Shop Talk

Retailers, consumers and prices

Affluent Chinese help Tiffany make up for stingy US shoppers

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tif1Normally double-digit sales declines don’t cheer investors.

But shares of jewelry chain Tiffany & Co rose 4 percent on Wednesday even though it reported that sales at its U.S. stores open for at least a year (“same-store-sales” in industry parlance) fell 10 percent in the third quarter. 

True, much of the hemorrhaging seems to have subsided since last year’s gruesome holiday fourth quarter when U.S. same-store sales fell 33 percent, and November is off to a promising start.

Seems that wealthy Asians and Europeans — in Asia outside Japan, overall sales rose 18 percent while European sales were up 10.5 percent in the quarter — are picking up the slack from rich Americans who seem to be curbing their shopping until the Dow Jones Index is more to their liking… like say 14,000. And analysts were encouraged that the jeweler is aggressively expanding overseas.

Tiffany is so bullish on China in particular that it is planning to triple the number of its stores on the mainland within 5 years. Outside China, the chain is also expanding. It is opening a second store at London’s Heathrow Airport next month and has opened new stores in Amsterdam, a Melbourne suburb, Toronto and Hong Kong this year.

Penney for your discretionary dollars

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Deciding where to spend the remainder, if any, of this month’s paycheck?

JCPENNEY/J.C. Penney is making its case for why you should be heading to its stores.

At the department store chain’s annual analyst meeting in New York, Penney discussed the steps it is taking to win consumers’ hearts (and their money).

One of the steps highlighted: A chance for its rewards program customers to meet country music band Rascal Flatts, which recently topped U.S. pop album charts with its album called “Unstoppable.”

Check Out Line: Wal-Mart beats Wall Street’s view

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Check Out Wal-Mart’s fourth-quarter results.WALMART/

The world’s largest retailer posted a quarterly profit that topped Wall Street’s expectations, as it enticed U.S. consumers trying to conserve cash in the recession. The company’s performance was “exceptionally strong” in the fourth quarter and through the year, its chief executive Mike Duke said in a statement, adding that he expects the momentum to continue.

Wal-Mart has outdone its competition in recent months, taking advantage of consumers’ desires to pay as little as possible for essentials such as food and gas as they face job losses, weak home values and tighter access to credit.

So goes Wall Street, so goes Fifth Avenue retailers

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santasaks.jpgThe fallout from the turmoil on Wall Street will be felt by retailers who have set up shop on one of Manhattan’s most prestigious avenues – Fifth Avenue.

In the past week, Lehman has failed, Merrill Lynch agreed to be acquired by Bank of America, and the government had to step in to keep giant insurer AIG from failing.

Check Out Line: Buffett sees more weakness

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buffett.jpgCheck out the gloom wafting out of Omaha.
 
Warren Buffett told CNBC that the U.S. economy is unlikely to improve before 2009 and that shareholders in Fannie Mae and Freddie Mac could be wiped out.

That’s the latest unglad tiding for retailers looking at an     already bleak holiday season.

Check Out Line: It’s a bad idea to raise the turkey you sell

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turkey.jpgCheck out why Heinz didn’t suffer like Hormel did in the past quarter.

H.J. Heinz came in with a quarterly profit that beat Wall Street expectations, helped by price increases and new product sales, while Jennie-O turkey seller Hormel Foods saw its earnings dip.

Food companies have found it tough going as commodity costs shoot up, but Hormel was particularly hard hit. The reason? It raises the turkeys that it eventually sells — meaning spiking corn feed costs hurt its results. 

Dr Pepper gets flat reception on Wall Street

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doc.jpgDr Pepper Snapple Group debuted on the New York Stock Exchange Wednesday after being spun off from British candy and gum company Cadbury. 
 
The company is putting together a five-year plan to improve its business in Latin America, but its main focus will be on selling more drinks in the United States, Chief Executive Larry Young told Reuters.
 
Unfortunately, that might not be what Wall Street wants to hear.
 
Dr Pepper’s exposure to the sluggish U.S. soft drinks business could hurt growth.
 
 ”The firm has a mixed stable of brands, lacks the scale and product portfolio breadth enjoyed by larger rivals Coke and Pepsi, and relies almost exclusively on the mature and highly competitive U.S. market,” Morningstar analyst Mitchell Corwin said.
 
Still, Young says the company’s brands will take care of themselves.
 
“We have great brands, great people and are focused on delivering great results,” he said. “We’ll let the market take care of the price.”

(Reuters photo)

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