Retailers, consumers and prices
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.
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.
Also in the basket:
H&M defies retail gloom as July sales top forecast
Swatch upbeat on H2 as Olympics boosts sales
Back-to-School discounts are deeper, more creative (N.Y.Times)
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)
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.
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.
Check out a little retail sunshine.
The weather finally got a little better in April, which helped retailer’s sales even as the economy stayed week, according to Planalytics.
“While April 2008, on a national level, may have been an ‘average’ month in terms of temperature — the weather helped unleash pent up demand, improving sales in the Northeast, Midwest and the Ohio Valley,” the consulting firm said.
The company, which provides weather information for businesses, said home centers, restaurants and softline retailers all showed positive year-on-year gains.
It called out Bon-Ton, Dress Barn, Family Dollar and Lowe’s as having the strongest sales gains.
“While the economy remains sluggish, the weather has certainly done its part this month to improve business’ fortunes,” said Scott Bernhardt, Planalytics Chief Operating Officer.
Also in the basket:
Dr Pepper Snapple to focus on brands, U.S.
Unilever looks for Bertolli sale deal: sources
AnnTaylor reported a quarterly loss on Friday as the struggling clothing retailer, facing lagging sales and falling store traffic, took a charge to restructure its operations. But not to worry — the CEO is aware of the problems facing the retailer and is “all over it.”