Retailers, consumers and prices
Check out some strong sales.
Sure, sales are still down at most chains. Still, anything that’s down less than expected is a good sign in this economy, right?
Sales at Wal-Mart‘s U.S. stores open at least a year jumped 5 percent, topping analysts’ average expectation for a 2.9 percent rise. And in a sign that improving sales are leading to better profitability, retailers including J.C. Penney, TJX and Kohl’s raised their profit expectations for their just-completed first quarter.
Also, it looks like kids whose parents didn’t have the money for family vacations over spring break spent some of their time in shopping malls. Some of the biggest surprises came from Aeropostale and The Buckle, which cater to teens. Both posted double-digit gains in same-store sales.
Also in the basket:
Walgreen’s beauty merchant leaves chain (WWD, subscription required)
The online retailer beat Wall Street expectations for quarterly earnings and revenue as lowered prices lured more shoppers online. It also benefited as sales of its Kindle electronic reader gained momentum.
The company increased revenue an unexpectedly strong 18 percent as cash-strapped consumers went shopping online, and Amazon’s own discount shipping program spurred purchases.
PepsiCo is offering about $6 billion to buy the shares it does not already own in its two largest bottlers, Pepsi Bottling Group and PepsiAmericas, to cut costs and secure control of its brands as growth switches to new noncarbonated drinks.
Pepsi‘s plan to consolidate its bottling business underlines an industry trend and would give it control of 80 percent of its North America beverage distribution volume.
Mike Duke, the newly installed CEO of Wal-Mart, has been watching the recession play out in the cash register at his stores.
In an interview on the Today Show, Duke took Matt Lauer on a walk through a Walmart store, and talked about how he is seeing his shoppers navigate the downturn.
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:
Check out the higher profits at discounter Family Dollar Stores.
Family Dollar, which prices most of its merchandise below $10, and other discounters like Wal-Mart and Dollar Tree, have been flourishing in the recession as consumers turn to them for low-priced essentials like food and cleaning supplies.
Family Dollar’s success in turn pleased shareholders, who pushed up the company’s shares in pre-market trading.
Check out the lackluster results that are expected for U.S. retailers.
Excluding the 3 percent gain forecast for Wal-Mart, March retail sales are expected to fall 4.7 percent, matching the results in February. Value retailers like Wal-Mart seem to be the only area holding up in the recession.
“Consumers are under significant pressure and we don’t anticipate that changing any time soon,” Morningstar analyst Brady Lemos said. “We, like most analysts, have a pretty pessimistic view for the foreseeable future, unfortunately.”
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.