Shop Talk
Retailers, consumers and prices
Check Out Line: Jobless claims rise, again
Check out the latest batch of grim data about the U.S. jobs market.
As if the consumer sector wasn’t nervous enough about a sputtering U.S. economy, the number of people filing new claims for unemployment insurance unexpectedly rose in the latest week to its highest level in close to six months.
Labor Department data showed the number of new claims for jobless benefits up 2,000 at 484,000 in the week ended August 7, the second straight increase. Economists polled by Reuters had expected claims to fall to 465,000 from the previously reported 479,000.
The news brings more pain to already angst-ridden retailers, who are hoping to pass on rising input costs to consumers with higher prices as companies try to guard margins in a tepid sales environment.
In July, retailers posted weaker-than-expected sales despite cutting prices to lure back shoppers, suggesting a rough back-to-school season.
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Check Out Line: Earnings-palooza!
Check out all the earnings in the consumer world.
Several retailers and food companies posted quarterly results, offering different views on where they stand in a recession that has consumers dialing back spending.
Macy’s posted a better-than-expected profit as it cut costs, but the department store operator’s new, higher earnings forecast shows full-year profit could still fall short of analysts’ expectations.
Sara Lee, the maker of baked goods and Jimmy Dean sausage, also reported a stronger-than-expected profit before one-time items on improvements in North America and said it was still considering divesting its international household and personal care business.
Underwear maker Maindenform also saw a profit that topped expectations, thanks largely to strong demand for its shapewear products, and raised its full-year outlook.
However, Liz Claiborne, owner of the Juicy Couture, Kate Spade and Lucky Brand chains, posted a deeper-than-expected quarterly loss as the recession kept many shoppers from buying the company’s clothing and accessories.
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from Summit Notebook:
Not for all the tea in China
Sara Lee Chief Executive Brenda Barnes is looking to expand the reach of the food maker. But one thing she isn't looking to do is sell tea in China.
Geographic expansion is a key strategy for the company through its coffee, tea and household products brands, she said at the Reuters Food and Agriculture Summit. However, business in Western Europe has suffered over the past eight months from recession.
Sara Lee has a good household and body care business in the few hundred overseas markets in which it competes, but not in the world's largest market.
"We don't have any plans to go into China. It's such a huge, enormous market that requires an enormous amount of investment and in the near term we believe that our investment is better applied to markets where we have a footprint."
"Unless you acquired your way in, and if you look at the acquisitions in China they're all quite pricey and it would be difficult to have them pay off in any near term."
Barnes has nothing against that market, however. After all, when asked later to identify her favorite food, she replied, "I'm a big fan of Asian food."
(Reuters photo)
Check Out Line: Food vs foreign currency
Check Out Sara Lee and Kraft Foods joining the “stronger dollar” bandwagon.
Both food makers cut their profit forecasts for the current year, citing the pain they expect from the stronger U.S. dollar decreasing the value of sales from international markets.
But currency alone is not to blame for oversease woes.
Sara Lee said it is seeing pressure in certain overseas markets due to worsening economic conditions.
“In our international business we are adjusting our plans and refocusing our resources to help offset significant economic downturns in many of our key markets, most notably Spain, France and the United Kingdom,” sad Brenda Barnes, the company’s chief executive officer.
Meanwhile, Kraft’s CEO said the company is seeing a slowdown in sales growth in the EU and developing markets.
Sara Lee, which makes Jimmy Dean breakfast sausages and its namesake bakery products, and Kraft, which sells Oreo cookies and its namesake cheese, have also faced increased competition from private label manufacturers as shoppers seek to save every dollar they can amid a deepening global recession.
Come back to work. We’ve got cheesecake.
In 1997, Brenda Barnes famously left her job as PepsiCo North America CEO in order to raise her family. She returned to work as Sara Lee’s COO seven years later and became Sara Lee’s CEO in 2005. Now she wants to help others who are returning to the corporate world after taking a career hiatus. Sara Lee is starting up a “Returnship” program. These “internships for experienced professionals” will give mid-career professionals a chance to try out the work place again. Sara Lee will provide training and in return gets to tap the skills and expertise of people who already have business experience. The 10 to 12 returnships will also be paid. The people will be filling real jobs at Sara Lee and have an opportunity to continue in the jobs once the three- to six-month “returnship” is over, Barnes said in an interview. “We’re not doing this to be benevolent,” Barnes said. “This is all about filling jobs for us.” Most people returning to work will not have had the same “break” experience that Barnes had. While getting to spend more time with her children than a typical corporate executive, Barnes also served on the boards of Staples, Sears, Avon, PepsiAmericas, Starwood, The New York Times and Lucasfilm. She also saw many women who were taking time off to raise their children while also running charities, school boards and other organizations. For those who want to transfer those skills back into the corporate world, Sara Lee is trying to make it easier. For more information about the returnships, click here.
(Photo: Reuters)
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