Fashionistas in town for New York’s Fashion Week this September will have a new type of bodega to duck into during their time in the city — a fashion bodega.

Manhattan is flush with corner stores or bodegas that are all too eager to meet the city dweller’s desire for a convenient place to grab a gallon of milk,  a stick of gum or a pack of cigarettes.

But Target will temporarily open four Bullseye Bodega in Manhattan from Sept 11 until 14 — coinciding with Fashion Week, which is September 5 until 12th. Instead of being stocked with food or toilet paper, the Target bodegas will sell clothes, accessories, home goods and beauty items by 22 designers it features in its stores, like Mossimo Giannulli, Liz Lange  and Jemma Kidd.

Those visiting the bodegas can be sure to get those designer duds at discount prices. Target said the stores will sell items that have an average price of $25.

(Graphic: Target’s website)

Check out all those billions of dollars in U.S. tax rebate checks failing to give June retail sales much of a boost.

The Commerce Department said on Tuesday that total sales at U.S. retailers rose a less-than-expected 0.1 percent in June.  Economists polled by Reuters had forecast total retail sales to rise 0.4 percent in June, following a 0.8 percent gain in May.

Part of the weaker-than-expected results were due to falling demand for cars. Auto and auto parts sales fell 3.3 percent in June — their worst month since February 2006.  But even excluding autos, retail sales rose 0.8 in June, which was below the consensus estimate of 1.0 percent. Excluding autos, building supplies and gasoline, retail sales rose 0.4 percent in June. 

Economists had expected government tax rebate checks to give a bigger boost to retail sales in June, despite the weak overall U.S. economy, as shoppers had excess cash to spend. But last week, major retail chains, like J.C. Penney,  Target and Gap, released their June sales results and many did not see a rebate boost. Penney said it might have received a “modest” sales lift from the checks but any benefit would be “short lived.”

So where did the billions of rebate cash go?

Well, Wal-Mart got a chunk. Its June U.S same-store sales rose at their highest level in years as traffic in its stores jumped. The retailer had offered to cash tax rebate checks for free.

Surging gasoline prices likely gobbled up an even bigger chuck of the rebate dollars. The Commerce Department said gasoline station sales rose 4.6 percent in June as motorists faced higher prices at the pump. Over the past year, gasoline station sales have jumped 24.5 percent to nearly $46 billion last month, on a seasonally adjusted basis.

Charles Grom, a retail analyst with JP Morgan, estimates that every 1 cent increase at the pump, translates into $1.4 billion of lost consumer spending power. “Therefore, the (roughly) $1.00 jump in retail gas year-over-year should more than offset the $106 billion stimulus package,” he wrote in a note last week.

Also in the basket:

Newell Rubbermaid to exit certain product lines

Kimberly-Clark cuts year outlook, says profit fell

(Photo: Reuters)

Check out the other discounter.
 
The wisdom in the struggling U.S. economy is that discounters are doing well as consumers trade down to try to save some money. It has worked for Wal-Mart, which saw first quarter profit rise 7 percent, while same-store sales rose 2.9 percent.
 
Not so much for Target, though.
 
That discount retailer today posted a 7.5 percent decline in net income for the quarter and its same-store sales dipped 0.7 percent and were weaker than the company had expected.
 
For a time, Target attracted customers with an approach that became known as “cheap chic,” with designers like Isaac Mizrahi developing exclusive clothing lines for it. At the same time, Wal-Mart has stumbled with its own attempts to upgrade its apparel offerings.
 
But even before the economy went south, Wal-Mart refocused on offering lower-priced value, a move that has helped the company in an economy that many say is in a recession.
 
Meanwhile, sales are falling short of Target’s target. And  Mizrahi has left to become creative director at Liz Claiborne.
 
Right now, it looks like the dog days for Target, while Wal-Mart sports a smiley face.
 
Also in the basket:
 
Home Depot posts quarterly loss 
 
Saks Inc posts higher quarterly profit 
 

(Photo: Reuters)

Check out the warning signs sprinkled amid the April sales results.
 
A lot of retailers reported better-than-expected sales in April as improved weather in parts of the country helped convince consumers to buy new clothes.
 
In fact, 61 percent of retailers that have reported so far beat estimates, according to Thomson Reuters research. Discounters, department stores and teen apparel retailers were among those posting the biggest upside surprises.
 
But amid those results were some comments that could be cause for worry going forward.

For example, J.C. Penney reported a less-than-expected decline in April same-store sales, but said it sees a steeper drop in May. It also said those rebate checks consumers are getting will provide, at best, only a modest benefit for sales and that any boost will be short-lived.
 
Wal-Mart had a better-than-expected same-store sales increase in April, but  gave a tepid outlook for May. The discount retailer said consumers are trying to stretch their dollars by purchasing cheaper types of meats or trading down to pasta.
 
Adding to worries, Wal-Mart said the “paycheck cycle” is getting more obvious, meaning it is seeing a drop in sales at the end of the month, just before consumers get paid.
 
Elsewhere, Target reported weakness in areas hard hit by the mortgage meltdown, including Florida, Arizona and Nevada.
 
Gap same-store sales actually fell more than expected in April and the company said the economic environment remains “volatile.”
 
The market seems to have picked up on the negativity, as the Standard & Poor’s retail index is down almost 2 percent.
 
Also in the basket:
 
Best Buy enters Europe with Carphone retail deal
 
Search said to be on for new Kellwood CEO (WWD)
 
Sally Beauty profit tops view; shares jump 
 

Late Monday, Target said it would sell a 47 percent interest in its credit card business to JPMorgan Chase for an initial investment of $3.6 billion.

The news came almost 8 months after the discount retailer, under pressure from activist investor Bill Ackman, said it was exploring options for its credit card business — a move it had long resisted.

The final deal was a complicated one that Uta Werner, an retail analyst with Sanford C. Bernstein & Co, described in the following way: A “note sold to JPM, backed by a 47 percent undivided interest in Target’s receivables, in exchange for cash proceeds of approximately $3.6 billion and subject to a profit and risk sharing agreement.”

While the deal may have left some on Wall Street scratching their heads, wondering if the deal made sense, CFO Doug Scovanner could not say enough good things about the deal on a conference call on Tuesday.

“We expect to get hundreds of millions of dollars from profit from this venture unless we really screw it up,” he said. “Personally, I think this is what Dire Straits had in mind in the 1980s anthem, ‘Money for Nothing.’ I think this is wonderful.” 

And he balked at the notion of terminating the deal with JPMorgan if Target finds another partner interested in its full credit card portfolio. 

“We just announced that we’re intending to get married in a few weeks and you’re asking me what happens if I want to get divorced,” he said. “I’d far rather live for the moment with the happy ideas of what’s going to happen on this honeymoon than worry about how to unwind this deal.”

Fred Katayama visits a Wal-mart just outside New York City to see how consumers socked with high gas prices and a sputtering economy are changing the way they shop. His full report hits the reuters.com website on Friday. It’s part of a Reuters multimedia presentation in text, video and pictures.

Equity analysts at Citigroup Global Markets decided to conduct a survey to figure out how consumers are making their grocery shopping choices in the current environment. 

Not very surprisingly, it found that consumers are becoming more value conscious and will likely favor retailers with sharp pricing.

So who is the sharpest of them all?

“An overwhelming 72 percent of customers surveyed said that Wal-Mart had the lowest prices. Among the top three traditional supermarkets, Kroger was perceived by more consumers to be the lowest priced,” the Citi note stated. 

Citi conducted its online survey in two markets, Texas and Washington, because it said those are two states are where Kroger, Safeway, Supervalu, Target and Wal-Mart – the  five grocery retailers in its coverage universe – compete. 

The survey found that Kroger had the next best pricing message behind Wal-Mart, with 6.9 percent of customers saying that grocery chain had the lowest prices.

Meanwhile, 26.5 percent of consumers found Safeway to be the most expensive, while 24.5 percent of consumers found Supervalu to have the highest prices, it said.

To offset the tough economy, Citi said consumers are reining in their discretionary food purchases, and it has started to see signs of consumers trading down in terms of where they shop (like moving from Target to Wal-Mart), in terms of what items they buy (switching from steak to chicken), and in terms of choosing between branded and private label (buying more private label).

“We believe that consumers will continue to adjust the way they shop if food inflation remains high,” the report said.

(Photo: Reuters)