Check out the mixed messages about the U.S. economy from the various consumer earnings.

Like any other earning day nowadays, it’s pick your poison on whether you want to focus on the good news or the bad news when it comes to whether the economy is improving.

Watchmaker Fossil reported a stronger-than-expected third-quarter profit and raised its profit forecast for the fourth quarter, sending shares up. And clothing retailer American Apparel also posted a profit above analysts’ expectations and said it saw signs of momentum in sales.

Meanwhile, InterContinental Hotels, the world’s biggest hotelier, said it was too early to forecast a recovery as room rates continued to fall due to cutbacks by business travelers. The group, whose brands include InterContinental, Crowne Plaza and Holiday Inn, and which earns 70 percent of its profit in the United States, said occupancy is stabilizing but room rates are under pressure across the board.

For what it’s worth, top forecasters are growing more confident the U.S. economy has embarked on a sustainable recovery, according to a survey. However, a report last week showed the jobless rate jumped to a 26-1/2 year high of 10.2 percent in October.

Also in the basket:

PREVIEW-AB InBev Q3 profit growth seen slowing

Yum India aims for $1 billion sales by 2015

Firms Loaded With Cash in Position to Diversify (WWD, subscription required)

(Reuters photo)

Check out the grim unemployment numbers from the U.S. Labor Department on Friday, a day after dozens of retail chains reported lackluster October sales.

U.S. employers cut a deeper-than-expected 190,000 jobs in October, driving the jobless rate to 10.2 percent, the highest in more than 26 years.

Analysts polled by Reuters had expected the monthly unemployment rate to edge up to 9.9 percent from 9.8 percent in September.

While job losses have been mounting for months, some analysts and economists say 10 percent unemployment could deal a new psychological blow to U.S. consumers who might previously have felt that the economy was beginning to stabilize.   

Just last week, news that the U.S. economy had returned to growth instilled hope for a rebound in consumer spending. But the latest reports on retail sales and joblessness suggest that such a result may be further down the road.

So, no matter what gimmicks retailers resort to – be it $10 DVDs or upscale wines – the customer, spooked by an almost daily dose of gloomy economic data, may still be unwilling to open their wallets.

Also in the basket:

Target fights Wal-Mart with $10 offers on DVDs

Hermes outshines rivals, optimistic about Christmas

Kraft in waiting game as Cadbury deadline nears

(Photo/Reuters)

Check out what women buy when they get tired of being a frugalista: boots, plaid and outerwear. 

Those were some of the products that helped October U.S. retail sales improve from a year ago, when the unfolding financial meltdown had shoppers fearing a second Great Depression.

“Frugal fatigue is setting in,” said NPD Group analyst Marshal Cohen. After a year of scrimping, he added, the numbers suggest that some women are going in for a little retail fix.

“Women (not only moms) are shopping their closets, discovering new and fresh looks and filling in with some key updates,” he said.

But selective shopping is not enough to ease worries about the all-important holiday sales.

Thomson Reuters research shows that while October sales rebounded, results from individual retailers were mixed.

Also in the basket:

Warnaco beats estimates; Liz Claiborne misses

Children’s Place October same-store sales beat estimates

CVS says won’t meet pharmacy benefits view in 2010

US commercial real estate to bottom in 2010-survey

Productivity at 6-year high, jobless claims fall

Talk about a disconnect.

Experts say U.S. economic growth has returned, signaling the end of the longest and deepest recession since the Great Depression.

But the good news for Wall Street — where shares have been running up — is showing no signs of trickling down to Main Street, where unemployment is flirting with 10 percent, foreclosures continue to rise and record numbers of families now depend on government-issued food stamps to make ends meet.

“For every person out of work, for every family facing foreclosure, for every small business facing a credit crunch, the recession remains alive and acute,” U.S. Treasury Secretary Timothy Geithner said in testimony to a congressional committee.

“Many people you might have called middle class or working class before have been ground down toward poverty or even destitution,” said author Barbara Ehrenreich, who has chronicled America’s working poor during her career.

While most Americans either fret about a job loss or deal with the financial devastation of joblessness, the income gap between the super rich in the United States and the average Joe is the largest since the 1920s. Nearly one-sixth of the U.S. population is uninsured. And, contrary to popular belief, Americans are less likely to move to a higher financial status than people who live in “socialist” countries like Germany, Canada, France or Sweden.

Many economists, who warn that the U.S. economy is in for a “jobless recovery,” caution that the turnaround is on fragile ground.

“Sure the economy’s standing up on its own legs again, but for how long once the government stimulus starts to fade?  That’s the million dollar question for the nation’s unemployed, all 15.1 million of them sitting idle through no fault of their own,” said Chris Rupkey, an economist with Bank of Tokyo-Mitsubishi in New York.

“We’ve got a long way to go,” U.S. President Barack Obama said.

(Additional reporting by Emily Kaiser; Reuters photo)

Check out a survey showing that younger U.S. consumers are trimming travel plans as well as turkeys during Thanksgiving.
    
More young professionals (37 percent) are adjusting their Thanksgiving travel and spending plans than the affluent and general population (both 30 percent), according to a survey by American Express. Young professionals are defined as less than 30 years old, having a college degree and a minimum annual household income of $50,000.
    
The young guns also are pulling back in other areas:
 
* 11 percent of young professionals plan to drive instead of flying, compared to 7 percent of the general population and 6 percent of the affluent, who are defined as having a minimum annual household income of $100,000. 
    
* 8 percent of young pros plan to shorten their stay for the Thanksgiving holiday weekend, compared to the affluent and general population (both 3 percent). 
 
* 7 percent of young pros will use rewards points, miles and special offers to offset the cost, versus 4 percent of the affluent and 3 percent of the general population.
    
Overall, American Express found 30 percent of U.S. consumers plan to adjust this year’s travel plans for Thanksgiving — historically one of the busiest travel days of the year — but only 21 percent expect those expenses to decline from last year.
    
Those who are changing their plans said they will rely more on travel by car, stay for a shorter time and cash in rewards to help pay for holiday trips as they become more selective amid the high unemployment and soft housing market.

However, in a positive sign, sales at U.S. retailers excluding vehicle sales rose for the second straight month in September, raising cautious optimism consumer spending could support the economic recovery.
    
The American Express survey also showed that the young professionals are cutting back for Halloween, when consumers spent $5.8 billion last year according to the National Retail Federation.
    
* 36 percent of young pros are buying less expensive costumes and decorations.  The rate is 16 percent among the affluent group and 15 percent among the general population. 

* 26 percent of young pros are making their own costumes or using hand-me-downs.  Again, that is higher than the 13 percent of affluent respondents and 11 percent of the general population. 
    
Looking ahead to the winter holiday season, sale prices are still king when it comes to early shoppers.  Eighty-two percent overall said they would be enticed by some sort of discount, with almost all of the young professionals (96 percent) and affluent (94 percent) agreeing.
    
It appears easier to entice the young set.  They would be willing to spend with discounts as low as 10 percent, according to American Express.  The affluent said it would take a discount of nearly 30 percent, on average, for them to buy. 
     
Also in the basket:

Pepsi, Anheuser to jointly buy goods, services

Kraft opens $50 mln Russian biscuit factory

Host Hotels beats estimates on cost cuts

Diageo’s Q1 sales dip 6 pct, sending shares lower 

Handbags and snoods help Burberry top forecasts

(Reuters photo)

Americans may have become more confident in the economy but they haven’t started spending heavily again — and that could be bad new for retailers this holiday season.

Discover’s U.S. Spending Monitor for September rose for the second straight month, climbing 2 points to 89 (based out of 100).  Thirty-three percent of respondents said they felt economic conditions were improving, a Monitor high and a 2-point rise from August.

When asked to rate their own financial fitness, 33 percent rated it as good or excellent, up a point from August and the highest percentage in four months. On the flipside, 48 percent said their finances were getting worse, also up a point from the previous month.

Consumers’ spending intentions remained flat.  Many industry watchers have said that the recession has created a “new normal” characterized by a more frugal lifestyle and fewer shopping sprees. Even those people who have remained financially secure, and are not among the 9.8 percent of Americans who are unemployed, have reset spending habits.

To that end, WSL Strategic Retail said that only 17 percent of shoppers plan to go back to shopping the way they used to.

“There appears to be no indication consumers are willing to increase their spending, despite a Monitor-high number of them who feel the economy is getting better,” said Julie Loeger, senior vice president of brand and product management for Discover.
 
That could cause headaches for retailers, who are hoping that consumers will start shopping again heading into the all-important holiday season.
 
For the sixth consecutive month, less than half of consumers said that they expected to have money left over after paying monthly bills.
 
One bright spot, if you could call it that, is that only 43 percent of respondents felt economic conditions are getting worse. Forty-six percent felt that way in August. 

(Photo/Reuters)

As we mentioned on Shop Talk this morning, the National Retail Federation expects total holiday sales this year to fall 1 percent.

The trade group held a conference call later in the day to add details about their forecast. Here is what NRF spokeswoman Ellen Davis said about the forces that will shape the upcoming holiday shopping season:

Unemployment:

“The golden ticket this year for the holiday season is going to be unemployment. With the unemployment rate at about 10 percent, we know that a lot of Americans will be pulling back on the holiday season because they have to, because they don’t have a job or because someone in their family doesn’t have a job.

“But the unemployment picture really goes far beyond that 10 percent because anyone who knows someone who is out of a job, looking for work or is concerned about losing their job is going to be pulling back. You don’t want to be the guy who drives up in a brand new BMW if your neighbor just got laid off.”

Retailers’ efforts to prepare for this year’s impending holiday season:

“This year, retailers knew going in consumers would be very price conscious and frugal for the holiday season and they’ve been able to plan accordingly.

“They’re doing everything they can to cut back on their operating costs. They’re pulling back on inventory. As we have seen from NRF’s port tracker report, retail containers to the nations’ ports are down to the levels we saw in 2002 and 2003, which is an indicator that retailers really aren’t shipping as much to their stores as they may have been in previous years.

… That will help retailers protect their profits and will keep them from, we think, having to resort to any panicked, unplanned markdowns at the last minute because they have too much merchandise.”

What shoppers can expect to see in stores:

“For the holidays specifically, we are expecting retailers to focus on a lot of lower-ticket items. This will be the holiday season of the blue jean instead of the Blu-ray.

… Absent, we think except perhaps for Black Friday, will be a lot of promotions of flat screen TVs and laptops. So, really more of a focus on the basics, the necessities and the lower-priced items this holiday season.”

“We are expecting a lot of aggressive discounts and promotions. The good news … is that retailers should be able to protect their profit margins this year because they have been planning these sales and promotions throughout the holiday season. Because they have done a nice job controlling their inventory, retailers really won’t have as many issues with unplanned markdowns as they may have a year ago, but consumers may start to find that retailers are coming out with many aggressive promotions and deals very quickly.”

(Photo: Reuters)

The U.S. housing slump’s impact is well chronicled, but PepsiCo CEO Indra Nooyi said it also has hurt sales of the company’s Gatorade sports drink.

Nooyi — on a conference call with analysts after the maker of Pepsi-Cola and other sodas and Tropicana juices reported a better-than-expected quarterly profit – said she has met with convenience store CEOs who told her the weak U.S. housing market has resulted in fewer construction workers stopping by for sports drinks and other snacks on their way to the job.

“One of the things that used to happen is the construction worker used to pull up with the pickup truck at 6 or 6:30 in the morning, buy six or seven bottles of 32-ounce Gatorade, a few bags of Doritos, throw it in the truck and pull off to the construction site. With housing starts being down as much as they are, that construction worker is not coming through the (convenience store) to pick up that Gatorade and so there’s no question that we have lost that active-thirst occasion related to that construction worker who was toiling in the hot sun.”

Nooyi said the Gatorade franchise will shrink in the short term, but the company is running the business with the long term in mind.

She said PepsiCo will not go to lower “private-label pricing” and is “jealously guarding” the brand’s equity. She said the core athletic user is extremely loyal and that the company is offering other products to retain casual users who might be lured by lower-cost tap water, bottled water and in some cases soft drinks. 

Nooyi said Gatorade previously experienced strong growth due partly to the rising number of casual drinkers and warmer-than-normal weather. Now, those casual drinkers have more options, the weather has cooled and the recession has some buyers trading down.

John Compton, CEO of PepsiCo’s Americas Foods business, added that higher unemployment and lower housing starts had indeed hurt convenience stores, particularly in the snack business over the last three to four months. However, he said more broadly in the company’s “up and down the street” channel, which includes convenience, dollar and drug stores, the total business has not changed very much as the dollar stores have picked up quite significantly.

(Reuters photo)

Retail experts don’t expect this back-to-school season to be anything to write home about, as consumers continue to pare back expenses.
    
But a recent survey cited fewer people cutting back on back-to-school items than last year – 64 percent compared with 71 percent. 
    
“It’s going to be bad but it’s not going to be as bad,” said Stacy Janiak, vice chairman and U.S. retail leader for Deloitte LLP, which conducted the survey, speaking of spending during the season.
 
She pointed to data showing that 1 in 7 consumers — 14 percent — believe the economy is starting to recover.
    
“It was only 14 percent but it was 2 percent last year,” she said. “It’s not a lot for anyone to get optimistic about, by any stretch, but it’s a ray (of hope).”
    
“People have a sense that we’ve been through the worst of it,” Janiak said, noting that people seem to believe another big drop in the economy unlikely.
    
Still, the gloom this year is driven more by a desire to save, as well as worries over job losses.
    
“Last year what was driving people’s concern was these things that would eat into their wallet — higher gas and higher food prices, energy costs,” said Janiak. “This year it’s about what’s in the wallet to begin with — the loss of a job, or fear of that, or intensity on savings to keep what’s in your wallet.” 

Some 22 percent of survey respondents cited “loss of job in household” for their frugality, compared with 12 percent last year, and 17 percent cited “fear of loss of job” compared with 9 percent a year earlier.
    
In June, Deloitte found that the pace of decline in consumer spending appeared to be abating. Its consumer spending index, which tries to track consumer cash flow to point to future consumer spending, rose in June after falling four consecutive months. 
    
The U.S. jobless rate hit 9.5 percent last month, the highest in 26 years, and many economists expect it to hit 10 percent this year.
    
Last week, the National Retail Federation predicted the average U.S. family with kids in school through 12 grade would spend 7.7 percent less than last year, but college students and their families would spend 3 percent more. Nevertheless, overall college spending is expected to decline 4 percent to $30.08 billion due to fewer people planning on attending college this fall.

One surprising note in the Deloitte survey was consumers’ consistent interest in sustainability, Janiak said. Some 41 percent of respondents said they would likely search for green products this season, with nearly a third saying they’d seek out green retailers. The data points were steady from the year-ago survey.
    
“The assumption is the consumer isn’t going to pay attention to that in a down economy. It’s clear they’re still paying attention to it,” said Janiak, acknowledging that the survey does not ask shoppers how much they’re willing to spend on green products.

The survey, conducted between July 6 and July 9, polled a sample of 1,044 consumers online. The study has a margin of error of plus or minus three percentage points.

(Photo: Reuters)

Check out June same-store sales at drugstore chains.

Walgreen Co and Rite Aid both reported sales at stores open at least a year, pointing to shoppers filling more prescriptions but buying less discretionary summer merchandise. Walgreen said same-store sales in June rose 3.4 percent, while smaller rival Rite Aid saw sales slip 0.6 percent.

Economists and analysts had previously pointed to signs the recession may be nearing an end, but the news is still mixed as the number of jobs cut in June was higher than expected and the unemployment rate rose to 9.5 percent.

Also in the basket:

Polo extends deal to dress US Olympic teams

If You Gave a Fashion Show and No One Came … (Wall Street Journal)

Luxury-Goods Makes Brandish Green Credentials (Wall Street Journal)

(Reuters photo)