Retailers, consumers and prices
Check out the latest sales reports, which show that consumers are still cutting back on discretionary spending as they shift to discounters for the basics. Granted, that’s not exactly news anymore, but some of this morning’s sales tell us that even the discounters are starting to feel the heat.
“Sales for the month of May were somewhat below our expectations,” chief executive officer of Target, Greg Steinhafel, said in a statement.
He’s not alone.
Big boxers such as Target and BJ’s Wholesale reported steeper than expected drops in same-store sales, suggesting that the recession may have depended further than the luxury market.
Speaking of which, upscale department stores, such as Nordstrom and Neiman Marcus, saw sales slip while Macy’s fared slightly better than analysts had expected. Abercrombie & Fitch, known for their strong hold on the younger markets saw same-store sales slide 28 percent, worse than the decline analysts had expected. And teen/tween sensation Hot Topic, saw same-store sales fall 6.4 percent which were, again, steeper than analysts had predicted.
In one corner is retailer Target, one of America’s largest retailers, and in the other is activist investor William Ackman.
Target has become synonymous with its big red bulls-eye logo, but now the discounter wants customers to also gravitate toward a new symbol — an arrow.
In a bid to appeal to penny-pinching shoppers, Target is giving its namesake Target Brand, which includes staple items like tissues, diapers and sunscreen, a makeover. It is now showing up on Target’s shelves wrapped in new packaging marked with a big arrow and it has been given a new name — up & up. (Check out the new look, pictured to the left vs. the old look below)
The results coming in show that things might not be so bleak after all. Sure, some retailers still disappointed with March same-store sales down more than expected. Take a look at American Eagle, whose same-store sales fell 16 percent, while analysts expected a 10.4 percent drop. Still, the company raised the low end of its profit forecast since it marked down less merchandise.
Over on the discount side, Wal-Mart’s same-store sales were only up 1.4 percent, while the Street expected them to rise 3.2 percent. Still, they were up. And they should be up again in April. The CEO of smaller discounter Target, meanwhile, had this to say:
Ackman, a hedge fund manager and activist investor, urged Target’s shareholders to vote down the discount retailer’s proposal to set its board size at 12 members and argued that his five nominees for the board, including Ackman himself, were better suited to serve in that capacity.
His letter is the latest action in the battle between Ackman and Target over boardroom seats at the retailer. Last month, Target said it was determined to re-elect four directors, prompting a letter from Ackman to Target CEO Gregg Steinhafel contesting the board’s size.
Check Out the ongoing battle between food makers and retailers.
As the recession crimps household budgets, retailers like Wal-Mart and Target are increasingly looking to woo shoppers with their own private label food items that often look very similar to name brand products but are sold at lower prices.
Wal-Mart is relaunching its Great Value private brand, adding more than 80 new products, like double-stuffed sandwich cookies and organic cage-free eggs.
Macy’s CEO Terry Lundgren professed his admiration for Target‘s advertising tactics at a consumer conference in New York.
Macy’s ran two back-to-back ad campaigns late last year, which included the “Believe” ads based on the famous New York Sun’s “Yes, Virginia, there is a Santa Claus” editorial.
Just how “wonderful” consumers think your brand is can help your stock price, especially in a recession, according to a study by market research agencies Kadence, Brand Care and So What Research.
The study looked at consumer perceptions of 650 leading U.S. brands and found there is a link between the affection consumers hold for a brand — or the “wonderfulness” of the brand – and its stock performance.
Sales are down, profits are off, but that didn’t stop discount retailer Target from throwing a big bash in Manhattan on Friday night to celebrate the launch of its latest designer collaboration – McQ by Alexander McQueen.
Timed to coordinate with Fashion Week and draw fashionistas in town for the shows, the bash took place in a huge downtown warehouse.
Late on Tuesday, Target said it would cut jobs, mainly at its headquarters in Minneapolis, while Best Buy (also headquartered in Minneapolis) said it planned involuntary layoffs after too few employees took voluntary exit packages.