DailyFinance.comhttp://www.dailyfinance.comDailyFinance.comhttp://o.aolcdn.com/os/df/2013/img/2-dailyfinance_logo_m.pngDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2013 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/CEO's Corner: Overstock.com's Patrick Byrne on Expansion, Sales Tax, Morehttp://www.dailyfinance.com/2011/03/24/ceos-corner-overstock-coms-patrick-byrne-on-expansion-sales/http://www.dailyfinance.com/2011/03/24/ceos-corner-overstock-coms-patrick-byrne-on-expansion-sales/http://www.dailyfinance.com/2011/03/24/ceos-corner-overstock-coms-patrick-byrne-on-expansion-sales/#commentsFiled under: , , , , , ,

Patrick Byrne, CEO of Overstock.com, speaks up about the company's international expansion plans, state sales taxes and dirty finance.Online retailer Overstock.com (OSTK) has been on a tear lately. Even after increasing its spending on marketing and technology, the company boosted its earnings 79% and its revenue 24% in fiscal 2010. It's now gearing up for international expansion, recently introducing the domain name O.co as an overseas-friendly shortcut and signing a deal with DHL to reduce its international shipping costs.

Meanwhile, Chairman-CEO Patrick Byrne has remained outspoken on a number of topics, including stock manipulation and attempts to force online retailers to collect state sales taxes. He recently spoke with DailyFinance about those topics and more:

DailyFinance: Have you noticed changes in consumer behavior as we emerge from recession?
Byrne: I hate to be a Debbie Downer, but I don't believe we're emerging from the recession. The government is just propping up the economy and kicking the can down the road, instead of doing the structural readjustments that we should be doing as a country. What we're seeing in consumer behavior is that the most affluent 20% are back shopping like it was 2007. It's the whole other 80% who are still getting squeezed.

Overstock.com opposes being forced to collect state sales taxes in locations where it doesn't have affiliates. Why?
This is being pushed by lobbyists tied to brick-and-mortar retailers. This is a competitive move under the smokescreen of fairness. Secondly, taxes are the price that government charges to provide service. We don't consume the same services as a Target (TGT) in Dubuque. They consume a lot more of Dubuque, Iowa's services than we do by shipping a package to someone there. We don't think it's fair that we should be asked to collect sales tax on behalf of the consumer for those services. The Supreme Court weighed in on all of this 20 years ago and they agreed.

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Is competition from brick-and-mortar retailers a concern?
The brick-and-mortars do have this extraordinary advantage that they can take their foot traffic and, at a very low marginal cost, can take (it) at their website. It's cheaper for them to do that. The ones who have figured out how to do brick-and-click, like Walmart (WMT), those are certainly good competitors that we keep an eye on. But there are lots of others who have not figured out how to make their websites work synergistically with their stores.

Do you think you'll have to sell your brand harder overseas, where shoppers may not know the concept?
They may not be as familiar with the concept of Overstock.com, but they do want bargains. We can see from those who are shopping online now [that] they are really discriminating shoppers. It really comes down to: Can we build our supply chain out to deliver the values overseas that we deliver in the United States? If we can, we think the customers will find us. We are now shipping in 91 countries.

Overstock.com was recently penalized by Google for search-engine optimization violations. Is that going to have an effect on sales and revenue this quarter?
It's having a single-digit effect.

You have been widely criticized for your campaign against naked short selling. Do you still feel some investors are manipulating stocks?
Even though the publicity and the evidence became overwhelming, Washington was unable to act because all of these bankers have Congressmen and Senators that they can pick up and call and prevent them from acting. It's called an oligarchy. However, in 2008, when the banks themselves started becoming the victims, the federal government finally acted.

I applaud that the [Department of Justice] is going after this whole network of bad actors on Wall Street. But I don't think that they did it because of the publicity; I think they did it because finally somebody understood that the joint had gotten so crooked on Wall Street that somebody had to do something about it. In fact, the intensity with which they avoid doing the things that they really need to do sometimes worries me. It may just be the game is so crooked that they're afraid to pull too hard on any one thread because the whole thing could come apart.

What are your plans for your controversial business blog Deep Capture?
There's something coming in a matter of weeks that is harder hitting than anything we've yet published. Mark Mitchell is a journalist working with Deep Capture and he's written a story that I think, in a fair world, would win a Pulitzer. It's an expansion of topics that we've dealt with before. This is a yearlong investigation into that blurry border between organized crime and the hedge-fund community.

Are you talking about money laundering, or just unscrupulous behavior?
Money laundering is part of it. It starts with the (May 6) "Flash Crash" and digging into some characters who where involved, tracing the trading activity and the people involved. And it turns out you don't have to trace it very far until you get right into the underworld, organized crime and worse. We're going to publish it over a space of about a month. It's going to be bigger than anything we've ever done.

What else is keeping you busy?
There are two other tabs coming to our site. You'll be seeing one of them in less than a week. But I can't tell you what it is.

New categories?
Yes.

Services or products?
I can't say any more.

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]]>brick and clickByrneceos cornerDeep Capturedhldiscount retailerseconomic crisiseconomic growtheconomic recoveryEconomicseconomyflash crashgoogle overstockHedge fundsInvestingo.cooverstockoverstock dhloverstock.comPatrick Byrnerecessionrecoveryretailretailersstock marketStock Tradingstockstradingwall streetwalmartwalmart.comWalmartStoresMercedes CardonaThu, 24 Mar 2011 11:00:00 ESTA Valentine's Day Surprise for February Retail Saleshttp://www.dailyfinance.com/2011/03/03/a-valentines-day-surprise-for-february-retail-sales/http://www.dailyfinance.com/2011/03/03/a-valentines-day-surprise-for-february-retail-sales/http://www.dailyfinance.com/2011/03/03/a-valentines-day-surprise-for-february-retail-sales/#commentsFiled under: , , , , , , ,

Valentine's Day saleRetailers got an unexpected valentine from shoppers: Strong February sales. But whether they repeat the feat in spring could depend on gasoline prices and how good shoppers feel about their finances.

According to the monthly sales tallies from Thomson Reuters, major merchants reported an average increase of 4.2% in comparable sales (for stores open at least a year) during February, much better than the 3.6% its analysts had projected. And strength came across the board, with discount stores up 4.9%, helped by rising food sales, and department stores up 5.3%, thanks to upscale shoppers.

More important, the sales increase beat the 4% growth seen during the same time last year, meaning retailers' sales are showing some mild momentum.

A Seesaw in Spring?

Most retailers reported that the month started slowly, due to bad winter weather around the country. But weekly totals picked up as the month went along, thanks to Valentine's Day and Presidents' Day sales. But results are expected to seesaw in spring, with shoppers retreating after the February surge. Merchants expect March will slow down as still-cautious consumers save up for Easter sales, which will come later this year than in 2010.

Shoppers remain largely cautions and are trying to spend less on average, especially those at the lower end of the economic scale. BJ's Wholesale Club (BJ), reported sales were up 7.5%, or 3.9% excluding gas sales, but it noted that the increase came thanks to a 3% increase in traffic that offset flat average transaction amounts.

Fellow discounter Target (TGT) reported that sales were up 1.8% and said nearly half of increase was driven by increased transactions, with only a small increase in average transaction size. JC Penney (JCP), which reported sales were up 2.7%, also noted that growth came from an increase in transactions in the mid-single-digit percentages that offset lower average prices and items per transaction.

Feeling More Flush Up Top

Things were a little different in the upper end: Both Saks (SKS) and Nordstrom (JWN) showed clear sales increases: 15.3% and 7.3%, respectively. The class distinction was obvious at Nordstrom, whose full-price stores were up 9.6%, while sales at its Rack outlets rose only 1.6%, reversing the trend seen during the recession.

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Many observers have noted that high-income households are spending more now, emboldened by strong returns from the financial markets. Mid- and low-income shoppers are shopping more but spending the same, and retailers have noted that these groups' shopping is increasingly influenced by promotional events.

That could be bad news for March totals. Most merchants expect the shift of Easter to late April this year will depress this month's sales. Macy's (M), which posted comparable sales were up 5.8% in February, forecast combined March-April sales will be up about 3%, but April will be the stronger month due to the later Easter and moving cosmetics promotions from March to April this year.

Victoria's Secret parent Limited Brands (LTD), whose sales rose 12% in February, estimated that the later Easter will shrink sales growth in March by three to five percentage points and leave sales flat over the same time last year.

"All Bets Off"

Most retailers had little to add to the numbers, after laying out some conservative outlooks during their quarterly reports a week earlier. Merchants have already warned that their costs are rising. And while shoppers' confidence is improving, the housing and labor markets aren't, which doesn't bode well for increased household spending.

But so far, so good, says Brian Sozzi, retail analyst of Wall Street Strategies. February was fueled by rising consumer confidence and shoppers taking money from savings, but "all bets are off for March and April, the heart of spring shopping."

Consumers will be dealing with rising prices for gasoline and food, as well as negative economic news, Sozzi wrote in a note to investors. And he said merchants are expecting to raise prices noticeably "after a year of companies eating ticket increases from manufacturers." It sounds like keeping the momentum going in retail will be a tricky task in the next few months.


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]]>consumer spendingdiscount retailersFebruary retail salesluxury goodsNordstromretail salesSaksshoppingvalentines dayMercedes CardonaThu, 03 Mar 2011 12:20:00 ESTFebruary Retail Sales Growth Should Be Slow but Steadyhttp://www.dailyfinance.com/2011/03/02/february-retail-sales-growth-slow-but-steady/http://www.dailyfinance.com/2011/03/02/february-retail-sales-growth-slow-but-steady/http://www.dailyfinance.com/2011/03/02/february-retail-sales-growth-slow-but-steady/#commentsFiled under: , ,

Consumers shopping in the mallEven after February showed a bipolar personality, retail sales continue to stabilize, and major merchants are expected to show mild improvement in sales when they report monthly results this week.

Most forecasts expect February will show 3% growth or better over the same time last year when major merchants report monthly tallies on Thursday. Industry observers say shoppers are opening their wallets more -- or at least wealthy shoppers are, thanks to the rising financial markets. But lower-income consumers remain cautious due to the stagnant job and housing markets. Most retailers have accepted that new reality and are planning for slow sales growth this year.

"We saw some good results in February. We don't really see any evidence that momentum is building. We say that momentum is continuing to hold," says Mike Berry, director of Industry Research for MasterCard Advisors SpendingPulse. Many observers have noted consumer confidence is rising to near pre-recession levels and spending on some areas -- most notably luxury -- is back to peak levels. Low- and moderate-income shoppers, however, still need to be prodded to buy with discounts and promotions.

Most Sectors Saw Gains

February was an up-and-down month, hit by bad weather but helped by the Valentine's Day holiday and Presidents' Day sales, according to the weekly tallies of the International Council of Shopping Centers.

"Overall, the month's trend performance was good and likely helped by an improving economy, despite some increasing drag from rising gasoline prices," said chief economist Michael Niemiera, in a report. Despite sales rising one week and dropping the next, he forecasts that February totals will show growth of 2.5% to 3% over last year.

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Most retail sectors showed growing sales in February, according to SpendingPulse, which tallies sales on payment methods including credit cards, checks and cash. Most apparel categories -- nonessential purchases that shoppers put off in hard times -- showed sharp increases, especially children's clothing, which was up 10.7%, and men's apparel, up 7.4% year-over -year.

Even furniture, a category that's been hit hard by the weak housing market, got a bump from Presidents' Day sales and rose 4% in February, according to SpendingPulse.

Furniture sales are still down from where they were three years ago, before the housing market tanked, "but 4% is a pretty good number compared to what we have been seeing for so long," says Berry. "It's nice to see that number recover, but realistically. . .until the housing market recovers, we can't really expect to go back to the area where we were in 2008. And we're still a ways away from that."

Another Shock Is Coming

Luxury sales, excluding jewelry, were up 1.7%, after spiking during the holidays. But jewelry sales were up 14.4%, thanks to Valentine's Day, with big-ticket baubles selling better than moderately priced items, notes Berry. "In the high-income [households] category, consumer confidence has recovered well and a lot of that is tied to the stock market," he says.

And low-income households are about to get another shock, as tensions in the Middle East keep pushing oil prices higher. Rising gas prices didn't have much of an effect on February sales, but they could start factoring into spring sales, says Berry. Gas prices don't start affecting retail sales until they hit around $3.20 a gallon -- roughly where they are right now, he notes.

"Keep an eye on gas prices, because when the economy was really heating up back in 2008, that had kind of started to put the brakes on things, even before the housing and financial crisis hit," Berry says.

March and April retail sales will be worth watching, he adds, because just as retail comes out of the post-holiday slump, merchants will be facing tough comparisons to an unexpectedly strong spring last year.

"It was really in April-May-June last year when things reverted back. After the first quarter, it looked like we might be moving into a recovery in consumer spending," he says. "We don't seem to be building any more, but we haven't lost momentum from what we saw in the fourth quarter. It will be interesting to see what happens next month."

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]]>apparel salesclothing saleconsumer spendinggasoline pricesholiday salesjewelry salesluxury goodsMasterCardretail salesshoppingSpendingPulseMercedes CardonaWed, 02 Mar 2011 06:30:00 ESTSpring Is in the Air for Retail M&Ahttp://www.dailyfinance.com/2011/03/01/spring-is-in-the-air-for-retail-manda/http://www.dailyfinance.com/2011/03/01/spring-is-in-the-air-for-retail-manda/http://www.dailyfinance.com/2011/03/01/spring-is-in-the-air-for-retail-manda/#commentsFiled under: , , , ,

Retailers are barely finished with the holiday 2010 season, but it might as well be spring, because the merchants' mating season has already begun.

"They're poking their heads out, taking a look around and seeing where they are and what they're capable of doing," says Bruce Cohen, a partner in the private equity practice of consultant Kurt Salmon.

Merchants are getting back to business after the recession and showing stronger earnings again, as seen in the latest quarterly results. After maneuvering through the downturn to operate leaner and more cost-effective companies, retailers have good cash flow, lower debt and rising stock prices as consumers come back, Cohen says. Combine that with cheaper credit available for their suitors, and retailers are becoming attractive targets for private equity investors -- and each other.

Signs of Vigor

"The companies that have done well and have strongest balance sheets and the private equity groups that were holding on to funds and looking for opportunities feel they have reached the bottom of the cycle," said Cohen "As the trend picks up with consumers coming back to stores, they want to redeploy that capital."

In late 2010, retail M&A began showing signs of vigor when J.Crew (JCG) accepted an offer from private equity firms lead by Leonard Green & Partners, and when Bain Capital signed a deal to take Gymboree private for $1.8 billion in cash. Just before Christmas, Leonard Green again made a deal to acquire fabric and crafts retailer Jo-Ann Stores (JAS) for $1.6 billion.

The action has sped up in the new year, with Family Dollar Stores (FDO) announcing in February it had received a buyout offer worth almost $7.6 billion from investor Nelson Peltz's Trian Group, which had picked up a 6.6% stake in the discount chain last fall. During the same month, BJ's Wholesale Club (BJ) announced it had hired Morgan Stanley to explore a possible sale; A.C. Moore Arts & Crafts (ACMR) put up the "for sale" sign and said it had received "expressions of interest"; discounter Big Lots (BIG) hired Goldman Sachs to shop it around; and bankrupt retailer Blockbuster went out looking for a white knight.

The latest retailer to put itself on the block was teen apparel specialist Delia's (DLIA), which is reportedly doing the private-equity rounds, looking for a buyer after losing much of its cachet in recent years.

Conducive Environment for Deals

The deals are not always led by retailers looking to sell and investors looking to cash in. Some retailers are looking to buy for strategic reasons. Nordstrom (JWN) picked up online "flash sale" site HauteLook in February as a way for the department store to dive deeper into online sales, to "learn how to operate better in that world," CFO Mike Koppel told analysts.

Many retailers have abundant cash flow they can use to experiment with new defensive strategies in an environment that is changing dramatically, noted Michael Exstein, retail analyst at Credit Suisse First Boston. In a note to investors, he singled out Walmart's (WMT) acquisition last year of streaming video service Vudu as one example of retailers' experiments.

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"This is really an indicator of greater confidence overall about the industry," says Cohen. "A lot of retailers went through a lot of pain during the recession to rationalize their companies to be able to survive, and not wanting to expand so quickly coming out of the recession, are still good cash generators."

Additionally, today's low interest rates are very conducive to dealmaking, and retail stocks have appreciated significantly as consumer confidence bounces back. That makes stock combinations also attractive, says Cohen. The Nordstrom-Hautelook deal, for example, is a combination of cash and stock worth up to $270 million.

Here are some retailers that haven't yet joined the fray but could become takeover targets:

Williams Sonoma (WSM): Most merchants report that home-related retail categories are still suffering the effects of a poor housing market. But Morningstar analysts singled out the parent of the kitchenwares chain and furniture retailers Pottery Barn and West Elm as an attractive target. Investors have gotten used to seeing nice stock upside from this company, which just approved a new stock repurchase program. And with wealthy consumers back spending in force and more confident than low-income shoppers, a play for an upscale retailer makes more sense than hitting up a discounter.

Barnes & Noble (BKS): The "for sale" sign has been up on this door since last summer, as the family of founder and chairman Leonard Riggio and activist shareholder Ron Burkle fought for control of the bookstore chain. A merger with Borders Group was floated several times just before the rival bookstore went into bankruptcy. With its main competitor on the ropes, could another takeover try lie ahead?

OfficeMax (OMX): Takeover rumors have popped up occasionally as analysts have noticed the office-supply chain has a plenty of free cash flow, good real estate and an attractively priced stock compared to competitors Staples and Office Depot. OfficeMax took a hit to its stock in February when it warned that the year ahead will be tough (no surprise, when your customers include a large portion of small businesses) even as it announced earnings that beat estimates. Credit Suisse First Boston analyst Gary Balter singled it out as an attractive investment in the office supply market, which he noted isn't getting much love from investors, despite attractive stock valuations and cash flow.

Fred's (FRED): This chain of discount stores operates mainly across the South. It doesn't generate the kind of free cash flow to attract a private-equity buyer, but could be a target for another retailer, Brian Sozzi, retail analyst at Wall Street Strategies, said in a note to investors. It has its own private-label brand and has been expanding pharmacy operations, which would make it attractive to a drugstore chain such as CVS Caremark (CVS) or Walgreen (WAG), which don't have a large presence in its markets, he said.

Private equity can be a catalyst for a deal in some situations, but all the retail companies are evaluating the opportunities right now, says Cohen.

"The last couple of years they weren't entertaining any of this. So in looking at where they are today, everyone is reemerging," he says. "Two Thousand Eleven is the new spring, where people are coming back out of the winter of recession."


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]]>Barnes NobleBlockbusterBordersdealmakingFredsJ CrewMandAmergersmergers and acquisitionsNordstromOfficeMaxPottery Barnprivate equityretailersWest ElmWilliams SonomaMercedes CardonaTue, 01 Mar 2011 09:00:00 ESTIs Penney Wise? The Retailer Is the Latest to Risk Rebrandinghttp://www.dailyfinance.com/2011/02/27/penney-new-logo-branding-risk/http://www.dailyfinance.com/2011/02/27/penney-new-logo-branding-risk/http://www.dailyfinance.com/2011/02/27/penney-new-logo-branding-risk/#commentsFiled under: , , , ,

The Nike Swoosh. McDonald's Golden Arches. Apple's -- well, apple. Corporate logos are the proverbial picture worth a thousand words. Or millions of dollars in sales.

As the recession recedes and companies return to business as usual, they're back to tinkering with their looks. J.C. Penney (JCP) announced this week it will introduce a new logo and brand identity as part of its effort to regain stature in the department-store sector.

The new look will appear first on ads during Sunday's Academy Awards broadcast, but Penney's is already getting flak over the design change. "JCPenney's Logo Is Changing, Bet You Won't Notice," was the Advertising Age headline. "Like a U.S. Senator that sends out tweets using 'omg' texting lingo, it's just kind of lame," blogged the marketing site Brandchannel.com.

"Our new logo honors our legacy while reflecting the modern retailer we've become," said CEO MIke Ullman, in a conference call with analysts. "We think it's an evolution, not a revolution."

A Hard Sell

Like Penney's, companies often change logos to communicate excitement and a shift in strategy, said Rob Scalea, CEO-North America of The Brand Union, a branding and design agency. But he acknowledged shoppers can be a hard sell.

"The logo is a way to identify quickly what the consumer is looking for, " said Scalea. "The logo represents the brand. That carries a lot of connection."

Penney's is only the latest of several retailers to tinker with their looks recently, with varying degrees of success:

Starbucks (SBKS): To mark its 40th anniversary this year, the coffee chain removed both its name and the word "coffee" from its logo. The new symbol kept only the mermaid icon and gave her a facelift. The reaction has been mixed. But since not everybody goes to Starbucks for the coffee anymore, why advertise it in the logo?

Target (TGT): Like Starbucks, Target has been quietly dropping the type from its logos and letting the red bull's eye logo do all the talking in most of its ads and displays. But the red-and-white design was already so ubiquitous in stores, hardly anyone has noticed the missing verbiage.

Seattle's Best: If Starbucks' new logo was streamlined, its down-market Seattle's Best brand went downright minimalist with its new identity. Several respondents to a Seattle Times poll noted the logo looked like it belonged on a blood bank, but Seattle's Best is sticking with it.

Gap (GPS): Gap made a big splash in October with its new logo, but not the kind of splash it wanted. Critics said the design was bland and unimaginative. Comments online were merciless, saying the logo looked like it was generated by a computer program, among other insults. Gap tried to smooth things over by going on social media to ask for better ideas -- and what it got was more backlash. It surrendered after a week and went back to its old logo.

Tough Customers

Consumers can be tougher critics than designers when companies switch logos: Witness Tropicana (PEP), which until the recent Gap follies probably held the record for the fastest makeover about-face. Critics said the 2009 repackaging of this orange juice brand made it look like a generic. The design replaced the orange-with-a-straw logo on the carton with a close-up of a juice glass that was so close-up shoppers couldn't tell what it was. Sales dropped 20%, and Tropicana went back to the old packaging after two months.

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People can become very attached to logos as a stand-in for the company they represent, says Richard Bates, chief creative officer of The Brand Union in North America. "That's partially why they get so upset when it changes," he says. "You're signaling that what they perceived that brand to be has shifted."

Gap's problem was partly that shoppers didn't see a shift in the store to go with the new logo. "You don't want to use a logo change as a Band-aid," says Bates.

If a logo change is part of a true overhaul, it will survive, even if the initial reaction is negative, he says: "If you've done that properly, then sticking to your guns is fine. People always have a reaction to change. It dies down pretty quickly."

Instant Reactions

But expect plenty of comments after the Penney ads appear in the Oscar telecast. The Internet has given these brand identity crises a life of their own, warn the admen.

"The same reactions happened in the past, but it wasn't so effective when it took two weeks to write a letter to the home office," says Bates. "Now everybody can flame online."


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]]>academy awardsbrandinggap logoGapLogojc penney logoJcPenneyLogonew logosrebrandingSeattles best logoSeattlesBestLogostarbucks logoStarbucksLogotropicanaMercedes CardonaSun, 27 Feb 2011 10:00:00 ESTRetail's 2011 Outlook: Rising Prices in a Down Economyhttp://www.dailyfinance.com/2011/02/26/retails-2011-outlook-rising-prices-in-a-down-economy/http://www.dailyfinance.com/2011/02/26/retails-2011-outlook-rising-prices-in-a-down-economy/http://www.dailyfinance.com/2011/02/26/retails-2011-outlook-rising-prices-in-a-down-economy/#commentsFiled under: , , , , , , ,

Retail's 2011 Outlook: Rising Prices in a Down EconomyRetailers went back to work after the holiday, buying into an "as-is" economy.

As merchants reported their full 2010 numbers, they forecast that 2011 will be a year spent dealing with inflation, expanding stores and trying to wean shoppers off their markdown habit, rather than cutting costs and inventories and reacting to crises as they did for the last two years. Faced with rising material costs that are pushing prices higher, merchants say they have to focus on growing sales in 2011, regardless of the economic pressures.

"We're prepared to operate effectively in a slow-growth environment," said Robert Niblock, CEO of Lowe's (LOW). The hardware chain reported earnings for fiscal year 2010 rose 12.7% to $2 billion and comparable sales (for stores open at least a year) rose 1.3%.

Rival Home Depot (HD), which reported even better results, is also in "new normal" mode. It posted earnings of $3.34 billion for 2010, up 25.4% despite the weak housing and employment markets. It also announced it expects to repurchase about $2.5 billion worth of shares during 2011.

CFO Carol Tome noted the hardware chain will work around housing and employment pressures that don't look likely to let up. The 2010 numbers -- which included rising sales in 49 out of 50 states -- showed business can improve even as the housing market remains under stress, with housing remaining at historic lows as a percentage of GDP, she said.

"The overall picture of one of a stabilizing business," Tome said.

Sales Growth Is Still Hard to Find

Most retailers reported strong holiday seasons that helped push 2010 to a profitable close, and many announced share repurchases, debt repayment and expansion plans for 2011. Macy's (M), which posted its best comparable sales increase in 15 years, said it plans to use its free cash this year to retire more debt on top of the $1.2 billion it paid off in 2010 in an effort to pull its debt back to investment grade.

""Obviously there's a lot of competition there, but we feel very good about 2011," said CFO Karen Hoguet.

Macy's is among several retailers who said they plan to step up store remodeling programs in 2011. Target (TGT), which already revamped a large fraction of its stores in 2010 to add larger grocery sections, said it will continue that program in 2011. The discounter, which struggled with sales growth in 2010, posted a 21.4% increase in earnings for the year and comparable sales growth of 2.1%.

Many of the lower-end retailers noted sales growth is still proving a tough effort, and is expected to stay that way in 2011.

"The U.S. market for the kinds of goods we sell is not enjoying robust growth," said Target CFO Doug Scovanner. Without mentioning Walmart Stores (WMT) by name, he referred to the results the giant discount chain reported earlier in the week: Walmart's earnings rose 12% in 2010 during the year, but its U.S. comparable sales dropped 0.7%.

"A lot of people are picking on my big brother, but it's more of a reflection of what's happening in the economy," said Scovanner.

Watch Out: Here Comes Inflation

Shoppers are coming back to stores, but they're still holding back on spending, said Kathy Tesija, Target's executive VP of merchandising. She noted shoppers are increasingly finding ways to cut back their spending on everyday items buy using coupons, buying store brands and waiting for sales to pay for their splurges on other items. Since the holidays, Target has noted many shoppers have traded down to the "good" items in some categories such as housewares, while trading up to "better" and "best" price ranges in other categories, such as apparel, she explained.

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That's going to be a problem as the retailers face the worst inflationary environment since well before the recession. Energy prices, labor costs in Asian manufacturing markets, and the price of commodities from cotton to copper are all on the rise, and vendors have stepped up their calls for price increases on items from clothing to housewares.

"For the first time, in a decade or more, we're seeing some inflation that is quite high," said Glenn Murphy, CEO of Gap Inc. (GPS), which posted 19% increase in earnings, despite only growing comparable sales by 1%.

Costs are expected to be up significantly, about 10% to 15% overall across all product categories, said Kevin Mansell, CEO of Kohl's (KSS). Product costs are already up by low single-digit percentages and that will "accelerate dramatically" this fall, he said. Kohl's is right to worry, because it had been doing well growing sales among moderate-income consumers: It posted net income of $1.1 billion in 2011, up 14% from 2009, and comparable sales growth of 4.4%. Management also announced the first cash dividend in the company's history, and increased share repurchase plans by $2.6 billion, to $3.5 billion by the end of 2013.

But the expected price increases are putting pressure on retailers' plans for the second half of 2011. Most retailers said they had worked around the cost pressures to stock up for spring, but vendors have stepped up their requests for price increases during the last two months, which will increase retail prices in the second half of the year, whether shoppers like it or not.

Balancing Price Increases with Customer Push-Back

"We fully recognize when you're taking the prices up... we recognize that units come down, so we're planning accordingly," said Kristin Hays, investor relations manager of J.C. Penney (JCP). Penney, which had struggled through the year to build up sales, reported comparable sales rose 2.5% in 2010, and earnings grew 55% to $389 million.

The department store chain has tested price increases in some areas to develop plans to pass on the cost increases. While Hays wouldn't give details, she noted the test results showed that higher prices in the "better" and "best" ranges made up for the lost sales in the "good" entry points.

So shoppers should be prepared to face higher prices, especially for the finer things. The merchants say they are managing on a real-time basis to balance both price-hike requests from vendors and push-back from customers.

"I think that's the question of the day. We know that we have to counter cost increases, the question is how much," said Mike Jeffries, CEO of Abercrombie & Fitch (ANF). The teen retailer turned things around during the holiday: It grew comparable sales by 7% in 2010 and posted net income of $150.3 million compared to net income of $300,000 in 2009.

"We're grappling with this," said Jeffries. "We have bought our back-to-school assortment, [but] we're still negotiating for Labor Day and on."

Figuring out what prices the traffic will bear will consume merchants' attention as they head into the key Easter selling season in April, and will really hit home during the second-largest shopping season of the year, the back-to-school period.

"The point of this tension is it has to be managed on a week-by-week basis," said Jeffries. "Those who can't have big problems."



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]]>2010 earningsback to schoolcommoditiescomparable salesEarnings reportsholiday shoppingHome Depotinflationinventorymarkdownprice increaseretailretail outlookretail salesretailerssame store salesStock buybackssupplierMercedes CardonaSat, 26 Feb 2011 10:00:00 ESTWinter's Gloom Didn't Keep Shoppers From Spending in Januaryhttp://www.dailyfinance.com/2011/02/15/shoppers-kept-spending-in-january/http://www.dailyfinance.com/2011/02/15/shoppers-kept-spending-in-january/http://www.dailyfinance.com/2011/02/15/shoppers-kept-spending-in-january/#commentsFiled under: , ,

January retail sales rose over December and last JanuaryPent-up demand among shoppers and savvy merchandising by retailers beat bad weather as merchants closed out the holiday season and their fiscal year.

The Commerce Department's retail and food services sales tally for January rose to $381.6 billion, up 7.8% from January 2010 and up 0.3% from December. Excluding auto sales, totals were up 5.4% from the year-ago month, and retail sales were 7.7% higher. The Commerce tally is the most complete picture of retail because it includes gasoline, food and auto sales, as well as the results of Walmart Stores (WMT), the world's largest retailer, which doesn't publicly report monthly sales.

The numbers show retailers were careful in stocking up for the holiday, managing inventories and promotions more sharply then ever -- a skill honed during the recession. And consumers have begun to respond, say experts.

"They're shopping, and retailers did a little better job of inventory so they didn't have to give anything away this January," says Alison Paul, vice chairman and U.S. retail leader at Deloitte. Shoppers let out some pent-up demand over the holidays, picking up both gifts and things for themselves. "The old 'one for you, and one for me' shopping," Paul calls it.

What Consumers Are Responding To

For the most part, merchants and manufacturers worked to line up wares that shoppers wanted at prices that were attractive to consumers who are now more frugal, note industry observers.

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"It was a nice match between people looking to buy and the value that retailers have trained themselves to offer consumers," says Laura Gurski partner at consulting firm AT Kearney. "If you put something out there at a price people can afford, you're seeing people respond."

Some retail segments continued to bounce back from the depths of the recession, most notably auto sales, which were up 15.9% over last January. Similarly, building materials and hardware stores were up 6.9% year-over-year. But some of the improvement comes thanks to easy comparisons to weak sales last year: Hardware merchants were still down 2.9% below December. And home-related sectors continued to suffer from the weak housing market, with furniture and electronics stores were down year-over-year, 0.2% and 0.7%, respectively.

"A Tale of Two Consumers"

While sales appear to show momentum in most segments, with January rising over December, some trouble areas persist. Several gift-related retailers had a holiday letdown, most notably book, hobby and music stores (down 1.3% from December), clothing (down 0.3%) and food-and-drink establishments (down 0.7%). Housing-related segments also slowed down after the holiday, with furniture sales down 0.3% and hardware stores down 2.9% below December.

"It's an interesting time, it's a bit of a mixed bag," says Paul. "It's a bit of a tale of two consumers."

Besides the pent-up demand, affluent consumers -- buoyed by the rising stock market -- did a lot of the heavy lifting during the holidays, Paul notes. According to Deloitte's research, households with incomes over $100,000 annually were more confident in spending and carried the day through January, while "families under $100,000 continue to feel the hangover of the recession," she explains.

But overall, the holiday season was one of the strongest in the last 10 years, says Gurski. And gift-card redemptions were low in January, which could push some sales into the next few months, as retailers restock their cleared-out racks, she says. That should give retailers heart as they head into the earnings season this week.


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]]>bargain huntingconsumer goodsconsumer spendinggift givinggiftsJanuary retail salesretail salesshoppingMercedes CardonaTue, 15 Feb 2011 12:15:00 ESTFourth-Quarter Retail Earnings: Can the Uptrend Continue?http://www.dailyfinance.com/2011/02/14/fourth-quarter-retail-earnings-can-the-uptrend-continue/http://www.dailyfinance.com/2011/02/14/fourth-quarter-retail-earnings-can-the-uptrend-continue/http://www.dailyfinance.com/2011/02/14/fourth-quarter-retail-earnings-can-the-uptrend-continue/#commentsFiled under: , , , , , ,

Christmas shopping for bargainsAs retailers start releasing their latest quarterly earnings this week, don't expect too many fireworks. After a holiday season that marked a return to some form of normalcy, merchants are bracing for a year of mild sales growth and more stable operations.

Consumers are spending again, but still shopping carefully, as the major merchants' January sales reports showed earlier this month. Tuesday's release of Commerce Department retail numbers for January will likely underline that dynamic, just as merchants begin reporting fourth-quarter and fiscal-year earnings. The Commerce numbers are the most complete picture of retail because they include gas, food and auto sales, as well as the results of Walmart (WMT), the world's largest retailer (which doesn't publicly report monthly sales).

"We're not completely out of the woods, particularly for housing-related spending, but I think retail has largely recovered from the 2008 recession," says Kamalesh Rao, director of economic research for MasterCard Advisors SpendingPulse.

"A Good Sign"

According to SpendingPulse numbers, which tend to mirror the Commerce Department tally, January sales excluding autos and gasoline were up 4.6% over January 2010, the best yearly increase since April 2010. The growth rate for the three-month period was 4.9% above the year-ago period, the best quarterly growth since August 2007, according to SpendingPulse, which tallies sales by payment forms including credit, cash and check.

"I think we've finally managed to dig ourselves out of that trough in the recession," says Rao.

"A lot of the momentum we generated through the holiday season seems to have sustained itself. That's a good sign for consumer spending," he says. Sales in January were up 1.8% over December, reversing a slowdown in month-over-month growth, which indicates sales momentum gathered steam despite the inclement weather last month, notes Rao.

"Singles and Doubles"

Whether that momentum holds is an open question, given the state of the housing and job markets, say industry observers. As the retail earnings season begins, analysts note that merchants will have to focus more on holding down costs and operating more efficiently, rather than look for sales increases to boost profits.

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"This year will be characterized not by home runs, but by singles and doubles," said Credit Suisse analyst Gary Balter in a note to investors. He said the stock prices of mall anchor stores had gone up 40.5% in 2010 after rising 228.3% in 2009, but that pace can't hold up for a third year. Comparisons will be harder this year, with gross margins having made it back to their pre-recession peaks, he wrote.

Mass merchants are under pressure from rising costs for goods, higher energy prices and price-sensitive consumers who are comparison-shopping more aggressively online, Balter explained. He recommended mass retailers such as Family Dollar Stores (FDO) and Costco (COST) that offer shoppers something beyond low prices, over retailers such as Walmart that are focused more narrowly on prices.

As the merchants report earnings, analysts will likely want some forecasts for spring sales -- especially the key Easter sales period -- as a gauge of consumer activity. Major retailers were tight-lipped when reporting January sales, even as several upgraded their guidance for fourth-quarter earnings.

"Even though we're talking about a rebound and pretty sustained momentum, we're still talking about a consumer that's far more selective and far more choosy than they were pre-recession," says Rao. "The sustainability of momentum is a question mark right now, but we have good signs."


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]]>bargain huntingchain storesconsumer spendingdepartment storesonline retailonline shoppingRetail earningsretail salesretail stocksshoppingshopping mallMercedes CardonaMon, 14 Feb 2011 11:00:00 ESTJanuary Retail Sales: Record Snows Couldn't Stop Shoppershttp://www.dailyfinance.com/2011/02/03/january-retail-sales-record-snows-couldnt-stop-sale-shoppers/http://www.dailyfinance.com/2011/02/03/january-retail-sales-record-snows-couldnt-stop-sale-shoppers/http://www.dailyfinance.com/2011/02/03/january-retail-sales-record-snows-couldnt-stop-sale-shoppers/#commentsFiled under: , , , , ,

Neither snow nor sleet kept shoppers from the post-holiday clearance sales, to the surprise of U.S. retailers. Merchants posted better-than-expected January sales results despite record snowfalls and icy weather that had caused several analysts to significantly lower their sales forecasts for the month.

Major retailers' comparable sales (for stores open at least a year) were up 4.1% on average during January, according to a tally by Thomson Reuters. That's nearly twice the growth rate forecast by many industry observers, who had cut estimates recently to the 2% range. Just this week, Thomson Reuters had lowered its estimate to 2.7% growth from 2.8%.

The numbers show that shoppers are slowly becoming less cautious about their spending, says Frank Badillo, senior economist at consultancy Kantar Retail. The company's monthly shopper survey shows consumer perceptions are stabilizing, with fewer households feeling less well-off financially in January, and the percentage planning to cut back their spending dropping for the third month in a row.

Most observers had expected the weather would compound the holiday letdown seen in the December sales results, which disappointed retailers when shoppers held back after November's early holiday season sales. Instead, January showed consumers still have spending power, if there is "a call to arms," such as early Black Friday deals in November, said Brian Sozzi, retail analyst at Wall Street Strategies. Bad weather in January also led to a "stock up now mentality," and consumers who did get out to the stores were not just window-shopping, he wrote in a note to investors.

"Browsing was not in the cards. Why waste a trip to the mall or big box center if the next day calls for 20 inches of snow?" he wrote.

The Weather Still Hurt

The weather wasn't completely ignored: Many retailers reported losing anywhere from 1 to 3 percentage points off their comparable-sales growth due to the snowstorms. For example, discounter Costco (COST), which posted a 9% increase in comparable sales, said that growth would have been 1 to 1.5 percentage points higher, while BJ's Wholesale Club (BJ), with a more modest 2.7% growth, said the weather shrank that number by 2.5 percentage points.

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Many retailers reported the number of transactions was up over the same month last year, even as the average price paid per item was down, meaning shoppers are still bargain-hunting. Limited Brands, (LTD) reported a hefty 24% comparable-sales increase, thanks to a 35% increase at Victoria's Secret. Sales at the lingerie chain got a 10-percentage-point boost from the move of its semi-annual clearance sale from late December to early January. Limited did well enough to raise its guidance for fourth-quarter earnings to between $1.23 and $1.25 per share, from the previous guidance of $1.02 to $1.17.

At the other end of the spectrum, J.C. Penney (JCP), which reported comparable sales down 1.2%, blamed both the weather and low levels of clearance inventory for its poor sales. But Penney also raised its fourth-quarter earnings forecast to between $1.06 and $1.09 per share, up from a previous estimate of 90 cents to $1. Rival Kohl's (KSS), with sales up only 1.4%, also raised its guidance to between $1.65 and $1.66 for the fourth quarter from $1.62 to $1.66, and $3.64 to $3.65 for the year from $3.61 to $3.65.

Another suffering retailer, Gap (GPS), which posted only 1% comparable sales growth, also raised its earnings guidance to call for $1.85 to $1.86 per share for the year, up from the previous forecast of $1.77 to $1.82. Aeropostale (ARO), which also posted a 1% increase and was down 3% for the full quarter, raised its guidance from a range of 94 cents to 96 cents to a range of 96 cents to 97 cents per share for the quarter.

"Confidence Is Higher"

The January surprise echoes the first-quarter surprise seen in 2010, when retailers had expected a post-holiday drop and instead saw better-than-expected spring sales, notes Laura Gurski, a partner at consultant AT Kearney.

There are pockets of households with growing spending power, and they are shopping, if the retailers can draw them in with offers, she says.

"Potential here is growing, their confidence is higher. They see the deals out there in January. . .and they're going for the value," she says. "They were looking for a better deal."


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]]>AeropostaleAT Kearneybargain huntingbargainsBJSBJs Wholesaleconsumer spendingcostcogapicejanuaryJcPenneykohlspost-holidayretailretail salesretail sales figuressalessales forecastsales growthsnowsurveywinter weatherMercedes CardonaThu, 03 Feb 2011 13:50:00 ESTThe Forecast: Winter Storms Chilled January Retail Saleshttp://www.dailyfinance.com/2011/02/02/winter-storms-chill-january-retail-sales/http://www.dailyfinance.com/2011/02/02/winter-storms-chill-january-retail-sales/http://www.dailyfinance.com/2011/02/02/winter-storms-chill-january-retail-sales/#commentsFiled under: , ,

January retail sales are suffering from more than the usual post-holiday blues.

Retail observers are expecting disappointment on Thursday, when major retailers report January sales. After December sales fell short of expectations, poor weather during January dampened hopes of a strong end to the fiscal year.

The International Council of Shopping Centers' weekly tally showed sales dropped week-over-week throughout January, even as sales remained higher than the same time in 2010. The ICSC revised its estimate for January sales to between 1.5% and 2% growth, after dropping the previous estimate to 2% from 2.5% a week ago.

"Downright Awful Weather"

The main culprit was the weather, said Chief Economist MIchael Niemira, who noted there was 60% more snowfall across the country in January than last year -- as much as 266% in the Northwestern states.

The weather just put a damper on what was already a weak trend, say experts. Shoppers continue to hold off on non-essential purchases after spending during the early holiday sales in November, they say.

"Weather in January has been downright awful for most of the country, giving retailers the perfect excuse for what we expect to be rather disappointing [comparable sales] results on Thursday," said Rob Samuels, managing director of Phoenix Partners. In a report to investors, he noted "new spring product is not moving." He forecast department stores and discounters would do better in January than teen apparel retailers. He singled out Zumiez (ZUMZ) as one apparel merchant that should see noticeable increases, while Aeropostale (ARO), American Eagle Outfitters (AEO), Gap (GPS) and Hot Topic (HOTT) will see lower comparable sales (for stores open at least a year).

Nonexistent Sales Momentum

Even before the bad weather, sales momentum going into January "was virtually nonexistent," noted Brian Sozzi, retail analyst at Wall Street Strategies. He noted most retailers had missed their December estimates for comparable sales and quickly marked down new merchandise in January -- a sign of unsteady demand and reluctant consumers, he said.

Don't expect retailers to offer much perspective on their first-quarter sales when they begin reporting fourth-quarter earnings later this month, warned Sozzi, who noted few merchants clarified their fourth-quarter guidance when they reported December results. He recommended shorting Gap and American Eagle ahead of the January sales numbers.

The lack of guidance is going to weigh on retail stocks, said Samuels. "The group will likely remain under pressure until we get some more clarity," he said. He forecast the merchants will be focused on protecting profit margins instead of raising sales.

Inflation a Bigger Concern

But the experts note January is considered a weak sales month, anyway, so they are taking the sales forecasts with a grain of salt. The bigger worry is inflation and pressure on prices brought on by rising costs, they say.

The rising costs may not be all bad news, if they force merchants and manufactures to create more enticing products, noted Samuels. Most experts have noted consumers were not excited by the stocks in stores and there were no must-haves on holiday shopping lists, so shoppers were easily turned off by prices.

"In the current environment, we hear far too little about product innovation," Samuels wrote. "The winners in the space will continue to be those companies that can continue to give the consumer newness and a reason to shop."


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]]>holiday shoppingJanuary salesnational retail federationretailretailersMercedes CardonaWed, 02 Feb 2011 06:30:00 ESTRetailers Look to E-Tailers for Survival Tipshttp://www.dailyfinance.com/2011/01/16/retailers-look-to-etailers-for-survival-tips/http://www.dailyfinance.com/2011/01/16/retailers-look-to-etailers-for-survival-tips/http://www.dailyfinance.com/2011/01/16/retailers-look-to-etailers-for-survival-tips/#commentsFiled under: , , , , , ,

Now that the holidays are over, retailers are focusing on the rest of the year and beyond. And they're increasingly looking at what shoppers are doing online for ways to perk up sales at bricks-and-mortar stores.

At the annual Big Show conference of the National Retail Federation Jan. 9-12, merchants seemed to agree on one thing: Shoppers are bored. Three years into a recession and lumpy recovery, consumers aren't getting comfort from retail therapy. Instead, they're increasingly price-shopping online and running in and out of stores, looking for a better deal, say merchants.

Retailers need to "debore" the consumer, says Dan Hurwitz, president of shopping mall landlord Developers Diversified Realty. He notes that his company did focus groups and found shoppers just weren't excited by store experiences anymore.

By next year, half the purchases made in the U.S. will be either done online or influenced by online shopping, according to a study by KPMG. So, with shoppers so used to shopping and buying online, many vendors are rolling out hardware and software that will put the Internet on the shelf, take over your mobile phone and get you out of the store without standing on a checkout line.

Shoppers "expect the Internet experience in store and the store experience on the Internet," says Lisa Fretwell, senior director of the Internet business solutions group at Cisco Systems (CSCO).

At the NRF trade show, there were bar-code scanning applications for smartphones, portable credit card swipe terminals to replace cash registers and touch-screens to access social media feeds in-store. Many programs are coming this year, and some pilots are already being installed at retail locations.

The Web on a Shelf

Technology companies are working with retailers to install touch-screen displays and interactive screens that let shoppers access a lot of the same information they get online, such as product reviews and ratings.

The key influences when people shop are still the recommendations of friends and family, Fretwell says. And while many retailers are focused on mobile-shopping applications, she notes that Cisco's research found most Web-savvy shoppers still make decisions while looking at the Web from their home computers. Shoppers say they want to see the same information they get online in store displays, according to Fretwell.

At the NRF show, Intel (INTC) demonstrated a prototype developed with Adidas (ADDYY) that places touch screens in stores. The screens let the shopper browse thousands of sneakers available online, even if they're not in stock at the store, and order the shoe to try on. Then the shopper can read Facebook and Twitter comments about the chosen shoe, or play video and access other online content while waiting for a sales associate to deliver the pair from the storeroom. If the shoe isn't in stock, the shopper can try on a similar one and buy the desired model online before leaving the store.

"Online shopping is a problem that bricks-and-mortar stores are trying to address. They're concerned that stores will become museums or showrooms," says Shailesh Chaudry, strategic marketing manager at Intel. "This is bringing the digital into the physical world."

A Salesperson in Your Phone

Brian Slaughter, director of end-user solutions for large enterprises at Dell (DELL), held up his new Android phone: "This device that you're carrying, it's huge," he says. "Over the next two years, we should see about 80% of the market will have one of these."

And vendors are offering systems to turn any smartphone into a shopping and payments tool. For example, Verifone (PAY) has developed a system that allows the shopper to pay by resting their smartphone on a pad attached to the card-swipe terminal. That deducts the cost of the purchase from an electronic wallet or electronic gift card stored in the phone. The hardware is being offered this year to stores.

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On the software side, AT&T (T) will launch a program this year that offers smartphone users a bar-code scanner application and lets retailers and manufacturers encode instructions for the phone. Once the bar code is scanned, the phone will perform functions such as open a product information page on the Web, dial a customer-assistance phone or create an email or text message the shopper can send to ask for more information. The application is already available for AT&T iPhone (AAPL), Android (GOOG) and BlackBerry (RIM) smartphones, and 25 companies are participating, but it will be launched officially this spring.

With consumers increasingly using smartphones to do comparison shopping, retailers feel they need to intercept those shoppers before they lose them to rivals, noted Bob Russell, AT&T director of industry solutions.

"Any of the retailers we can think of don't want shoppers walking into the store, scanning an item and then it lands them on a [Web] page where they can find it cheaper, and then they walk out the door," he says. "Retailers have a choice to make: They can either proactively assert their message in that medium, or not. And if they don't do anything, they're in trouble."

The technology exists to do even more, such as location-based services that can recognize customers by their phone signal and change the digital signage if they linger in a certain department or by an in-store display, says Slaughter. But he adds that retailers are holding off on installing those features because of privacy concerns.

Goodbye, Checkout Lines

Some retailers, such as the Apple Store, already have equipped salespeople with portable terminals that let them scan purchases and swipe credit cards. Technology companies are mashing tablets and smartphones with card-swipe terminals and PIN keypads to turn every sales associate into a potential cashier.

Verifone was showing a cradle at the NRF show for an iPhone or iPod Touch with a swipe terminal and keypad, so store employees can scan the product bar code with the phone, then process the payment by credit or debit card using the keypad, and send the shopper a receipt by email. Dell also showed tablets that store employees can use to find items in the store, get information and complete transactions in the aisles.

Consumers are pushing all these changes, say retail observers. Flat-screen TVs and smartphones are becoming common household items, so shoppers expect to find the same kinds of features in stores. And with electronics prices still falling, the cost of the hardware is less of an objection to implementing these programs, say the vendors.

Despite retailers' concerns about rising costs in a difficult economic environment and the return on these investments, the customers are forcing their hand, say the experts.

"I can't tell you how many [chief information officers] have told me their CEOs have told them: 'When are we going to get this done? My children can already do this.'" says Slaughter. "It used to be 'We're going to tell you how you're going to experience our store.' Now the consumer is walking in and saying: 'No, I'm going to tell you how I'm going to use your store to give me more information.' The tools they have at their disposal are very cool."

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]]>brick-and-mortar storesComparison shoppinge-tailersIntelinternet shoppingiPhonesonline shoppingretail industryretail salessmartphonesMercedes CardonaSun, 16 Jan 2011 09:00:00 ESTRetail Sales: November Stole the Show from Decemberhttp://www.dailyfinance.com/2011/01/14/december-retail-sales-numbers-are-another-post-holiday-letdown/http://www.dailyfinance.com/2011/01/14/december-retail-sales-numbers-are-another-post-holiday-letdown/http://www.dailyfinance.com/2011/01/14/december-retail-sales-numbers-are-another-post-holiday-letdown/#commentsFiled under: , , , , ,

December's Retail Sales Numbers Are Another Post-Holiday LetdownEven though U.S. shoppers piled up the presents under their Christmas trees, retailers are finding themselves a bit disappointed by their holiday haul, a government report revealed Friday.

The Commerce Department's retail and food services sales tally for December rose to $380.9 billion, up 7.9% from December 2009, but up just 0.6% from November. Excluding auto sales, totals were up 6.7% from 2009 and 0.5% from the month before, slightly less than analysts had expected.

The Commerce Department's tally is the most complete picture of the retail sector, including gas, food and auto sales, as well as the results from Walmart Stores (WMT), the world's largest retailer, which doesn't publicly report monthly sales.

"One-Time Binge"?

The numbers weren't a surprise: Industry observers were disappointed last week when major retailers reported that December sales were weaker than expected due to bad weather and consumers who had front-loaded their holiday shopping, spending heavily during late November's Black Friday sales. Merchants now worry that the December numbers are a sign that shoppers will close their wallets again in 2011.

"I don't think people believed that November's growth was sustainable, not any indication on a macro basis that the consumer is really back," says Kevin Regan, senior managing director of FTI Consulting. The holiday season was the best since 2006, but shoppers are still paying down debt and trimming spending while they wait for a significant improvement in the economy, he said.

November sales could have been "a one-time binge" as consumers chose to splurge on the holidays before returning to paying down debt in 2011, said Regan.

Some gift-related segments showed a loss of momentum going into the final stretch of the holiday. For example clothing stores, which were up 7.4% compared to December 2009, dipped slightly from November's totals, down 0.2%. And the inclement winter weather had a silver lining for hardware stores, which were up 2% in December over the month before, and 13.1% over the same month a year earlier.

Healthy Increase for E-Tailers

"The December retail sales report had Mother Nature's paw print all over it," said Brian Sozzi, analyst at Wall Street Strategies. The weather had a part in holding down some of the momentum retail that had been seen since back-to-school season, but just how much of the slack was weather-related, as opposed to "early holiday season spending hangover" won't become clear until we see what shoppers do in coming months, he said in a note to investors.

A few segments showed signs of continued strength: Auto dealers' sales were up 14.7% from December 2009 and 1.1% higher than in November, a sign of Detroit's continued climb from the depths. And nonstore retailers -- a segment mainly made of up of online stores -- saw sales rise 15% year-over-year and 2.6% over the month before, the biggest monthly jump for any retail segment, as shoppers continued to adopt e-tailing.

But the retail recovery remains an iffy proposition, according to attendees at the recently concluded annual meeting of the National Retail Federation, the industry's trade group.

The Rich Are Spending Again

The affluent consumer is shopping again, as evidenced by Tiffany (TIF) raising its guidance earlier in the week. But mass consumers are still counting their pennies and worrying about the state of the job and housing markets, said merchants.

The split was clear in last week's major merchant announcements, when luxury retailers such as Saks (SKS) and Nordstrom (JWN) posted strong sales gains, while mass merchants such as Target (TGT) and BJ's Wholesale Club (BJ) were disappointed.

"The economy is starting to grow again, and that's fantastic, but it's broken into two economies," says Matt Rubel CEO of Collective Brands (PSS) the parent of Payless Shoesource. "The upper end is doing well, but we need to create jobs for the mass and base consumer who has 15% unemployment, not 9.5%."

There is still "an air of caution out there," says Regan. Gas prices are rising, which will put a damper on spending in coming months, as consumers have to choose between shopping and driving. Inflation in areas such as food and clothing will also put pressure on household budgets in early 2011.

"Things have not improved enough for consumers to do more than fix their balance sheet," Regan says. "The consumer wanted to put some presents under the Christmas tree, but I think they are going to bear down."


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]]>Black FridayChristmaschristmas shoppingcommerce departmentCommerce Department reportconsumer debtconsumer spendingcredit cardsDecemberDecember salesfrugalholidayholiday shoppingholidaysluxuryNordstromrecessionretailretail salesretailersSakssnowTiffany & Cowinter weatherMercedes CardonaFri, 14 Jan 2011 16:35:00 ESTBargain Hunters Marked Down December's Retail Saleshttp://www.dailyfinance.com/2011/01/06/bargain-hunters-marked-down-decembers-retail-sales/http://www.dailyfinance.com/2011/01/06/bargain-hunters-marked-down-decembers-retail-sales/http://www.dailyfinance.com/2011/01/06/bargain-hunters-marked-down-decembers-retail-sales/#commentsFiled under: , , , , , ,

Holiday retail markdownsThe final stretch of the holiday shopping season was busy for retailers, but with the bar set high early on, December sales results were a letdown in some quarters. Many shoppers who took advantage of the early holiday sales in November held back and forced retailers to cut prices as Christmas neared and bad weather hurt sales in the year's final weeks.

Major retailers reported that comparable sales (for stores open at least a year) rose 3.1% over December 2009, according to tallies by Thomson Reuters, which had forecast 3.4% growth. Most analysts had forecast an increase of 3% to 4%. The biggest disappointment, according to Thomson Reuters, were teen apparel retailers, where sales dropped 2.5%, instead of growing 3.5% as estimated.

Most merchants had expected that shoppers would unleash some pent-up demand in the third holiday season since the onset of recession, feeling the economic downturn is bottoming out. But the results show that mainstream consumers remain bargain shoppers, despite increases in luxury spending and healthy results among upscale department stores.

Discounters Disappointed

The sales numbers were a tale of haves and have-nots. While discounters such as BJ's Wholesale Club (BJ) and Costco Wholesale (COST) disappointed, high-end department stores had strong sales. Nordstrom (JWN) posted comparable sales up 8.4%, and Saks (SKS) was up 9.8%.

After being lured into shops in November by early Black Friday promotions, "December was a different ballgame for retail," noted Brian Sozzi, retail analyst at Wall Street Strategies. Price-conscious shoppers turned back to cherry-picking deals and forced retailers to lay out more offers, he explained in a note to investors.

For example, Limited Brands (LTD) said that while comparable sales were up 5% in December, they would have risen 7% if the Victoria's Secret semi-annual sale had started in December, as it did last year. Limited said it expects the sale will add about five percentage points to its January sales instead.

Kohl's (KSS) was one of the few retailers to upgrade its guidance, after posting a 3.9% sales increase in December. It now expects to report fourth-quarter earnings of $1.62 to $1.66 per share, up from $1.58 to $1.66 previously. And it raised its fiscal year earnings forecast to range of $3.61 to $3.65 from $3.57 to $3.65.

Sticking With Their Forecasts

Many retailers had planned for a highly promotional holiday, and several reaffirmed their quarterly targets for the year-end period, which generates much of the year's profits. Even Gap (GPS), which saw both traffic and sales drop in December after an encouraging start in November, restated its guidance of $1.77 to $1.82 per share in the fourth quarter.

Target (TGT) had a weak 0.9% increase in comparable sales in December, due to gift-buying moving earlier in the holiday season, but it's sticking with its fourth-quarter guidance. The discounter restated its forecast for 2% to 4% sales increases and said it expects to hit the First Call earnings estimate of $1.40 per share.

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Macy's (M), which posted comparable sales up 3.9% in December and 4.6% for the two-month period, also restated its guidance of 3.5% to 4.5% sales growth in the fourth quarter and $1.44 to $1.49 in earnings per share.

Sozzi cautioned that "over-exuberance was baked into stock prices," but shoppers were being more realistic in their spending. He figures that investors will be sour on retail until the fourth-quarter results begin to flow in February and merchants give more information about plans for 2011.

"The fact is a happy, happy holiday season was priced into stock valuations," he wrote. "We received a happy holiday season, minus the extra 'happy.'"


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]]>December retail salesdepartment storesdiscount retail stocksdiscount retailersholiday shoppingluxury goodsluxury goods stocksretail salesretail stocksretail storesMercedes CardonaThu, 06 Jan 2011 10:20:00 ESTDecember Sales Will Warm Merchants' Heartshttp://www.dailyfinance.com/2011/01/05/december-sales-will-warm-merchants-hearts/http://www.dailyfinance.com/2011/01/05/december-sales-will-warm-merchants-hearts/http://www.dailyfinance.com/2011/01/05/december-sales-will-warm-merchants-hearts/#commentsFiled under: , , , ,

December Retail Sales Report Retail appears to have gotten back to business as usual this past holiday season. Shoppers didn't disappoint merchants, buying presents at both low- and high-end prices, from jewelry and electronics to clothes and shoes. Most analysts are predicting sales will show year-over-year increases of 3% to 4% on Thursday, when major merchants post December figures and holiday totals.

"It was really a broad-based strength we saw in December," says Mike Berry, director of industry research for MasterCard (MA) SpendingPulse.

Nearly every retail sector posted increases, from essentials such as food and auto repairs to luxury goods and jewelry, according to SpendingPulse, which tallies up sales according to payment form, such as credit cards or cash. Some sectors that posted lower numbers, such as department stores and electronics retailers, were affected more by pricing pressures than low traffic, Berry notes.

"They're Still Buying"

Apparel, considered a gauge of discretionary spending, was up 10.9% in December, jewelry was up 10.4% and luxury goods sales rose 8.5%, according to SpendingPulse. Among the underperforming segments, department store sales were down 2.5%, while electronic retailers were up only 1.2%, despite moving a lot of inventory.

"Shoppers are out there, they're still buying electronics and such, and they're buying more," says Berry. But he notes low prices hurt both electronics and department stores. Electronics retailers had strong traffic and unit sales, but those factors were offset by lower prices for big-ticket items such as TVs and laptops. Department stores' sales totals dropped due to store closings during the year, as well as falling prices.

"They had to do a little bit of discounting to keep traffic coming in," Berry says.

Retailers laid out a wide assortment of promotions and offers to lure shoppers in this holiday season, and experts agree the shoppers responded, despite continuing worries about the slow pace of the economic recovery and continuing weakness in housing and job markets. However, observers point out the discounting was more measured and better organized than it was in 2008, when the onset of recession caught retailers overstocked for the holidays and forced them into fire-sale pricing to clear excess inventory.

"A Few Upside Surprises"

The heavy promotional activity spurred traffic this year, but there appeared to be less need for post-holiday discounts, which has eased concerns about profits, noted Michael Exstein, retail analyst at Credit Suisse First Boston (CS), in a note to investors. However, Exstein warns that inventory growth during the fourth quarter was beating sales growth for the first time since 2008, which -- coupled with the aggressive promotions -- could slow down profit growth.

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"Overall, we think December should be in line with expectations with a few upside surprises given all of the positive news that has surrounded the holiday shopping season," Extein wrote. "The key to better understanding the overall 'health of the consumer' will be when Walmart reports its sales for the fourth quarter in February." Walmart (WMT), the world's largest retailer, doesn't report monthly sales figures publicly.

"In the end, December will prove to be a relatively healthy sales month for retailers," says Michael Niemira, chief economist of the International Council of Shopping Centers. He's expecting a sales increase of about 3.5% or higher.

Despite snowstorms along the East Coast on the weekend after Christmas, warmer temperatures afterward helped merchants make up lost ground on post-holiday sales, Niemira noted in a report. Sales for the week ending Jan. 1 rose 3.6% above the same week in 2009, and 0.4% above the week of Christmas, which itself saw sales 4.8% higher than the year-ago period.

There could be some spillover effect into the following months. A survey by the ICSC found that gift card sales this holiday season reached their highest level since 2007. But the rate at which shoppers redeemed them after Christmas was down from last year -- 10.8% of value, versus 20.9% in 2009. And the number of shoppers planning to redeem cards in January was lower than in the past two holiday seasons. That leaves room to shift more of the sales associated with these cards to the first quarter of 2011, perhaps keeping some of that holiday momentum going.


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]]>Christmas saleschristmas shoppingclothingconsumer spendingdiscountselectronicsgift cardsholiday shoppingInternational Council of Shopping CentersluxurymastercardMasterCardAdvisorsSpendingPulseMichael ExsteinMichael NiemiraMike Berryrecessionrecoveryretailretail salesretailersshoppingshopping seasonSpendingPulseMercedes CardonaWed, 05 Jan 2011 00:01:00 ESTThe Early Line on Holiday Retail Sales: Up a Merry 5.5%http://www.dailyfinance.com/2010/12/27/holiday-retail-sales-rise-5-5-percent/http://www.dailyfinance.com/2010/12/27/holiday-retail-sales-rise-5-5-percent/http://www.dailyfinance.com/2010/12/27/holiday-retail-sales-rise-5-5-percent/#commentsFiled under: , ,

Holiday shoppingShoppers did their part this holiday season, spending more on clothes, jewelry and luxury items than last year, according to new sales tallies.

Retail sales from Nov. 5 through Dec. 24 were up 5.5% above the same period in 2009, according to MasterCard SpendingPulse, which tracks purchases by credit card, cash and other payment systems. That's better than many analysts had estimated. The National Retail Federation, which hasn't released its holiday totals yet, upgraded its forecast in mid-December to 3.3% from 2.3% after November sales came in far stronger than originally expected.

"Overall, it's a positive story this year," says Michael McNamara, vice president of SpendingPulse. "Most of the numbers are coming in at least at the high end of expectations."

"A Bounce-Back Year for Apparel"

For example, he noted apparel sales were up a strong 11.2% year-over-year. However, McNamara cautioned that apparel has a relatively easy comparison to last year, when sales were flat, after losing 7% in 2008. But sales also benefited from cold weather in most of the country during December, which helped move more expensive cold-weather gear such as coats and boots. "This was a bounce-back year for apparel," McNamara says.

Other nonessential gifts also did quite well, including jewelry, which rose 7.2% year-over-year, and other luxury items, which were up 6.7%. But again, McNamara cautions that those numbers are still below the prerecession peak. Jewelry, for example, remains 8.9% below where it was in 2007's holiday season, before the recession began.

On the weaker side, electronics sales were up only 1.2%, despite the interest in video consoles such as Microsoft's (MSFT) new Kinect system and e-book readers such as Amazon's (AMZN) Kindle. The drop was mainly due to lower prices for TVs, which are the big-ticket items in the segment. "You really need the TV sector to do well," says McNamara. "If TV prices are declining, you have to sell a whole lot more units to make up."

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One area showing unequivocal growth is e-commerce, where sales rose 15.4% during the season. The online sector had been showing double-digit growth rates for some time, but the pace of expansion this season is different from a few years ago because it also shows the segment maturing and taking market share from the bricks-and-mortar merchants. "You're talking about material gains from the sales standpoint," says McNamara.

While the totals don't bring numbers back to prerecession levels, it shows a marked improvement over the past couple of years, especially the spending on nonessentials. Retail still needs employment to improve to show some real growth, but the industry appears to have hit bottom and resumed growth. Says McNamara: "We're going in the right direction."


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]]>consumer spendingholiday shoppingjewelry salesMasterCardMasterCard SpendingPulseretail salesretail sales figuresretail sales upretail sectorMercedes CardonaMon, 27 Dec 2010 18:01:00 ESTRobust Retail Sales Lift Merchants' Holiday Spiritshttp://www.dailyfinance.com/2010/12/14/robust-retail-sales-lift-merchants-holiday-spirits/http://www.dailyfinance.com/2010/12/14/robust-retail-sales-lift-merchants-holiday-spirits/http://www.dailyfinance.com/2010/12/14/robust-retail-sales-lift-merchants-holiday-spirits/#commentsFiled under: , , ,

Retail sales rose 7.7% in NovemberThe holiday shopping season is off to an even better-than-expected start, according to new sales figures from the federal government.

The Commerce Department's retail and food services sales tally for November rose to $378.7 billion, up 7.7% from November 2009 and up 0.8% from October. Excluding auto sales, totals were up 6.7% from the year-ago month, and retail sales alone were up 8.1%. With this latest boost, year-to-date sales are up 7.7% over last year's first 11 months, supporting retailers' recent view that the recession is finally losing its hold on shoppers.

While some segments showed a drop from October -- including car dealers (-1%) electronics (-0.6%) and furniture stores (-0.5%) -- all retail segments showed strong increases year-over-year, despite being compared to healthy sales in November 2009. Auto sales likely suffered from the comparison to September and October, when the start of the new model year typically boosts totals, while electronics sales continue to suffer from dropping prices for large-screen TVs and other big-ticket items.

Big Chains Beat Forecasts

Holiday gift-shopping lifted several categories, including hobby, book and music stores (up 12.3% year-over-year) and apparel (up 7.5%). Both segments were also up noticeably from the month before, 2.3% and 2.7%, respectively.

The increases were not totally unexpected because major retailers had already reported strong sales over the Thanksgiving weekend -- spurred in large part by stores that started Black Friday sales earlier than usual. Still, the top national chains reported nearly 6% growth, better than the 3% to 4% analysts had forecast.

The Commerce Department's tally is the most complete picture of retail sales because it includes gas, food and auto sales, as well as results for Walmart (WMT), the world's largest retailer, which doesn't publicly report monthly sales.

A Strong Start for December

"The November performance was strong across most segments and was helped by a confluence of factors, including easy comparisons (back-to-back November declines in 2008 and 2009), colder-than-normal weather, early promotions, aggressive post-Thanksgiving marketing and a recovering economy," said a report from Michael Niemira chief economist of the International Council of Shopping Centers

And December is off to the good early start, according to the ICSC's weekly tally, which found sales rose 3.1% last week over the same time last year and 0.8% over the previous week.

"That is a rather impressive increase over the past two weeks, but consumers are still a tad below last year's pace and noticeably below two years ago, which suggests a stronger late-buying rush over the next two weeks," Niemira noted. Based on the strong performance in November and the momentum so far in December, he revised his holiday season forecast up by half a percentage point, calling for growth of 3.5% to 4% above last year, the strongest since 2006.

"Shopping Smartly"

Indeed, three holidays into this economic downturn, retailers are facing the fourth quarter with more of a sense that consumers have begun spending again, however cautiously.

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"The consumer is shopping, she is shopping smartly and looking for good value on good product," says David Friedman, marketing president at Sears Holding (SHLD). "We are cautiously optimistic."

The parent of Sears and Kmart is seeing a pickup in jewelry -- an encouraging sign that nonessentials are selling -- as well as electronics, home appliances and other large-ticket items, Friedman says.

"I think she's sort of found the new normal," he says, "and is now interested in moving forward from that place." Moving forward is something retailers have been waiting to do for quite a while.

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]]>auto salesbig-ticket itemschain storesconsumer spendingholiday shoppingholiday shopping seasonnovember retail salessears holdingsMercedes CardonaTue, 14 Dec 2010 12:30:00 ESTDollar Stores Are Taking Walmart's Lunch Moneyhttp://www.dailyfinance.com/2010/12/04/dollar-stores-walmart-customers-market-share-competition/http://www.dailyfinance.com/2010/12/04/dollar-stores-walmart-customers-market-share-competition/http://www.dailyfinance.com/2010/12/04/dollar-stores-walmart-customers-market-share-competition/#commentsFiled under: , , , ,

Dollar Stores Are Taking Walmart's Lunch Money Thrifty shoppers looking for low prices on basics are frequently passing up the big boxes of Walmart (WMT) for the tighter aisles of their local dollar stores.

Chains such as Dollar Tree (DLTR), Family Dollar Stores (FDO) and Dollar General (DG) are hitting the world's largest retailer where it hurts -- in the food and pharmacy aisles. The rock-bottom discounters are revamping their stores and replacing no-name products with nationally known brands, luring in both the low-income shoppers who have been Walmart's core customers and higher-income households getting thriftier in hard times.

"Dollar stores for the past two years have put more money behind how they present consumables and fresh food to their customer base," said Brian Sozzi, retail analyst at Wall Street Strategies. "It's in dollar stores' best interest to offer an increased amount of food, in the hopes of getting a greater share of wallet." Their selections are still limited and not comparable to what a Walmart offers, but the addition of national brands helps, he noted.

Sales of those essentials have held up better through the downturn, and as cash-strapped consumers have moved to cut their spending, they've found the dollar stores quite willing to accommodate them. As Walmart pulled back last year on the number of low-price, low-margin items it was stocking to improve stores' sales numbers and boost profits, dollar stores stepped in to fill the void -- and Walmart's sales suffered.

Walmart reacted by bringing back many of the products it cut, adding displays focused on low-priced food and consumables, and launching promotions for everything from apples to turkey trimmings. But it's having a hard time luring those shoppers back. While Dollar Tree's comparable store sales (for stores open at least a year) were up 9% in the latest quarter and Family Dollar's were up 8%, Walmart's were down 1.3% in the U.S., along with store traffic; Dollar General is expected to report a solid quarter next week.

Gaining Ground With Higher-Income Shoppers

"Dollar General is not the place it was two years ago," CEO Rick Dreiling told analysts earlier this year. During 2010, it has added national brands including L'Oreal cosmetics and Heinz foods, part of an overhaul of the company that followed its public offering in November 2009. Older stores are being revamped and new ones have opened at a fast clip.

And as the overhaul continues, it's becoming easier to attract national brands and shoppers. The company's fastest growing customer segment comes from households making more than $70,000 a year, Dreiling told the analysts.

Walmart has not been idle, though. While discussing the disappointing sales numbers with analysts last month, Bill Simon, president of Walmart U.S., said the company will step up its initiatives aimed at its core customers -- households making under $70,000 a year.

"Whether it's for everyday groceries, or for discretionary items, Walmart U.S. will be the price leader throughout the holidays," vowed CEO Mike Duke.

However, Walmart does appear to be losing the pricing edge against the dollar stores and supermarkets. A November spot check by Credit Suisse First Boston analysts noted the price of a basket of 60 common products was 1.3% higher than the same time a year ago. And the difference between Walmart's prices and those at rivals such as Target Stores (TGT) and supermarkets had shrunk to its lowest level since 2007, before the start of the recession.

Pendulum Will Swing, and Dollar Stores Will Adapt

But don't count Walmart out, says Kevin Regan, senior managing director of FTI Consulting. Even if the shoppers' newfound liking for dollar stores carries over to the economic recovery, Walmart's merchants are skilled at balancing prices and profits to draw shoppers in, he said.

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"Walmart is a sleeping giant and they realize their productivity has slipped," he said. Walmart has the advantage of having both the national brands the dollar stores have and private labels that are well known to shoppers, he said.

For their part, the dollar stores have co-existed with the big boxes for decades, often in the same malls, said Regan. They even complement each other, with Walmart being the one-stop, once-a-week destination, and the dollar store the source of fill-in shopping during the week, he said.

Once the sleeping giant regains its footing, the dollar stores will adapt, as they have before, Regan believes. Dollar store chains have grown large enough -- Dollar General has nearly 9,000 stores, Dollar Tree over 4,000 and Family Dollar over 6,800 -- to leverage their scale to compete against Walmart without hurting profits, he explained.

"If Walmart becomes aggressive, it will impact [dollar stores] for some time, and they will come up with a counter-strategy," Regan said. "The reason they have survived for 40 to 50 years is they have been good about changing strategy."


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]]>bargainsBargainShoppingbig boxdiscountdiscount retailersdiscount storesDollar GeneralDollar StoresDollar TreeDollarStoresfamily dollarFamily Dollar Storesgenericnational brandswalmartwalmart earningswalmart salesMercedes CardonaSat, 04 Dec 2010 06:00:00 ESTBlack Friday Sales Boost November's Retail Numbershttp://www.dailyfinance.com/2010/12/02/black-friday-sales-boost-november-retail-numbers/http://www.dailyfinance.com/2010/12/02/black-friday-sales-boost-november-retail-numbers/http://www.dailyfinance.com/2010/12/02/black-friday-sales-boost-november-retail-numbers/#commentsFiled under: , , , , , , ,

Black Friday Sales Boost November Retail NumbersMajor retailers got an early Christmas present this year: Better-than expected November sales.

The nation's largest merchants posted 6% sales growth in November over the year-ago period, according to a tally by Thomson Reuters. That's far ahead of the 3% to 4% growth most analysts had forecast. Thomson Reuters' own projection had called for a 3.6% boost.

Retailers reported good traffic through most of the month, with a surge over the Black Friday weekend following Thanksgiving, the traditional start to the holiday shopping season. Sales were aided by strong online promotions and extended hours at many stores. Some merchants -- including Walmart, (WMT) Toys 'R' Us and Sears Holdings' (SHLD) Kmart chain -- opened on Thanksgiving Day, and most had Black Friday deals available online on the holiday.

Holiday Weekend Sales Records

"Retailers came out aggressively and got rewarded," says Sherif Mityas, a partner in the retail practice at consultant A.T. Kearney. Merchants laid out a wider breadth of deals across the holiday weekend, he says, rather than the usual concentration on a handful of door-busters, and shoppers responded.

Several retailers reported record sales over the holiday weekend. Limited Brands (LTD), which posted 10% higher comparable sales (for stores open at least a year), said its Victoria's Secret chain and its website both set a single-day selling record on Black Friday. J.C. Penney (JCP), which posted sales growth of 9.2%, also reported the biggest Black Friday in its history, and sales at jcp.com were up 12% year-over-year on that day.

"Holiday 2010 has started on a merry note," wrote Brian Sozzi, retail analyst at Wall Street Strategies, in a note to investors. He speculated that if December sales also beat expectations, more retailers will follow the lead of Guess (GES) and American Eagle Outfitters (AOE) and return some of their extra free cash to investors via share repurchases or special dividends. But he cautioned that retail stock prices are creeping up, which could turn off some investors.

While most retailers were cautious about raising expectations for the rest of the holidays, Macy's (M) was emboldened by better-than-expected sales growth of 6.1% to raise its fourth-quarter guidance. The Bloomingdale's parent now forecasts earnings per share of $1.44 to $1.49, up from $1.42 to $1.47. And it increased its December sales forecast to call for growth of 3.5% to 4.5%, up from 3% to 4%.

Waiting for More Deals

This holiday season is forecast to be better than the last two years, with consumer confidence edging into a slight improvement. A monthly survey from RBC Capital markets noted that for the first time this year, more consumers said they expect their local economy to get stronger in the next sixth months (24%) than those saying it will get weaker (20%). Several analysts have also noted that the number of shoppers who were buying gifts for themselves on Black Friday was higher than in recent years, and the percentage of holiday shopping completed was smaller, both signs that holiday sales have more room to grow.

But A.T. Kearney's Mityas warns that shoppers are still in deal-hunting mode and will likely hold back until the next wave of promotions arrives closer to Christmas. "Everyone is going to take a breath," he says. "There's still enough uncertainty around the economy."

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If the sales increases were strictly a factor of more confident consumers, sales would have been on an upward curve the whole month, notes Mityas. Instead, several retailers reported a spike in November's last week. Aeropostale (ARO), one of the few retailers that posted lower sales (down 1%), noted that its sales dropped off over the holiday weekend after a spike in the mid-single-digit percentages on Friday. Rival Abercrombie & Fitch (ANF), which reversed 2009's disappointing sales with a 22% increase in November, did warn that growth will moderate for the fourth quarter as a whole.

With no must-have items this year, shoppers don't feel the need to rush to the store unless there is a deal to be had, says Mityas. Gifts this year will be basic, moderately priced items, so shoppers are willing to wait until they can find them at the right price.

"No question, consumers are still playing let's-make-a-deal," says Mityas. "They'll wait until retailers blink again."


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]]>abercrombie and fitchAmerican Eagle Outfittersbargain huntingbargainsBlack FridayBlack Friday 2010Black Friday dealsBlack Friday Salesbloomingdalesholiday dealsholiday shoppingholiday shopping dealslimited brandsmacysnovember salesretail salessears holdingsthanksgivingtoys r usMercedes CardonaThu, 02 Dec 2010 11:31:00 ESTBlack Friday Should Help Boost November Retail Saleshttp://www.dailyfinance.com/2010/12/01/november-retail-sales/http://www.dailyfinance.com/2010/12/01/november-retail-sales/http://www.dailyfinance.com/2010/12/01/november-retail-sales/#commentsFiled under: , , ,

A strong early start to the holiday shopping season should help retailers post better-than-expected results for November, especially among sellers of non-essential items, such as apparel stores.

Analysts are projecting major merchants will see 3% to 4% increases in November sales over the same month last year when they report tallies on Thursday. More importantly, they are expecting the momentum will carry on throughout the holiday season and help retailers post real sales growth again, following the two recession holidays of 2008 and 2009.

After several months of unseasonable weather, November cooled down to more winter-like temperatures and retailers revved up their deals to entice early holiday shopping.

Teens Were Out Spending

Most analysts noted strong foot traffic at malls around the country on Black Friday -- the day after Thanksgiving that marks the official opening of the holiday season -- as many merchants opened around the clock and laid out promotions online to draw early birds. But the promotions were not overly aggressive and inventories seemed under control -- a good sign for retailers, notes Robert Samuels, analyst at Phoenix Partners Group.

Among the standout retailers at the malls, he singles out department stores, Forever 21, the Abercrombie & Fitch and Hollister chains of Abercrombie & Fitch (ANF), the Gap and Old Navy units of Gap Inc. (GPS) and Limited Brands' (LTD) Victoria's Secret chain.

There was anecdotal evidence that teenagers were out shopping more during Black Friday weekend sales, and their shopping is a good proxy for discretionary spending, according to Thompson Reuters analyst Jharonne Martis, who's projecting a 3.6% monthly sales increase. Additionally, the unemployment rate is stable, and expected to come in at 9.6% in November for the third month in a row, another good sign for retail spending, Martis said in a report.

"Spending power is there, [consumer] confidence is not. And retailers are tapping that spending power with some clever promotions," says Scott Krugman, vice president of the National Retail Federation.

December Could Stay Hot

And shoppers aren't expected to lose steam after Black Friday. Michael Niemira, chief economist of the International Council of Shopping Centers, noted in a report that the average percentage of holiday shopping completed by the end of the Thanksgiving weekend was only 32.6%, far lower than in recent years.

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That "suggests that December will continue to see brisk sales as consumers 'catch up' on the completion of their holiday-gift buying," he wrote. The ICSC is projecting sales will rise between 3% and 4% in November over last year.

While Black Friday weekend sales were stronger than expected -- especially thanks to sales at stores that opened on Thanksgiving day -- the NRF has not revised its forecast of 2.3% growth in sales this holiday season over 2009. However, Krugman noted that the NRF will be looking closely at Commerce Department sales numbers that come out Dec. 14, to see if they're tracking higher than expected. Don't be surprised if NRF revises its forecast higher then, he warns.

"Many analysts had a concern that we were robbing Peter to pay Paul," on Black Friday, says Krugman. "And that did not happen."


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]]>Abercrombie and Fitchblack fridayForever21Gapholiday shoppingHollisterLimitedOld NavyretailVictorias SecretMercedes CardonaWed, 01 Dec 2010 07:40:00 ESTRetailers Cut Corners -- and Fabrics -- to Avoid Apparel Price Hikeshttp://www.dailyfinance.com/2010/11/27/apparel-retailers-price-hikes-cut-corners-fabrics/http://www.dailyfinance.com/2010/11/27/apparel-retailers-price-hikes-cut-corners-fabrics/http://www.dailyfinance.com/2010/11/27/apparel-retailers-price-hikes-cut-corners-fabrics/#commentsFiled under: , , , ,

Expect your T-shirts to get a little bit thinner next year -- and maybe even a little more expensive as well. As apparel retailers try to cope with rising costs, "cutting corners" could take on a new meaning in the clothing department.

Merchants are facing higher cotton prices, labor costs and other rising expenses to produce apparel, but they know shoppers are still cash-strapped and won't stand for moves to pass on wholesale price increases. This time last year, retailers were warning that clothing prices would go up, but with unemployment still high and incomes stuck in neutral, merchants have found little room to maneuver.

So, retailers are asking their vendors to perform some manufacturing sleight-of-hand to keep unit prices down. You may see more of the same fabrics interpreted in different pieces -- which lets manufacturers buy fabric in bulk -- as well as designs that use less fabric per piece and more cotton blends in some pieces. Most retailers have already bought their inventory for spring and summer, so it could be fall before you notice a change.

Cotton prices are up about 80% and synthetic fabrics by about 50%, says Cathy Tesija, executive vice president of merchandising at Target (TGT). And while there are options for mitigating the increases -- by shifting manufacturing to countries with lower labor costs and making more efficient use of fabric -- some of those costs will have to be passed on, she says.

"We don't want to get to the point where we redesign the garments to the point where they're not appealing," Tesija says.

Fewer Fabrics, but Not Lower Quality

In fact, tweaking cotton blends by adding more of cheaper fabrics can backfire: "The U.S. consumer loves cotton," warns Christian Callieri, principal at consulting firm AT Kearney. Given the small difference in price between cotton and other fibers, switching from a 90% or 95% cotton blend to 80% or something lower will barely budge the price and can affect the quality of the garment in customers' eyes, he says.

A more significant advantage could come from reducing the number of fabrics used, such as making 10 styles in five different fabrics instead of eight, says Callieri. That can reduce costs by double-digit percentages, depending on the prices the retailer can negotiate with the mills, he says. It also gives the retailer flexibility to shift the fabrics to another design, if one design doesn't sell.

That's a strategy both Gap (GPS) and Abercrombie & Fitch (ANF) are using to cut costs. If the manufacturer is careful, says Callieri, it can be done without being visible to the shopper. It works best with basics such as jeans or on the less visible parts of more complex pieces, such as the linings in outerwear, he says.

Fabric prices "have obviously escalated, and that's a problem," says Abercrombie CEO Mike Jeffries. But he claims the teen apparel retailer, which has been nursing sales back to health during the last year, won't lower its quality lest it risk losing sales. Abercrombie will try buying fabric in bulk across its chains -- including Abercrombie & Fitch, Hollister and Abercrombie Kids -- but "if cost pressures remain significant, we will keep an open mind to pricing" says Chief Financial Officer Jonathan Ramsden.

Room for Some Price Increases

That can be a tough question for retailers still struggling to come back from the recession. During their third-quarter report, executives at Bon-Ton Stores (BONT) said they had doubts about their ability to raise prices, remarks that could be a "canary in the coal mine event," according to Michael Exstein, retail analyst at Credit Suisse First Boston.

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"This is the first company that we have heard say that customers will not be willing to accept price increases, and we don't think they will be the last," he wrote in a note to investors. Indeed, Doug Scovanner, chief financial officer of Target, hinted at similar doubts when asked if the company could handle the return of inflation that some expect next year. The competitive marketplace doesn't allow for much passing down of costs, he told analysts.

However, economic conditions have improved to the point where sales could hold up to some price increases, barring increases in unemployment or other bad news, says Michael Niemira, chief economist of the International Council of Shopping Centers. But he acknowledges that moves to offset costs are also necessary nowadays.

"The market can't absorb a huge price hit," he says, "but to the extent that some of that can be passed through, we're in in a much better place."

Reeducating the American Consumer

Still, retailers are struggling with how far they can tweak the merchandise without turning off shoppers. Gap, which is struggling to turn around its flagship chain, has been concentrating its production in fewer fabrics and manufacturers to hold down costs.

"We have too many fabrics in the company," says CEO Glenn Murphy. He notes that Gap is also working with mills and manufacturers, moving production to lower-cost regions and looking for other places to cut costs without sacrificing looks. "You can't take out your quality. You have to be true to your customer," he says. "You have to deliver product that you can feel good about."

Several years of low prices have spoiled U.S. consumers, says Callieri, and the industry is reaching a point where manufacturers can't absorb any more rising costs. Retailers will need to educate consumers about why it's worth to pay more for a higher-quality garment, he says.

"You have to consider the trade-offs between cost and design, and impact to the consumer," he says. "Some will be stuck in this tug of war about what they absorb and what they can pass on to the consumers."


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]]>abercrombie and fitchapparelapparel retailersbon tonbudgetclothingconsumer spendingcottoncutting cornerscutting costsfabricgapGap Inc.inflationpricesproducer price indexqualityretailretail pricingretail salesretailerswholesalewholesale pricesMercedes CardonaSat, 27 Nov 2010 07:00:00 EST