Retailers, consumers and prices
Check out the mixed results at women’s clothing retailer Talbots.
The company posted a higher-than-expected quarterly profit as tighter inventory management boosted margins, but demand lagged analysts’ expectations.
Talbots’ second-quarter results echoed those of the prior three-month period, when sales suffered as the retailer did not stock enough merchandise.
“Our top-line sales performance reflects our decision to remain on plan with respect to our promotional event calendar within what proved to be an aggressively promotional environment,” Chief Executive Trudy Sullivan said.
U.S. retailers posted modestly higher-than-expected August sales as consumers sought out bargains during the key back-to-school shopping season. The reports suggested retailers were able to clear excess inventories ahead of the key selling season without having to resort to deep discounts.
Check out the latest raft of earnings for clues on the U.S. economy’s health.
LVMH, the world’s biggest luxury group, posted a forecast-beating 13 percent increase in same-store sales, helped by a strong rebound in the United States and Europe.
Check out the power plays going on in the consumer world.
Walgreen said it will buy Duane Reed for $618 million in cash, catapulting the largest U.S. drugstore operator into the top spot in the New York City area. The deal price also includes the assumption of $457 million in debt.
Duane Reed is owned by private equity firm Oak Hill Capital Partners and operates 257 drugstores in the New York metropolitan area. Duane Reade will continue to operate under its brand name, and Walgreen expects to retain the employees at its stores, pharmacies and distribution centers.
Talbots, whose clientele consists mainly of women above 35 years old, reported a first-quarter loss of 23 cents a share, less than half the 49-cent loss analysts had expected.
Check out the deeper-than-expected quarterly loss at Talbots.
The women’s apparel retailer posted a fourth-quarter loss of $1.17 a share, excluding one-time items. That was far worse than what analysts polled by Reuters Estimates had expected. Sales fell 16 percent, while sales at stores open at least a year tumbled 25 percent.
Talbots is working to revamp its classic styles to boost sales in a slow market for women’s apparel. It has cut jobs, closed some units, suspended its dividend and frozen its pension plan to preserve cash. It also is looking to sell its J. Jill chain.
Check out the not-so-chipper news in the retail world.
Restaurant chain Burger King reported lower profits and cut its full-year forecast due to the currency fluctuations, while cosmetics and perfume companies Estee Lauder and Elizabeth Arden rang up lower, albeit better-than-expected, profits and said they would cut jobs.
Indeed, retailers overall posted the second weakest monthly same-store sales performance since Thomson Reuters began tracking the data in 2000 as heavy job losses, weakness in the U.S. housing sector and the still-tight credit markets have many consumers closing their wallets.
The Paris-based Organization for Economic Cooperation and Development says the U.S. economy has probably slipped into a recession that will last through the middle of 2009.
But forget Paris, you don’t need to look any further than today’s results from apparel retailers for proof that the U.S. economy is in a slide.
Check out Talbots’ sales forecast.
The struggling women’s apparel retailer said it expects same-store sales to be flat at its namesake stores in the current quarter and down low-to-mid single digits at its J. Jill stores.
That looks like progress, especially at the Talbots’ brand.
But, wait. Hasn’t the weakness in women’s apparel has been going on for some time now. So the glass-half-empty view would be to look at how that forecast compares with a year ago.
Same-store sales at Talbots’ stores fell 8.2 percent last year (and J. Jill same-store sales fell 6.5 percent).
So there might be some improvement coming at Talbots’, but it is off a weak comparison.
Then again, with how women’s apparel has gone lately, flat same-store sales might be a welcome new fashion trend.
Also in the basket:
Dollar Tree posts higher quarterly profit
Brown Shoe 2nd-quarter profit down; cuts outlook
Urban Outfitters Fashion Growth Plan (Wall Street Journal)
Check out the majority owner of Talbots exerting more control.
The women’s apparel retailer, which has endured hardships in recent months including falling sales, job cuts, an executive departure and a credit problem, said on Thursday that Tsutomu Kajita would become chairman of its board.
Kajita is senior vice president of international operations for Japan’s Aeon Co, Talbots’ majority owner.
The “flight to necessities” by the U.S. consumer was on display as BJ’s — which sells food and fuel — posted a 26 percent jump in quarterly profit.