocean freight market,” he said.

But he said Wal-Mart’s plans to increase its selection of laptop computers was a good sign and perhaps the back-to-school season would be better — a hope likely held by the entire retail industry.

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(Photo\Reuters)

Wal-Mart has a plan to keep shoppers coming into its discount stores once the economy improves and it is called ”Project Impact.”

While the retailer lost customers during the boom years as shoppers spent their dollars in the brighter, cleaner stores of its competitors, Wal-Mart is trying to make sure that doesn’t happen again.

Under Project Impact it is renovating its U.S. discount stores,  widening its aisles, lowering fixtures, improving its signs, installing wooden floors, and adding skylights to present shoppers with a store that fees open and “friendly.”

Check out a little video of a prototype store.

(Photo: Reuters\Jessica Rinaldhi; Video\Lisa Baertlein)

Could Lee Scott be heading off to Stanford?

Scott will retire as CEO of the world’s largest retailer as of Feb. 1.

While Scott will remain chairman of the executive committee of the board after retiring as CEO, he gave a hint on Monday as to how he might spend some of his upcoming free time.

Speaking at a Wal-Mart meeting that was broadcast over the Internet, Scott said he has been asked by Stanford to be a visiting professor.

“It’s interesting being invited to be a visiting professor there because they sure as heck wouldn’t have let me in when I was younger, I guarantee you that,” Scott joked at the meeting.

According to a bio on Wal-Mart’s website, Scott received his Bachelor of Science degree in Business from Pittsburg State in Pittsburg, Kansas.

Reuters put a call in to Stanford. At the time this blog was published, the University was still working to confirm the invitation had been extended to Scott.

UPDATE:

Stanford got back to Reuters with an update.

Turns out, the Stanford Graduate School of Business has talked with Scott about the being a Denning Distinguished Fellow in Global Business and the Economy.

“I would be delighted if Lee can spend time at the Stanford Graduate School of Business, interacting with our students and faculty,” said Dean Robert L. Joss, in a statement provided to Reuters.

The school said talks are continuing.

(Photo: Reuters)

Check out the fifth straight drop in U.S. retail sales.

The Commerce Department said total retail sales fell 1.8 percent in November to a seasonally adjusted $355.66 billion following a revised 2.9 percent plunge in October.

Excluding motor vehicles and parts, sales were down 1.6 percent in November after a revised 2.4 percent October fall.

One reason for the decline (besides the struggling consumer) – gas prices.  Gasoline sales plummeted a record 14.7 percent after falling 12.9 percent in October, the data showed. Prices at the pump have fallen significantly and that is reflected in the retail sales report, which compiles total sales by gasoline stations.

The data also showed that sales of furniture, electronics and clothing were up in November after decreasing in October.  Looks like those Black Friday deals were able to rouse skittish consumers into a spending mode.

But the question remains — how much have retailers put profits at risk to gain sales?

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(Photo/Reuters)

Check out retailer’s different views on future profits.
 
Kohl’s, the mid-priced department store, says it expects third quarter earnings to be better than expected, while upscale Nordstrom cut its forecast range.
 
That’s not to say that Nordstrom’s consumers are flocking to Kohl’s as the U.S. economy suffers. Kohl’s profit fell in the second quarter. But cutting inventory was enough for it raise its profit estimate for the full year. Deutsche Bank retail analyst William Dreher also said the company will be able to set itself apart with fresh merchandise because it cleaned out its inventory.
 
Nordstrom, meanwhile, cut its full-year profit outlook. But while its customers are spending less, the retail chain says they are not trading down.
 
And if they were, they certainly aren’t trading down to J.C. Penney, which saw a 36 percent drop in profit and forecast third quarter earnings below analysts’ estimates. Sales also fell 2.5 percent.
 
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Back-to-School discounts are deeper, more creative (N.Y.Times)

 (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.
 
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 (Photos: Reuters)

Sears Holdings Corp reported a quarterly loss this morning. But the thing that left analysts like Credit Suisse’s Gary Balter scratching their heads was the company’s expectations for higher earnings before interest, taxes, depreciation and amortization (EBITDA) for the full year.

“We are struggling with what we are missing in the context of Q1 being down over $385 million in EBITDA and other comments in the release that talk about the expected difficult sales and gross margin environment,” Balter said in his research note.

Sears said sales fell about 6 percent to $11.1 billion in the quarter. Total U.S. same-store sales were down 8.6 percent as the appliance, lawn, garden and apparel segments languished.

Balter described the second half of the past year for Sears as an “unmitigated disaster” with very high inventories, and expenses that pointed to sales levels that were not reached.

Noting that Sears was already a lean company, Balter said that its latest EBITDA plans implied expense declines of  over 14 percent — which to him, doesn’t seem a viable option unless, he said,  ”the company is planning for even lower service levels and liquidating the company.”

For the quarter, Sears said selling and administrative costs rose 6 percent. The Illinois-based retailer, which has reorganized into five types of business units, and has boosted spending in some areas.

The other alternative to achieve higher EBITDA, Balter said, could include gains on asset sales which he didn’t think would solve Sears’ longer-term issues.

And Sears didn’t seem to be helping him understand any of this  — Balter said in his note that ”there is no one at the company to contact.”

Can someone at Sears, please…?

(Photo: Reuters)