Retail Industry Trends

[HenryTo]

Retailiers already bracing for the worst. The $64 billion question is, as always, how bad will this get and how much of this has already been factored into retail stocks?
-----------------------------------------------------------------------------------
Retail Holiday Season May Be Modest
Tuesday October 30, 5:15 pm ET
By Betsy Vereckey, AP Business Writer
Sluggish US Economy May Weigh on Holiday Sales for National Retailers

NEW YORK (AP) -- U.S. retailers are bracing for a difficult holiday season, some industry watchers say, as higher gas prices and a sluggish housing market are expected to continue crimping consumer spending.

At a conference on Tuesday hosted by the Retail Marketing Society, a membership-based organization focused on the retail industry, some industry executives said holiday sales may be sluggish.

"This holiday season will be somewhat Grinch-like," said Carl Steidtmann, chief economist at Deloitte Research.

Steidtmann said retailers are preparing for the worst, especially given tightening credit and problems in the housing market. Steidtmann said it will be at least 18 months to two years before the housing market bottoms.

Merrill Lynch analyst Jaime Sheinheit said higher energy costs will weigh on consumer spending, noting that retailers have had trouble getting customers in the door. However, it's hard to tell whether the sluggish traffic is related to softening consumer spending or warm weather, Sheinheit said.

"Cold weather may spark shopping," she said.

In the luxury sector, Sheinheit said handbag maker Coach Inc. has warned of sluggish traffic in its U.S. stores. The company recently issued a fiscal second-quarter same-store sales outlook it called "conservative." Same-store sales are sales at stores open at least a year, and the industry metric is considered a key barometer of a retailer's health.

David Wolfe, creative director at Doneger Group, a buying office, said Coach has reached its saturation point with aspirational customers, who may not have the money to spend on these handbags but still want quality at a price.

Meanwhile, wealthy customers may help other luxury retailers this season, like Tiffany & Co., as spending patterns among the affluent tend to stay the same, regardless of changes in the economy.

Sectors that might fare better include teen retailers, Sheinheit said, noting that the income of their main customer, teenagers, usually stays the same. Companies in this sector include American Eagle Outfitters Inc. and Abercrombie & Fitch Co.

One company that may emerge stronger, Sheinheit said, is AnnTaylor Stores Corp., which has leaner inventory and a new product assortment at its lower-priced Loft division. In August, the company said it increased markdowns to reduce inventory heading into fall seasons at both its Ann Taylor and Loft stores.

"There is a lot of opportunity for Loft to improve margins this holiday season," Sheinheit said. "As always, what it comes down to is having the right product."

[rffrydr]

Food: Target and Walmart look for the new edge.

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/16/AR2009091603540.html?hpid=topnews
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Latest August results of selected retailers, per Retailing Today:

[HenryTo]

Laying the ground for the next boom: the retailers who actually expanded their presence in New York City last year (most probably because of cheaper rents):

http://cityroom.blogs.nytimes.com/2009/08/18/despite-recession-large-retail-chains-expand-in-city/?hp

[rffrydr]

Hell hath no fury like a retail analyst scorned:

http://media.bloomberg.com/bb/avfile/Economics/On_Economy/vx8lMVqZQs1I.mp3

In the once mighty world of retail analysts who dared not question the almighty american consumer (the bodies were piled high of those who bet against it, they said) we have to consider if they, the analysts themselves are yesterday's "luxury."


Resentment towards autos bubbles up in a world where three coach bags for the average high-schooler has become the stuff of legend....gone.

Bottled water takes the hit. Cover shows "Perrier" but that's not what's hurtin'

http://www.latimes.com/business/la-fi-water14-2009aug14,0,4535633.story
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

RetailingToday.com on July sales and its August outlook:
------------------------------------------------------------------------------------
THE NEWS | JULY SALES TAKE A HIT
NEW YORK - July was one of the worst months on record for retail sales, with virtually every retailer who reports such numbers posting a decline. Companies such as Dillards, Macy's, JCPenney, Saks and several mall-based specialty chains experienced a double-digit decline in their same-store sales, including a massive 28% decline at trendy teen retailer Abercrombie & Fitch. Meanwhile, value-oriented retailers, TJX and Ross, experienced growth as their value proposition was discovered by increasing numbers of price-sensitive consumers and sa-e store sales at both companies advanced 4%. Other value-oriented retailers didn't fare as well, as Costco's U.S. same-store sales, excluding volatile gas prices declined 2%, Target dropped a worse-than-expected 6.5%, and regional discounter Fred's declined 4.6%.

THE FIX Labor Day shuffle to follow comp catastrophe
The best thing that can be said about the weakness in July sales is that the negative numbers were surprising. Even in those instances where a retailers numbers were less worse, or worse than expected, the variances weren't viewed as troubling because accurately forecasting July sales was complicated by the recessionary economy and the opposing forces of low gas prices compared with last summer, offset by the absence this year of economic stimulus checks.

Now it is August and the outlook for sales growth hasn't improved. Back-to-school sales are expected to be low, as consumers remain reluctant to spend in the face of an uncertain labor market characterized by ongoing job losses. The heightened sense of frugality will result in lower average transaction sizes during a promotional period that is highly price competitive even when the economy is humming.

As if the negative forces of the economy weren't enough, August sales will be under additional pressure due to the late arrival of Labor Day. That means retailers will be comparing August 2009 sales to a prior-year period that included the benefit of Labor Day sales because the holiday fell on Sept. 1 last year. This year, it falls on Sept. 7, so the bulk of sales attributable to the holiday will occur in early September, make this year's August sales results appear even weaker than they are already expected to be. That was the situation earlier this year with Easter. It fell on April 12 compared to the prior year when it was March 23. Retailers' results for March 2009 looked weak because they were compared to a prior period that contained Easter while the April 2009 period were made to look artificially strong.

If there is a positive takeaway from the current environment it is knowing that brighter days are ahead. September results benefit from the Labor Day shuffle after which monthly comparisons grow increasingly easy deeper into the fourth quarter. Meanwhile, it's not like retailers didn't see the current economic conditions coming. All those layoffs that took place last fall and earlier this year and the reductions in store expansion, in addition to reduced inventory levels, have most retailers well-positioned to operate profitability in an environment of temporarily reduced consumer demand.

[HenryTo]

Retailers' earnings galore next week:
-----------------------------------------------------------------------------------
In final lap of U.S. earnings, it's retailers' turn
Fri Aug 7, 2009 7:39pm EDT

NEW YORK (Reuters) - If the strong earnings trend keeps up next week, black will be back in style on the balance sheets of more of the nation's retailers.

Like other companies struggling in the recession, retailers have been cutting costs and paring down inventories, moves likely to boost their bottom lines, analysts said.

Moreover, restaurant companies, including Chipotle Mexican Grill (CMG.N), P.F. Chang's China Bistro Inc (PFCB.O) and Domino's Pizza Inc (DPZ.N) posted profits this week that topped analysts' expectations, a potentially positive sign for retailers.

"We've seen the retailers track the restaurant companies a little bit, and a lot of them came out a little better than expected," said Joseph Feldman, retail analyst with Telsey Advisory Group in New York.

"I would bet we see some upside from a lot of the retailers."

Among some of the top names reporting next week are Wal-Mart Stores Inc (WMT.N), Macy's (M.N), Kohl's Corp (KSS.N), Nordstrom (JWN.N), Abercrombie & Fitch (ANF.N), J.C. Penney (JCP.N) and cosmetics company Estee Lauder (EL.N), which sells its products via its own Web site in addition to its distribution through major retailers.

If results come in ahead of current estimates, that would fall in line with what investors have seen so far from corporate earnings.

Seventy-three percent of the Standard & Poor's 500 .SPX companies' results so far have beaten analysts' estimates -- well above the 61 percent for a typical quarter, according to Thomson Reuters data.

S&P 500 companies' second-quarter earnings are seen declining 28.3 percent from a year ago, but that percentage has improved from a forecast for about a 36 percent drop at the start of the second-quarter reporting period, Thomson Reuters data showed.

With reports from more than 85 percent of S&P 500 companies already in, the percentage is unlikely to change much, said John Butters, director of the research group at Thomson Reuters.

HOPEFUL SIGNS, BUT NO PARTY

Within the S&P 500, the consumer discretionary sector, where retailers fit, is expected to show a 15 percent decline in earnings from a year ago.

On Thursday, retailers reported their 11th straight month of same-store sales declines in July. But some chain stores, including Gap Inc (GPS.N), gave upbeat profit forecasts.

Worth noting: An S&P index of retailers' shares .RLX rose 3.6 percent on Friday following a stronger-than-expected July jobs report from the U.S. government.

"I think you've seen the stocks relatively strong for a couple of months now, and I think that's indicative of retail comps, and that bodes well for the majority of retail earnings," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

But it might be too soon for investors to put on their party shoes.
James said retail stocks could sell off in spite of upbeat earnings news because of their recent gains. In the past month, the S&P Retail Index .RLX has jumped 22.5 percent.

And signs still point to sluggish consumer demand. Last week's report on gross domestic product showed consumer spending, which accounts for two-thirds of U.S. economic activity, dropped in the second quarter after rising in the first quarter.

And even though the U.S. government's employment report on Friday showed fewer-than-expected job cuts in July and a slight decline in the unemployment rate, many analysts say the labor market is expected to remain weak for some time.

"The consumer is still very cautious and it's a tough retail environment," said Fred Dickson, market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.

"What I'm more interested in (in next week's results) is what their assessment is on back to school and holiday order flows," he said.

The holiday period accounts for the bulk of many retailers' profits. For some retailers, especially those that sell toys or gifts, holiday sales are a make-or-break item.

[HenryTo]

Morningstar on the latest same-store retail sales numbers:

http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200908061320DOWJONESDJONLINE000787_univ.xml

The problem is not just the fundamental shift in retail spending, but also the amount of saturation in certain categories, especially teen retailing (which the demographics don't support anymore) and the many department stores that are "stuck in the middle."

[rffrydr]

Out with Crocs and jewelry, in with the flipflops (and gas savings cars)--and 33% interest rates on store credit:

http://media.bloomberg.com/bb/avfile/News/First_Word/v1b1pOEu4LZQ.mp3
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

June retail sales mostly disappoint, with the notable exception of discount retailing:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDLPVe5Vw_qo

[rffrydr]

The anthropomorphism of cars ranks up there with Warner Bros. pets. Why we won't all be driving "pods" anytime soon:

http://www.detnews.com/article/20090708/AUTO03/907080372/1148/rss25
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Best Buy your next car dealer?

http://news.cnet.com/8301-11128_3-10279809-54.html
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Of Private Label and a blossoming midwest (yes, we are a commodity country; yes, we are a manufacturing country):

http://media.bloomberg.com/bb/avfile/News/First_Word/vRGkJa9GNfNA.mp3
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Eddie Bauer BK--Patagonia the last premiere brand here?

http://www.marketwatch.com/story/eddie-bauer-filing-for-bankruptcy-wednesday-wsj
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Consumer Discretionary/Consumer Staples vs. SP


_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

File this under "Alternative Engergy Investment"?

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20090615006055&newsLang=en
_________________
Today is the Tomorrow you worried about Yesterday!