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Retail sales in July remain sluggish; Cash for Clunkers to blame?

Found in: Economy, Monthly Retail Sales
Friday
August 7, 2009
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Retail sales in July continued to be a mixture of disappointment and mediocrity.

Retailers catering to teens saw a mixed bag of results as teens decided to spend more money at Aeropostale (same store sales up 6%) and Buckle (same store sales up 2.8%), but both retailers missed analysts projections. American Eagle saw an 11% drop in same store sales, on top of the 7% drop they saw this time last year. Abercrombie & Fitch continued their terminal velocity fall with a 28% drop in same store sales. No good.

Macy’s saw a 10.7% drop in same store sales, JCPenney reported a 12.3% drop in same store sales, while Kohl’s managed to eek out a nearly flat month (0.4% increase in same store sales). I guess shoppers are really going nuts over that new line by Avirl Lavigne.

Besides the general state of the economy and unemployment through the course of the year, some analysts suggest that the, recently enacted and more recently refueled, Cash for Clunkers program is diverting money from the retail industry:

“One of the unintended negative side effects of the cash for clunkers program was that it’s going to remove money that probably would have been spent in retail stores and restaurants and is now going to go toward a car payment,” said Purdue Consumer Sciences Professor Dr. Richard Feinberg.

And not just “spare change.”

Feinberg estimates the nation’s retailers could lose up to $300 million a month as consumers spend their disposable income on loans instead of lunch. By the end of what’s expected to be another tough holiday shopping season, losses could add up to between $1.5 billion and $2.5 billion, Feinberg says.

More information on retail sales from the New York Times and Los Angeles Times.

Boscov’s to get 43.7 million in government loans

Found in: Economics, Economy
Thursday
August 6, 2009
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Good news for the sometimes troubled retailer:

The Boscov’s department store chain will receive a $43.7 million federal loan through a Department of Housing and Urban Development program for economic development, U.S. Sens. Arlen Specter and Bob Casey announced today.

The 20-year loan is intended to assure the Exeter, Berks County-based department store chain continues to operate. The chain employs about 5,000 workers in Pennsylvania.

More on this from the Morning Call.

This is great news for the regional retailer who, I’m sure, can use the infusion of cash. It is also very good news for mall owners throughout the Mid-Atlantic who cannot afford any more vacant square footage in their anchor units.

I do have to say that I’m somewhat surprised at the fact that Boscov’s was able to secure a loan. With other industries receiving assistance from the government, I guess it was only a matter of time before retailers saw the same type of consideration. Is anyone aware of other retailers who have secure loans from the government to assist them through the turbulent retail economy?

Jim Cramer on Kohl’s and JCPenney

Found in: Economy
Thursday
April 19, 2007
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From Seeking Alpha:

J.C. Penney (JCP), Polo Ralph Lauren (RL) , Kohl’s (KSS), United Technologies (UTX): Cramer declares JCP a “multiyear story” because of Sephora cosmetics and the private label deal with RL, and would give the retailer the benefit of the doubt in spite of its lackluster quarter. Cramer comments JCP and KSS are stores which make customers feel “they’re richer than they are.” He predicts JCP will be up to $85 from $81.50. He added UTX has the earnings power to go to $70 from $66.

(See: Jim Cramers Stop Trading! Stock Picks and Comments, April 18)

Jim Cramer saying that Kohl’s and JCP makes customers feel “they’re richer than they are” might be the most accurate assessment of those two retailers that I have ever seen.

Report: Rite Aid to buy Eckerd, Brooks drug stores

Found in: Economy, Retail, Store Openings & Closings
Wednesday
August 23, 2006
3 Comments

Just the other day, I talked somewhat about the pharmaceutical retail industry in New Jersey. In a word, it’s crowded. Like I said the other day, before I even take a look at the local, Mom & Pop pharmacies, I’ve got a CVS, two Eckerds, Drug Fair, Rite Aid, Walgreens, and a Target Pharmacy. Add in the local pharmacies and a couple of supermarkets, it’s a crowded enviroment. A crowded enviroment which is now about to get smaller as reports are that Rite Aid is in discussions to buy Eckerd & Brooks drug stores.

Under terms being discussed, Rite Aid would pay about $1.5 billion in cash, with the rest in stock, The Wall Street Journal reported on its Web site Wednesday night, citing two people familiar with the matter.

The deal would add about 1,800 stores to Rite Aid’s existing 3,300 locations, making Rite Aid a stronger rival to Walgreen Co. and CVS Corp. There are currently 6,171 CVS stores and 5,401 Walgreen stores, according to the companies’ Web sites.

Brooks has about 330 locations in New England and New York.

What does this mean? It gives Rite Aid a leg up and moves itself up the food chain, allowing the retailer to compete better with Walgreens and CVS. I also don’t think this will be the last consolidation-type move within this industry. As consolidation has swept other segments of the retail industry, pharmaceutical retail is not immune and I think that some of the bigger players in the field will be buying up more regional chains over the next few years.

Sidenote – does Rite Aid have the best NYSE stock symbol, RAD, or what?

More coverage from Marketwatch.

Related: last week, Chain Store Age Blog had a funny piece about Walgreens in Lincoln, Nebraska: Walgreens Ahead, and Ahead, and Ahead.

Department stores breathe fresh air

Found in: Economy
Thursday
August 17, 2006
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With another quarter of solid earnings and sales for most department stores, The Street says that it “might be time to remove department stores from the retail industry’s endangered species list” (see: Department stores breathe fresh air).

They say:

“Mid-market department stores, led by J.C. Penney and Kohl’s, started to fight back against their competitors about two to three years ago,” says Hastings. “They’ve been able to use fashion exclusives, private-label merchandise, footwear offerings, cosmetics and fragrances, jewelry and other accessories to really surpass discounters in their ability to appeal to customers. They also have more leeway when it comes to profit margins, which gives them more flexibility with pricing and promotions.”

JC Penney, Kohl’s, Federated, and Dillard’s are all doing very well when compared to the industry as a whole. So far, in 2006, people are flocking to department stores and seemingly ignoring most of the specialty retailers. While department stores were playing catch-up with the rest of the mall in 2002, now it seems that JCP and KSS are the top dogs again.