Shop Talk
Retailers, consumers and prices
EA Sports looking to score with new toy lines
If you want your football or baseball to cheer for you after a great play, EA Sports has just the toys for you.
***
***
EA Sports, a unit of Electronic Arts, is introducing its first line of products beyond the company’s popular video games, offering sports toys and equipment to appeal to the young sports lovers in the house.
***
Check Out Line: Sales fall again
Check out the generally dismal sales in June, sprinkled with drops of hope.
The rain that hampered play at last month’s U.S. Open golf championship also pressured the retail industry.
Sales dropped at several U.S. chains as consumers stayed out of the rain and out of the stores. Still, some of those focused on discounts once again reaped the rewards as those who did go out searched for deals.
TJX, which runs chains such as T.J. Maxx, raised its earnings outlook after sales at stores open at least a year rose 4 percent. Analysts on average had expected those sales to fall 0.6 percent.
Maybe things are starting to pick up even at chains where sales fell, as companies find ways to trim costs. Target, which said same-store sales fell 6.2 percent still said earnings should come in at or above Wall Street’s expectations. Over at J.C. Penney, same-store sales fell 8.2 percent, but that was better than the company’s forecast for a 9 percent to 12 percent drop. J.C. Penney also raised its second quarter guidance.
Also in the basket:
Check Out Line: At least Ackman outpolled most of his slate …
Check out the final tally from the contentious Target Corp annual meeting.
William Ackman had already lost the battle to seat his slate of director nominees on the Target board last month, but the retailer released the final vote totals and the activist shareholder came up far short in trying to win investor support, garnering 19 percent of the votes cast. That topped the tally for three of his other four nominees.
The hedge fund director, whose Pershing Square Capital Management had a 7.8 percent stake in Target when votes were cast, launched his proxy contest in March to seat a slate of five director nominees after Target refused his proposal to spin off land under its stores into a real estate investment trust to boost its stock price.
Former Starbucks CEO James Donald, one of Ackman’s five nominees, garnered 22 percent of the vote, while the other three each won 8 percent. All four of Target’s incumbent director nominees received more than 70 percent.
Ackman garnered attention at the May meeting for a tearful appeal in which he invoked Martin Luther King Jr’s famous “I Have a Dream” speech in a final effort to win votes.
Also in the basket:
Check Out Line: Signs of brighter days ahead?
Check out hopeful signs that the recession may be abating.
While recent reports showed slumping sales at many big-box retailers, there are other signs that the economy may be bottoming.
U.S. retail sales rose in May and the number of workers who filed new applications for jobless benefits last week fell for the fourth straight week.
The Commerce Department today reported that U.S. retail sales rose 0.5 percent in May, thanks partly to gasoline sales that jumped 3.6 percent. Meanwhile, the Labor Department said initial jobless claims fell to their lowest levels since Jan. 24.
Discount retailer Target has increased its quarterly dividend, Clorox did the same while also affirming its 2010 profit outlook and financial targets for 2013, and Del Monte posted far stronger-than-expected quarterly earnings and provided a better-than-expected 2010 forecast.
Not all the news has been hopeful, however.
While last month’s U.S. foreclosure activity ebbed from April’s record high, homeowners were still struggling to keep up with house payments and May foreclosure filings were the third-highest on record.
Target investors shoot down Ackman
When an activist investor comes to town, it appears that Target security goes on high alert.
While Target had its shareholders, including hedge fund manager William Ackman, and the media fly to one of its yet-unfinished stores outside of Milwaukee to attend their annual meeting, it greeted them with a heavy security detail.
From guards zooming around the parking lot on segway personal transporters to chase down wayward parkers, to Target employees scanning shareholders with handheld metal dectors when they entered its stores, Target made it very clear it was in no mood for fun and games at its annual meeting.
But the heavy handed approach did not seem to be needed.
Target shareholders ended up handing a loss to Ackman, who was seeking five spots on the retailer’s board in a closely watched proxy battle with the large U.S. retailer.
Investors instead reelected the four directors nominated by Target and voted to set the board size at 12, rather than the 13 Akman sought.
Check Out Line: The Thrilla in Waukesha
Check out the proxy battle royale going on at Target’s annual meeting in Waukesha, Wisconsin.
Activist investor William Ackman of Pershing Square Capital Management is fighting for seats on the board of retailer Target Corp. Pershing has amassed a 7.8 percent stake in the retailer.
Shareholders at the company’s annual meeting also will decide whether the board should be 12 members, as Target wants, or expands to 13, as Ackman prefers.
Ackman has said he is running the proxy contest to add executives to Target’s board who have expertise in credit cards, real estate and food retailing, while Target maintains he simply wants to push through a risky real estate transaction.
Also in the basket:
Check Out Line: Ackman pledges to keep Target
Lest anybody accuse Pershing Square Capital Management of running a proxy battle at Target Corp for a quick return, its head William Ackman pledged to keep his stake in the retailer for the greater of five years or the duration of his tenure on Target’s board, if he gets elected.
“As a commitment to Target shareholders and to reflect my confidence in the long-term value of the company, if I am elected to Target’s board of directors I pledge to keep that stake invested in Target,” Ackman said in a statement on Tuesday.
The outspoken hedge fund manager will square off against Target later this week at the company’s annual shareholder’s meeting in Wisconsin. Pershing owns a 7.8 percent stake in Target and is seeking a board seat for himself and four other nominees.
Target is running a slate of four incumbent directors. The battle has grown increasingly contentious, with the two sides appearing unwilling to reach a compromise.
In addition to a fund worth over $55 million exclusively invested in Target, Ackman said Pershing has other funds that own an additional 24.8 million shares of Target.
“I expect these other Pershing Square funds will also be long-term owners of Target subject to investment concentration limits and other factors,” added Ackman, who discussed his views on CNBC Tuesday morning and sent a lengthy letter over the weekend to the editor of Barron’s disputing a feature story the paper ran that called Ackman’s campaign “a misguided attack“.
Ackman said the Barron’s story does readers “a disservice for it fails to accurately characterize what our proxy contest at Target is about, and is riddled with numerous materially false and misleading statements.”
Want that hot new video game? Make a reservation
Shoppers eager to secure a copy of the hottest new video game can soon walk into a Target store and pay $1 to reserve a copy ahead of its release.
Starting April 19, Target is launching a “reservation program” for what it expects will be the best selling video games.
That means shoppers can purchase a $1 reservation card in the electronics department of its stores.
When they bring the card back to the same store within 7 days of the video game’s release the can buy the title. They will also receive a $5 Target gift card that can used for a future purchase.
“We will hold inventory so in essence, it does guarantee you the product within the first seven days,” said Target spokesman Joshua Thomas of the program.
Target already lets customer place preorders for video games on its website. But Thomas said it the in-store reservation program has an added benefit — it will hopefully bring shoppers into its stores more frequently. They can come into its stores to make the reservation, to pick up the game when it’s released, and then again to use the gift card.
Target said the reservation program will kick-off with titles such as “Punch Out!!” from Nintendo , “Ghostbusters” from Atari, and “Indiana Jones and the Staff of Kings” from LucasArts.
Check Out Line: Weak economy keeps socking it to retailers
Check out the lower expectations in the retail world.
Discount retailer Target Corp rang up its fifth consecutive lower quarterly profit, suspended almost all of its share buyback program and cut capital spending plans as cash-strapped consumers shifted away from its trendy merchandise to staples like food and toiletries.
Meanwhile, Lowe’s Companies, the No. 2 home improvement retailer, posted a lower profit, but even worse cut its fourth-quarter profit forecast below Wall Street’s expectations, citing rising unemployment, falling home prices and tight credit as reasons homeowners are putting off some renovations and purchases.
Most economists say the U.S. economy is in recession and will shrink even faster in the fourth quarter. The news reflects the pressures consumers are under.
The result? Fewer shoppers plan to use credit cards to buy gifts this holiday season and most have yet to complete their gift buying as retailers brace for their worst holiday season in about three decades. In fact, more consumers are simply putting away their plastic.
Also in the basket:
The bodegas are coming! The bodegas are coming!
The drink cooler is lined with linens. The fridge is stocked with jeans. The soup cans don designer labels.
It’s Target‘s take on the local New York City bodega as the discount retailer prepares to open four “Bullseye Bodegas” in Manhattan.
Bloggers got a preview of the bodega on 57th Street in Manhattan, and the four temporary stores, which are scattered throughout the borough, will open to the public for four days starting on Sept. 12 at 10 am.
The bodegas are stocked with merchandise made exclusively for Target by 22 designers, including maternity wear by Liz Lange, kitchen appliances by Michael Graves, and makeup by Jemma Kidd. The soup cans, featuring the names of the Target designers, are just for display, as are the Target paper towels that serve as a wall around the dressing rooms.
“New York is where you go to get noticed,” said Target spokesman Joshua Thomas of the retailer’s decision to open the pop-up stores. Target’s first Manhattan store is set to open in 2009, but the temporary bodegas will help it generate buzz, he said.
The bodegas will also help Target show that designer goods can be had at discount prices.
“It’s design, it’s quality, but it’s affordability,” Thomas said. The average selling price for a piece of bodega merchandise is $25. There are Sigerson Morrison high heels for $34.99, Anya Hindmarch clutches for $19.99, and Thomas O’Brien towels for $9.99.
-
Resident Shop Talk Expert
-
