Retailers, consumers and prices
Check out the impact of signs the U.S. flu season may be weaker this year.
Drug stores such as Walgreen, CVS and Rite Aid are offering flu shots earlier and more conveniently to keep sales from slumping with no expected H1N1 outbreak this year along the lines of last year.
Last year, consumers came for flu shots and bought other items as well, but those related sales could suffer this year. Walgreen, for example, said lower demand for flu-related prescriptions cut 0.3 percentage point from its same-store sales growth in August.
This year, drug stores began promoting flu shots in late August, a week earlier than last year.
Making it tougher for drug stores are rivals like grocery stores (Supervalu and Kroger), and big-box retailers (Target) have been offering flu shots as well.
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.
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The third-largest U.S. supermarket operator, with about 2,500 stores, said that its earnings in the first quarter, which ended on June 20, were hurt by a “tougher than expected business environment.” Its results would be much below analysts’ expectations, the grocer said.
“Since providing guidance on our fourth quarter earnings call, consumers have become more value focused and cautious in their spending, which has pressured sales and margins greater than anticipated,” Supervalu’s CEO Craig Herkert said in a statement.
Around this time last year, stimulus checks amounting to more than $100 billion started landing in cash-strapped consumers’ bank accounts, giving them a chance to spend and boosting sales for many retailers.
But this year’s stimulus entails lower withholding taxes and not ”hard checks,” which means “the effects of this year’s stimulus on retailers will be a far cry from 2008,” Pali Capital analyst Stacey Widlitz said in a research note to clients.
The third-largest U.S. supermarket operator is setting up stations in its produce, meat and deli departments that feature the fixings for fast, easy, home-cooked meals that can feed a family of four for less than $15.
Check out where the groceries are bought.
Family Dollar and Supervalu both reported quarterly results today and they seem to highlight the shift in where people are shopping.
Family Dollar saw an 8 percent increase in sales, driven in part by food. The company also raised its forecast for full-year earnings.
Meanwhile grocery store operator Supervalu had flat sales and cut its earnings forecast for the full year.
As the economy remains mired in a recession, people have been shopping places where they can save money. Wal-Mart has been the big winner, but Family Dollar says they are getting a share of that business, too.
“As more families face financial challenges in this environment, they are relying on Family Dollar for more of their everyday needs,” Chairman and CEO Howard Levine said in a statement.
So while Family Dollar is seeing sales grow in the here and now, Supervalu is cutting costs and says it is focusing on the long term in the face of “cautious consumer spending.”
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Check out the latest peeks into consumer behavior.
You know how when there is a huge news event, people stay home to watch it unfold on TV and order pizza?
Well, apparently that doesn’t happen when the major news event is a meltdown in the U.S. financial system.
Domino’s reported a dip in quarterly profit on Tuesday, with U.S. sales down 6.1 percent at restaurants open at least a year.
The credit crunch has also made it harder for the company to open new restaurants, overhaul existing ones and turn over poor performing franchisees, CEO David Brandon said.
Less pizza being sold also means less need to wash it down with Pepsi. PepsiCo missed Wall Street earnings expectations, hurt by disappointing U.S. soft drink sales.
Pepsi trades in brand names, like Cheetos and Tropicana. But brand names are coming under fire from thrifty shoppers seeking private-label products.
Just ask Supervalu. The grocery chain operator also posted lower profit as consumers traded down to lower-cost store brands.
So, to paraphrase John Belushi’s Greek diner owner, “No Coke! No Pepsi! Sam’s Choice.”
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We know many consumers are dining out less often. Just look at the weak results at chains like Red Lobster and Olive Garden. Still, some people aren’t making home-cooked meals either. They need a place to buy pre-made meals and some groceries. Enter the latest new twist on quick grocery shopping — Supervalu’s test store, Urban Fresh by Jewel, in Chicago. About half of the products in the new store are prepared.
We wonder, though, if some parts of the store launch were rushed a bit. Supervalu’s Jewel-Osco chain, which is running the store, took out a two-page ad in the local, free Red Eye newspaper on Thursday (including the back page where commuters get their daily scoop of celebrity news).
Supervalu, whose chains include Albertsons and Save-A-Lot, didn’t see any increase in its total quarterly sales. Its food sales were actually down 0.7 percent, but the company saved itself in part with lower expenses, and reported a higher quarterly profit.
Check out those federal rebate checks.
Tax rebates began arriving in U.S. consumers’ bank accounts this week as part of Washington’s $152 billion stimulus package. (Direct deposits this week and paper checks next week.)
Retailers have various strategies for attracting those rebate dollars. Many of them are offering 10 percent bonuses when the checks are converted to store discounts.