Retailers, listen up. A survey from Discover shows that more consumers believe economic conditions are still getting worse.
 
Discover’s U.S. Spending Monitor for October fell 3.2 points to 85.8 (that’s out of 100, which is where the index started in May 2007).
 
Forty-six percent felt economic conditions were getting worse. That’s up 3 points from September and the first time the survey has seen an increase since July.

Slightly more women (58 percent) than men (53 percent) rated the economy as poor. Overall, 56 percent called the economy poor, up from 52 percent in September.
 
“The Monitor has always shown that women tend to be less optimistic than men about the economy and their finances,” said Julie Loeger, senior vice president of brand and product management for Discover.  “But the record jump in the number of women rating the economy as poor and the pessimism over the current state of their finances may indicate a weak holiday shopping season ahead.”

The Discover U.S. Spending Monitor is based on interviews with 8,200 U.S. adults conducted thoughout October.

Nearly 63 percent of 5,000 consumers surveyed toward the end October plan to spend less on holiday gifts this year. That’s in line with last year’s projections, and we all know how the winter of 2008 turned out.

For the seventh month in a row less than half of consumers said they expected to have money left over after paying their monthly bills. Just 44 percent said they expected to have money left over, down 3 points from September.

Meanwhile, the U.S. Agriculture Department said more Americans than ever are receiving food stamp assistance, while personal spending fell 0.5 percent in September.
 
“Consumers simply don’t seem to have the economic or financial confidence right now to reverse course, which is not good news for retailers,” said Loeger.

(Photo/Reuters)

Check out the quarterly results at jeweler Tiffany & Co. It’s enough to make one question  Marilyn Monroe’s choice in songs.

The company posted a slightly weaker-than-expected first-quarter profit and said sales dropped 22 percent as shoppers avoided jewelry. Companies like Tiffany and even more-affordable peers such as Zale Corp have seen demand hurt in the past year as consumers focus on buying necessities in the recession.

In a sign that maybe things are at least stabilizing, Tiffany maintained its full-year profit outlook. Even better, the U.S. economy contracted slightly less than initially estimated in the first quarter.

However, consumers remain under pressure as plunging home prices, rising unemployment and a new wave of foreclosures are clouding prospects for a quick end to the U.S. real estate debacle.

Also in the basket:

J Crew beats in quarter, shares rise 17 percent

Organic Dairies Watch the Good Times Turn Bad (New York Times)

Hartmarx’s Fate Hangs in the Balance (WWD, subscription required)

Versace’s Business Model Stumbles On The Catwalk (New York Post)

(Reuters photo)

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.

In the mixed-bag camp, apparel retailer Gap saw same-store sales fall more than expected, but raised its full-year profit outlook.

There is some good news out there, however. 

Discount giant Wal-Mart posted a better-than-expected increase in sales at U.S. stores open at least a year, almost double what analysts had expected. Meanwhile, Kellogg’s quarterly profit rose and the cereal maker stood by its 2009 profit outlook, and department store operator Macy’s saw a smaller-than-expected decline in same-store sales and raised its fourth-quarter profit forecast.

Also in the basket:

Talbots announces cost cuts, $200 mln loan

Signet to cut costs as Q4 sales fall sharply

Flash is out for wealthy on Valentine’s Day

(Photo/Reuters)

Check Out some weakness in book and drug stores sales.

Borders dumped Chief Executive George Jones less than three years after he joined the No. 2 U.S. specialty bookseller, replacing him with a private equity executive with experience turning around ailing companies. The company, which reported a sales decline of almost 12 percent during the holiday shopping season, also named a new chief financial officer as well as replacing its executive vice president for merchandising and marketing.

In November, Borders said it was no longer pursuing a possible sale of the company even as it posted a larger-than-expected operating loss.

Meanwhile, same-store sales at drug stores were not what those retailers were hoping for. Walgreen, which saw sales at store open at least a year rise 4.9 percent in December, said shoppers focused on basic necessities, while staying away from seasonal items. Rite Aid’s same-store sales in the same period slipped 0.2 percent.

President-elect Barack Obama plans to propose up to $310 billion in tax cuts as part of his massive economic stimulus package in an effort to help the U.S. economy escape its recession.

Also in the basket:

LG, Netflix to launch TVs with instant movie viewing

China’s young generation gets thrifty in gloomy economy

China maker Waterford Wedgwood calls in receivers

Consumers to Pare High-Tech Purchases (Wall Street Journal)

The Coming Fallout: Who’s Vulnerable? (WWD)

(Photo/Reuters)

Check out Black Friday.

Call it a test of the American consumer’s mettle.
How many will feel confident enough about the economy, and their own future within it, to spend money that is increasingly hard to come by? How many will resist the siren call of steep discounts and sales for even the hottest gadgets, like those available at Apple Inc’s stores?

This Black Friday, such questions are not only central to the future of many of the best known U.S. retailers, but amount to a key indicator of how quickly the country’s consumer-led economy will shrink in the coming months. How deep a recession could it be, how long might it last?

At Shop Talk, our colleagues are out across the country today, talking to scores of shoppers and documenting their stories, the hardships they have seen this year and the fears they voice about the coming year, after the holiday gatherings are over.

Nearly 45 percent of Americans are expected to turn out for the sales that started today and last through the weekend, according to the International Council of Shopping Centers. Stay tuned for anecdotes and pictures, and our full coverage on Reuters’ Holiday Shopping page. Let us know what you are seeing too.

Also in the basket:

U.S. holiday sales begin before turkey grows cold

UK retail sales plunge back to series low in Nov-CBI

(Photo/Reuters)

Check Out what the shrinking U.S. economy is doing to apparel sales.

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.

Two retailers that cater to women over the age of 35, Talbots Inc and Chico’s FAS, each saw sales at established stores fall more than 13 percent in the latest quarter.

Third-quarter net profit at Chico’s, which also operates White House Black Market stores, withered to $2 million from $23.6 million a year earlier as mark-downs also pounded profits.

Talbots, which specializes in classic looks, saw its loss from continuing operations expand to $14.8 million from less than a million in the year-earlier third-quarter.

Elsewhere, Charming Shoppes, which sells plus-size clothing for women, had a bit of good news. It reported a smaller-than-expected loss, but said it expects a wider loss for the holiday quarter.

It goes without saying that none of these results bode well for the all-important holiday shopping season, which is expected to be the worst since the early 1990s.

Also in the basket:

Small U.S. stores adopt personal touch to survive

Fed announces new plan to support mortgages

Home prices plunge in September

GDP contracting deeper than first thought

(Photo\Reuters)

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:

UPS: outlook unclear, so no peak package forecast

J. Crew Benefits as Mrs. Obama Wears the Brand (N.Y. Times)

(Photo: Reuters)

Check Out Coca-Cola Enterprises feeling the pinch as cash-strapped consumers buy fewer soft drinks.

The world’s largest Coca-Cola bottler cut its full-year outlook on Thursday, even though third-quarter results met Wall Street’s view.

“Our performance remains below our expectations as we work through a combination of significant marketplace challenges, including a weakened North American economic environment, changing consumer purchasing patterns, and the impact of volatile fuel costs,” Chairman and Chief Executive John Brock said.

Brock said his company is working on its fundamental business review and would divulge details of that plan in December.  The bottler now expects to earn $1.25 to $1.29 per share this year, excluding items, down from a previous forecast of $1.40 to $1.45 per share.

Meanwhile, Danish brewer Carlsberg said its French subsidiary, Brasseries Kronenbourg, would cut 214 of its 1,400 employees as it works on restoring profitability.

The French beer market has been declining for many years and even market leader Brasseries Kronenbourg is losing market share, hurt by strong legislation and the general economic slowdown, Carlsberg said.

Also in the basket:

RadioShack posts higher quarterly profit (Reuters)

Altria profit beats estimates (Reuters)

An Ironic Look for Lean Times: Extreme Banker (WSJ)

(Photo/Reuters)

Check out the cool and wet weather that hit U.S. retailers in September as the month will go into the books as the fifth coolest in the last seven years and much cooler than last year, according to Planalytics Inc, a business weather tracking company.

While the mean September temperature in the 96 largest U.S. metro areas fell about 4 points from last year to 64.2 degrees, retailers selling rainwear (demand up 29 percent based purely on weather), pants (up 13 percent), dehumidifiers (up 10 percent) and hot cereal (up 2 percent) benefited, Planalytics said.

September also was the 11th wettest since 1961, driven by six tropical storms, including Hurricane Ike, the consulting firm said. Some cities, such as Chicago, St. Louis and Wichita, Kansas, had their wettest Septembers ever recorded, while Houston, Kansas City and Little Rock, Arkansas, had months that still ranked among the the 10 wettest.

“The tropical systems that pummeled both the Gulf and Atlantic coasts became the real weather story of the month. Despite challenging economic times, businesses that supply pre- and post-hurricane staples such as gas, ice, water, non-refrigerated foods, generators, tarps, plywood, and chainsaws experienced brisk sales in the affected areas, driven by need-based purchases” Fred Fox, Planalytics CEO Fred Fox said in a statement. “In addition, foot traffic into grocery stores, restaurants, and hotels was robust along evacuation routes.”

The weather was a favorable factor for 78 percent of the publicly traded companies tracked by Planalytics, with the biggest positive comparisons seen at BJ’s Wholesale Club (store traffic up 24 percent), Family Dollar Stores (up 22 percent), Shoe Carnival (up 16 percent) and Target (up 13 percent).

More broadly, the index for retailers that sell a broad line of merchandise was up 14 percent based solely on weather, and it rose 8 percent for retailers that sell mostly apparel, Planalytics said. On the down side, were indices for home centers (off 4 percent) and restaurants (off 6 percent). 

Also in the basket:

Global Fears of a Recession Grow Stronger (New York Times)

Home Depot Learns to go Local (Wall Street Journal)

Safeway third-quarter profit rises

(Photo/Reuters)

Frozen seafood is never as tasty as fresh, a problem Red Lobster, whose menu hosts various fried frozen fish dishes, is trying to overcome.

Following a quarter of disappointing sales at its Red Lobster restaurant chain, Darden is trying to change the ”perception that the menu at Red Lobster is primarily comprised of frozen seafood prepared in a fried manner and not having a lot of interesting innovation, flavor profiles, culinary expertise,” said Darden’s CEO Clarence Otis on a call with analysts.

In other words, fried frozen fish lacks the flavor of fresh produce.

To change that, “the menu that’s coming out late in the second quarter is really designed to maintain or increase appeal of current users, which is important, but also address those concerns about, this is frozen, fried seafood without any interesting flavor profiles,” Otis said.

Darden also offers fresh lobsters, which customers can pluck from a tank in some of its restaurants,  but people ate less lobster over the summer as high per-pound prices turned off consumers already pressured by skyrocketing gas and grocery prices. 

Now that per-pound lobster prices have eased, Red Lobster plans to lower prices on some of its lobster dishes. To entice customers who might enjoy Olive Garden’s “endless pasta bowl,” Red Lobster also began three weeks ago to offer ”endless shrimp,” which hopefully has an interesting flavor profile. Darden didn’t mention whether the endless shrimp will be fresh or frozen.

(Photo/Reuters)