Shop Talk

Retailers, consumers and prices

Check Out Line: Warning, slow recovery ahead

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homedepot1Check out signs that a slow recovery is in the offing.

Retail executives see only gray skies ahead as U.S. shoppers are still spending cautiously, giving weight to the notion that a recovery will remain weak beyond 2010.

“The economic backdrop is not optimal,” Ken Perkins, president of retail research firm Retail Metrics, told Reuters. “It’s not catastrophic like it was in 2008 and the first quarter of 2009, but it’s just very sluggish.”

Indeed, Wal-Mart Stores posted its fifth consecutive quarterly drop in U.S. same-store sales (sales at stores that were open for at least a year) and said that trend may not reverse itself in the current quarter, Home Depot cut its full-year sales view and Kohl’s, which caters to middle-income consumers, and BJ’s Wholesale cut their profit forecasts.

“The landscape hasn’t changed, and you can make the case that perhaps it has worsened,” Kohl’s Chief Executive Kevin Mansell told Reuters last week.

Check Out Line: More corporate earnings to parse

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walmart1Check out the latest raft of quarterly earnings.

With investors and denizens of Main Street alike dissecting various government reports and company press releases for hints on the relative strength or weakness of the U.S. economy, the latest slew of quarterly earnings arrived to parse, including better-than-expected results from Wal-Mart Stores and Home Depot.

Wal-Mart posted a better-than-expected profit helped by cost cuts and growth in international markets as sales at U.S. stores open at least a year fell. The world’s largest retailer also raised its full-year profit forecast.

Check Out Line: Consumers beware! Rising prices even at Wal-Mart

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walmart1Check out rising prices even at Wal-Mart.

Pressures created by rising costs have caused even the world’s largest retailer, known for its ”rollback” discounts, to boost the prices that consumers pay for groceries.
    
Wal-Mart Stores raised average prices on supermarket items by about 6 percent in a month, according to a recent J.P. Morgan study in Virginia that compared the prices of 31-item goods sold at its supercenters, and at supermarket rivals Kroger, Safeway, Harris Teeter and Whole Foods.
    
Specifically, the study found that prices at a supercenter in Virginia rose 5.8 percent, the most significant sequential increase since JP Morgan started price comparisons in January 2009.
    
While the world’s largest retailer remains the cheapest among supermarkets, rivals such as Kroger and Safeway are gaining ground, according to J.P. Morgan.
    
Rising costs of raw materials and oil are pressuring companies to pass on costs to consumers with higher prices.

Indeed, clothes makers such as Nike, VF Corp and Hanesbrands are facing the same conundrum. And British baker Greggs said soaring wheat prices were set to push up costs, emphasizing a theme that may be repeated for such food makers as General Mills, Kellogg, Kraft and Sara Lee.

Check Out Line: Beware the ides of rising costs for food companies

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gis1Check out fears of rising costs for U.S. food companies.

Rising commodity costs and promotional discounts are pressuring profit margins for food companies and analysts said more may be on the horizon.

General Mills, whose brands include Cheerios, Green Giant and Haagen-Dasz, said on Tuesday that the gross margin in its most recent quarter was flat, excluding higher ad costs and other items.

Wal-mart’s global workers talk sales…and soccer

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merchantsWal-Mart management and about 1,200 workers from around the globe gathered in Fayetteville, Arkansas, for a spirited, pre-shareholder meeting pep rally.

Their message? “We are merchants!”

The employees, who are tasked with helping to grow company sales, reiterated that point multiple times. 

Check Out Line: The tale of two home centers

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Home DepotCheck out the differing prospects at Home Depot and Lowe’s.

Home Depot topped analysts’ expectations with its quarterly report on Tuesday morning and raised 2010 forecasts after its strong start out of the gate.

That dose of confidence came a day after smaller rival Lowe’s issued guidance that disappointed investors.  Remember, Lowe’s was a bit cautious when it came to talking about the possibility of an economic recovery.

Olive Garden owner goes Green

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olivegardenDarden Restaurants, owner of restaurant brands like the Olive Garden, Red Lobster and LongHorn Steakhouse, has joined the Sustainability Consortium — a group of scientists, academics and industry leaders working to “green” consumer products. 

Darden, an 1,800-unit restaurant chain considered one of the industry’s best performers, has set a per-restaurant goal of reducing energy and water use by 15 percent by the year 2015. Long term, it aims to send zero waste to landfills.

Check Out Line: Duke wins, but there’s another bracket to fill

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duke1Check out a different kind of tournament bracket still underway.

The Duke Blue Devils may have won yet another college basketball title Monday night, but consumers can still make their “Sweet 16″ picks in Consumerist.com’s annual “Worst Company in America”  tournament, which runs through April 26.

In its fifth year, the website, owned by Consumers Union, the publisher of Consumer Reports, lets consumers vote for their least favorite companies in matchups much like the NCAA tournament. Starting with 32 “teams,” the tournament pairs companies in votes in which the “winner” (think about it, in a worst company vote you want to lose) advances to face the next competitor.

Check Out Line: February sales strong despite snow

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Check out the return of the shopper.  Even at Abercrombie & Fitch.

snowSeveral U.S. retailers showed off strong sales gains — albeit over an ugly February 2009 — despite the winter storms that bashed the Northeast, mid-Atlantic and other parts of the United States.

It’s too early to declare a major rebound yet, analysts said, but the sales gains signal that consumers are heading back to stores for more than just the essentials these days.

Check Out Line: Sam’s Club outsources, sheds 10 percent of jobs

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samsCheck out Sam’s Club cutting 11,200 jobs or about 10 percent of its workforce as it outsources in-store product demos and sheds jobs for recruiting new business members to its warehouses.

Sam’s Club, a division of Wal-Mart, will use a third-party company, Shopper Events , rather than its own staff to essentially hand out food samples or demonstrate electronics to passersby, allowing Sam’s Club to let go of about 10,000 mostly part-time workers. (Though they can apply for new jobs with Shopper Events.)

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