Check out the latest outlook on October sales at U.S. retailers.

While most industry experts expect a 1.2 percent rise thanks to the weather gods and easy comparisons, the forecast doesn’t really say it all.

For instance, while sales trends have improved from a disastrous October 2008, data on the economy and consumer spending gives mixed signals and indicates shoppers remain cautious.

News of the U.S. economy returning to growth may have renewed some hopes of a revival in spending late last week, but the Commerce Department talked about consumer spending falling 0.5 percent in September.

It may be too early to raise hopes based on expectations for October.  One thing is certain — the future is unclear.

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(Reuters photo)

Check out retailers beating earnings expectations.

Today it is Family Dollar and Costco — both being places where people usually shop to save money.

Family Dollar saw sales rise in the quarter, though sales at stores open at least a year were less than expected as the company has been reorganizing its stores to stock more food and other items that shoppers want as they stick to necessities.

Costco sales fell and so did its profits, in part due to a stronger dollar, higher labor costs and also because of the weak economy.

But its earnings still beat Wall Street’s expectations and Costco’s stock rose in the morning.

Retailers will be heard from a lot this week as many report September sales.

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(Reuters photo)

Consumer product manufacturers and retailers have a relatively sharp eye for cost-cutting, speed and expanding into new markets, a report released on Thursday showed.

Sixty two percent of consumer and retail firms see additional opportunities to lower costs in their supply chains, compared with just 48 percent across all sectors, according to Ernst & Young’s Opportunity in Adversity research.  That means cuts above and beyond the trimming that has already been completed.

Of course, many companies in the consumer and retail space have been able to navigate the recession better than the overall business world since people still need to eat, drink and — occasionally, these days — buy clothes and shoes.  At the same time, manufacturers in the space face the added pressure of retailers cutting back inventory levels as they try to boost margins.

Others have also seen consumer industry companies taking a closer look at their supply chains.  Carlos Niezen, head of Bain & Co’s purchasing practice, told Reuters that smarter firms take a step back to see if they can revise their cost structures, rather than just looking for quick fixes to trim spending in the short term.  Still, in a Bain survey of 60 executives from various industries earlier this year, 85 percent said they lacked best-in-class purchashing capabilities at their companies.

Ernst & Young’s report was based on responses from senior executives at 39 global companies in areas such as food, beverage, tobacco, personal products, apparel and retail.

It showed that 79 percent have undertaken a review of their current cash management and cash flows, versus 73 percent of the overall tally from 569 firms across a wide range of businesses.  The survey was completed in June.

As they look for ways to drive growth, 56 percent of consumer companies planned to accelerate the time it takes to get products to market, compared with just 30 percent of the overall group.  Consumer and retail respondents were also more likely to say they would expand into new geographical markets compared with the larger pool.

(Photo/Reuters)

Check out the continuing struggle in the retail world.

U.S. retailers reported disappointing sales declines for July, suggesting shoppers are still searching for bargains and basics in the downturn.    

July’s results mark the 11th consecutive month of falling sales at stores open for at least one year, a measure known as same-store sales.

Rising unemployment, cool weather and a lack of tax-free holidays like those held last year disheartened shoppers, who bought just daily essentials last month.

Still, some companies like Gap and Macy’s managed to forecast better-than-expected earnings for the quarter, as they managed their expenses better.

But retailers’ true test?  September, according to one analyst.

“The true month to watch will be September because it will mark the first month that started the streak of negative same-store sales in 2008,” said Jharonne Martis, senior research analyst with Thomson Reuters.

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(Reuters photo)

Check Out retail strategy for growth.

A list of the top 10 companies from a “Hot 100 Retailers list” compiled by Planet Retail for the National Retail Federation showed that while a few companies grew organically, most grew as a result of a merger or acquisition.

Topping the list of companies that grew through a deal was DineEquity,  which bought Applebee’s last year. 

Others in that category include Susser Holdings after its purchase of Town & Country Food Stores and Village Market grocery stores, as well as the combination of fast food chains Wendy’s and Arby’s into Wendy’s/Arby’s.

Of the companies that grew on their own, Los Angeles-based American Apparel was “tops,” with revenue growth of 57.6 percent, the list showed.

Another not-so-surprising name in the top 10 was Apple, known for its iPod, Mac computer and one of the latest favorites in the market — the iPhone. “Still opening new locations, Apple also uses its stores as a way to build brand awareness,” according to the survey.

Some retailers actually managed to maintain growth, averaging a 10.8 percent compound annual growth rate, the list showed.  Those on the growth chart include GameStop, Urban Outfitters, Best Buy and J. Crew to name a few.

The Hot 100 Retailers study is the annual ranking of the fastest-growing publicly traded retail chains, and rankings are decided by increases in year-over-year revenues between 2007 and 2008.

Here’s the list of the top 10 companies in the Hot 100 Retailers List:

1.       DineEquity

2.       American Apparel

3.       Susser Holdings

4.       A&P

5.       Apple Stores/iTunes

6.       Wendy’s/Arby’s Group

7.       O’Reilly Automotive

8.       Finlay Enterprises

9.       The Pantry

10.     Amazon.com

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(Photo/Reuters)

Check Out this analyst’s view on the toy sector.

Tim Conder, an analyst with Wells Fargo Securities, said toy shares continue to offer the best “risk/reward” as those in his coverage, like Mattel, Hasbro and RC2 Corp, continue to gain relative market share.

“Despite on-going consolidation among retailers and investor concern about growing major retailer ‘clout’  via pricing pressure and private label toys, major toy manufacturers have gained share. Why?” Conder asked in his note.

The answer could be –  ”(1) Financial staying power, (2) Uninterrupted supply chains while 2nd/3rd tier vendors had issues during the peak of the credit freeze, (3) Licensed/owned brands that major retailers need to draw consumers (e.g., Barbie, Transformers, Star Wars, Spiderman, Thomas & Friends, Sesame Street, John Deere), and (4) Dependable consistency to deliver globally as major retailers expand,” Conder said.

Conder’s positive take on toy makers comes ahead of major earnings reports that begin this week with No. 1 toy maker Mattel, followed by rival Hasbro early next week.

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(Photo/Reuters)

Check out the expected weak May sales in the U.S. retail landscape.

Despite Memorial Day sales, warmer weather and deals such as $1 flip-flops, most U.S. retailers are expected to report declines in same-store sales in May as shoppers kept hunting for bargains in the recession.

Only eight of 30 retailers are expected to post growth in May sales at stores open at least a year when companies report results this week. Walgreen kicked things off with a 1 percent increase, but that was below what analysts had expected due to weaker-than-expected sales at its pharmacy counters.

May same-store sales are expected to fall 3.6 percent from a year earlier, when they rose 1.1 percent, according to Thomson Reuters’ revenue-weighted index of sales.

The data excludes Wal-Mart, as the world’s largest retailer stopped reporting monthly sales data with April results. Wal-Mart, one of the best-performing retailers during the recession, had held about 50 percent of the weighting in the monthly average.

There are signs, however, that the global recession may have bottomed out as an Ipsos/Reuters poll showed global consumer confidence is stabilizing after falling for 18 months.

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(Reuters photo)

What happens to sales at existing retailers when a new Wal-Mart store opens its doors?

That’s the question Kusum Ailawadi, professor of marketing at the Tuck School of Business at Dartmouth, addresses in a new research paper.

The professor and her co-authors studied 90 local supermarkets, drug stores and mass merchandise stores in seven regions of the United States, before and after a new Wal-Mart store opened. The team looked at weekly sales data for 46 product categories from these stores over a two-year period.

They said retailers — regardless of size – take a hit when Wal-Mart arrives, but that there are ways to soften the blow. 

The study found that sales declined an average of 17 percent at supermarkets and 40 percent at mass merchants included in the study. Drug stores took a 6 percent sales hit on average. 

But the researchers found that the loss could be minimized with smart marketing strategies. For instance, the study found that sales dropped an average of 20 percent to 25 percent when prices were reduced or when the assortment carried by the store was reduced after the new Wal-Mart opened.  
  
Here is the advice the researchers have for retailers that may find themselves going head-to-head with a Wal-Mart:

–  Supermarkets should not reduce prices; they should offer deeper promotions and begin selling a higher percentage of top-tier national brands and private labels. 
 
–  Drug stores should also not lower prices across the board. Rather, they should offer frequent promotions on a wide assortment of products. They should increase the total variety of products they sell. 
 
– Mass merchandisers are hurt most by Wal-Mart. They have no choice but to reduce prices if they want to mitigate losses, and they should definitely not reduce their product assortment.

(Photo\Reuters)