Shop Talk

Check Out Line: April showers bring May shoppers

Check out the recent rise in U.S. sales.

U.S. chain store sales rose 3.3 percent last week versus a year ago, according to new data from Redbook.  The sales were also up 0.8 percent in May so far versus April, Redbook’s figures on general merchandise retailers with about 9,000 U.S. stores showed.

That’s a bit brighter than the 0.5 percent rise in April same-store sales we saw last week, based on 28 chains.

Meanwhile, consumers are getting tech-savvy about their food shopping.  Deloitte said that more consumers are turning to their computers to look for deals on food.  According to the firm’s 2010 Consumer Food Safety Survey, 33 percent of people have signed up to get emails, recipes or coupons from food makers, a 6 percentage point rise from just two years earlier.

Deloitte found that food shoppers also feel the quality of store, or private label, brands is better.  Fifty-five percent of those surveyed said they are buying store brands because they believe the quality is comparable to national branded foods, up 14 percentage points from 2008. Six percent even said the quality is better than national brands.

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Check Out Line: Walgreen sales catch a cold

Check out a dose of bad medicine for Walgreen.

Analysts had expected the No. 1 U.S. drugstore chain operator to post a 2.2 percent increase in same-store sales. But the company instead posted a surprise 1.1 percent drop. Among factors that hurt the company were a calendar shift. This January had one less weekday in it than last year. That might not seem like a big deal, but Walgreen fills more prescriptions during the week so the shift cut 1.3 percentage points from the same-store sales increase.

Pharmacy same-store sales fell 1.2 percent, a decline made worse by the fact that some of those sales have were in the form of H1N1 flu shots, a one-time item.

The same-store sales decline was also the second monthly surprise in a row.

The problem has also infected the entire store, with general merchandise sales also down.

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Check Out Line: Walgreen sales plenty to sneeze at

Check out the sickly same-store sales at Walgreen.

Same-store sales of general merchandise fell 3.1 percent, with the company saying a decision to stock fewer seasonal items caused much of then drop.

Walgreen, like most retailers, had to sharply discount seasonal items in the teeth of the recession last year.

But prescription same-store sales only rose 1.8 percent, compared with analyst expectations of a 3.1 percent increase. More sales of lower-priced generic drugs, which help profits but cut into revenue, hurt pharmacy sales.

Traffic in stores was also down and when people came in, they bought less.

Maybe those flu vaccines are cutting down on sales of cold medicine and Kleenex.

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from Raw Japan:

Retailers do the limbo

For some of Japan's retailers trying to jumpstart consumer spending, setting prices is like doing the limbo: How low can they go?

Japanese retailers reported mostly dismal first-half earnings results, with the industry stuck in a slump as shoppers remain reluctant to open their wallets even as the economy emerges from recession.

With no sales pick-up in sight, stores seem to have no choice but to continue their race to undercut rivals, with prices dropping for everything from cars to clothes to milk.

On the surface it sounds like a shopper's paradise: Who wouldn't mind paying less than 1,000 yen ($11) for a pair of jeans?

But it could also lead to a deflationary spiral in which consumers put off spending in hopes of further falls in prices.

And what's more, these price cuts are slicing into already razor-thin profits at companies, which are then forced to pass on the pain to employees in the form of lower paychecks.

"It's a death march," said Junji Ueda, CEO of FamilyMart, Japan's No. 3 convenience store chain.

Many Americans plan to spend less on gifts this year

If you received a great Christmas present last year, and are hoping for the same kind of treatment this year, don’t hold your breath — U.S. consumers are planning to spend conservatively this holiday season, according to two new surveys.

A Gallup poll found that consumers, on average, plan to spend $740 this year on holiday gifts. At this time last year, consumers said they planned to spend $801 on average. That number fell to $616 during a November poll, although it recovered slightly to $639 in a December poll.

The latest Gallup survey, which polled over 1,000 consumers from Oct 1-Oct 4, found that 33 percent of respondents said the planned to spend less this year on holiday gifts. Last year, that figure was 35 percent.

Apart from 2008, when retailers faced the toughest holiday shopping season in nearly four decades, Gallup said its 2009 spending outlook is the worst since mid-December 1991, when 33 percent of Americans said they would spend less on gifts than the year before.

The trend of paring back is the same among the nation’s elite.

A separate survey, which polled 684 people with an average income of $300,000 and net worth of $3.1 million, found that nine percent of those people said they would not buy any gifts this year. Three percent said they would spend more than they did last year, while 38 percent said they would spend less.

The survey, by the American Affluence Research Center, estimated this group of consumers would spend about $2,400 per household, on average, for holiday gifts.

Check Out Line: Saving money, beating estimates

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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Check Out Line: Flu vaccinations aid drugstores

Check out Walgreen’s sales growth.

Walgreen Co, the largest U.S. drugstore chain, said on Friday that September sales at its stores open at least one year rose 5.3 percent, thanks to in-store flu vaccinations and people filling more 90-day prescriptions.

Sales of general merchandise, which consumers have been shying away from in past months, also rose for the first time since May for Walgreen.

Retailers began their seasonal flu vaccinations earlier than usual this year, amid raised awareness of the flu with the H1N1 pandemic. Pharmacy same-store sales rose 7 percent for Walgreen, with the number of prescriptions filled at existing stores jumping 12 percent, including 5.2 percentage points from pharmacists administering seasonal flu shots.

Walgreen, which administered 1.2 million seasonal flu vaccines in last year’s flu season, has already given more than 2.4 million this season and aims to administer 5 million.

But not all drugstores have reported such growth.

Check Out Line: No prescription for sluggish sales

Check out the sluggish sales at Walgreen.   People filled more prescriptions at the drugstore chain, but didn’t buy much else.  August same-store sales rose only 1.9 percent, less than analysts had anticipated.   While many retailers have been experiencing sales declines, drugstores have generally done much better because an aging population  has been buying more prescriptions drugs.   But Walgreen’s sales of general merchandise fell 1.3 percent.   That could be a bad sign for other retailers that report sales this week. Walgreen is the third-largest retailer that reports monthly sales, behind only Costco and Target.   Overall, analysts are expecting a 3.8 percent drop in same-store sales when retailers report this week.   Also in the basket:   Zale identifies prior adjustments, delays results   Jos A Bank Q2 results top Street Brown-Forman profit tops view   Tesco uses weather to predict sales (N.Y. Times)   Retail theft soars in economic downturn (WWD, subscription required)

(Reuters photo)

Check Out Line: Nobody’s buying nothin’

Check out the lack of interest in pens and purses.   Retailers as varied as Coach and Office Depot reported lower quarterly sales, continuing to show that despite some forecasts that the recession may be at an end, consumers are cutting back on just about everything.   Coach sales fell 1 percent and profit, excluding one-time items, dropped 21 percent.   Sales at Office Depot fell 22 percent and the company posted a wider than expected loss, sending its shares down 14 percent.   Oh, and it isn’t just office supplies and fancy bags consumers are cutting back on.   Grocery chain operator Supervalu reported a 4.5 percent drop in quarterly sales as it cut prices to try to keep consumers from going to stores like Walmart.   Economists are looking for “green shoots” everywhere these days, but the consumer still doesn’t seem to be buying it … or anything.   Also in the basket:   CIT courts creditors, plans large debt exchange   Under Armour posts surprise second-quarter profit   PepsiAmericas Q2 profit beats estimates, ups FY outlook   Italian group makes offer for Christian Lacroix (N.Y. Times)   (Reuters photo)

Check Out Line: Hitting an easy Target

Check out Target maintaining retail margins.   That counts as a win in retail these days. The discounter was able to better manage markups and markdowns than last year, helping it keep gross margin steady, even though consumers are spending more on less profitable staples and less on discretionary items.   The company soundly beat analysts earnings estimates for the quarter. But profit still fell 13.3 percent in the quarter, not necessarily a good thing when you are in a proxy fight with an activist investor.   The story from Target was the same as the story from most retailers during this recession. Sales are sluggish or falling, they are controlling inventories and trying to rein in expenses.   AnnTaylor had the same story and reported a smaller-than-expected loss.   But it’s outlook was also cautious as the recession keeps women from buying work clothes and luxury apparel.   The question is, if consumers keep on the sidelines, how much more cost cutting can retailers do to limited the bleeding.   Also in the basket:   Tween brands posts narrower-than-expected Q1 loss   BJ’s Wholesale profit tops view; forecast raised   Sodas a tempting tax target (N.Y. Times)

(Reuters photo)