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November 14

Target, Wal-Mart set up holiday sales battle
Retailers’ fight will save consumers money, but may damage bottom line
The Associated Press
updated 1:55 p.m. CT, Wed., Nov . 15, 2006

NEW YORK - All across America, families are making their to-do lists for Thanksgiving shopping. Turkey? Check. Fixins’? Check. Sweet potato pie? Check. Flat-screen TV?

Eh?

With price cutting from Wal-Mart likely to spread among other retailers, it will be all that shoppers can do to avoid picking up toys and electronics along with their cranberry sauce and stuffing.

On Tuesday, Wal-Mart, the world’s largest retailer, announced its fourth price-slashing move since mid-October and said that it would have its most aggressive discounting ever this holiday season. Its rival, Target, vowed price cuts, too.

That’s good for consumers, but probably bad for retail profits in the fourth quarter.

By February, when retailers report fourth-quarter and full-year earning, Wal-Mart and Target may not be able to match the double-digit percent profit increases that they announced Tuesday for the third-quarter. And what’s bad for Wal-Mart and Target may be worse for smaller retailers.

“(Profits) is going to be a big issue for the big box retailers,” said Ken Perkins, president of RetailMetrics LLC, a research firm in Swampscott, Mass. He noted that Target is going to be able to make up some ground lost in digital cameras and flat-screen TVs with its trendier apparel, which carries fatter profit margins. But he said, “It’s going to put pressure on everyone.”

Perkins pointed out that Wal-Mart can’t rely on price cutting alone; it needs to have customers buy merchandise other than electronics and toys. “Customers need to leave with a handful of merchandise,” Perkins added.

Wal-Mart’s assertive discounting is expected to pressure other retailers to match the cuts, a move that would erode profit margins, though it would save customers money. The most vulnerable are toy retailers and electronic chains, but moderate-price apparel chains could be affected as well, Perkins said.

Wal-Mart started holiday discounting in mid-October by cutting prices on more than 100 toys, then followed this month with electronics and small appliances, with a promise of more to come. The company vowed generous discounts, or what the company calls rollbacks, on basic apparel like cargo pants and flannel shirts.

“We are implementing our most aggressive pricing strategy ever across core categories, such as toys and electronics,” said Lee Scott, president and CEO of Wal-Mart, in a prerecorded phone message.

Wal-Mart and other retailers normally reserve such discount blitzes for the day after Thanksgiving.

Target President Gregg Steinhafel told investors during a conference call Tuesday that the retailer would compete on long-running discounts, noting that it has often matched those before Wal-Mart advertises them in its circulars.

John Menzer, head of Wal-Mart U.S. stores, told investors there were “huge sales increases” among the discounted toys and in some electronics.

“We’re seeing a big growth in our new categories such as flat panel TV’s, MP3 players, laptops and cell phones. But this is tempered with declines in our more mature categories such as music, DVD players and telephones,” Menzer said on the recorded message

Scott told analysts last month that Wal-Mart would focus more on discounts after an overemphasis on selling trendier clothing backfired, contributing to a sharp slowdown in sales.

Wal-Mart posted posted net income of $2.65 billion, or 63 cents per share, for the period ended Oct. 31, compared with $2.37 billion, or 57 cents per share, a year earlier.

Net sales totaled $83.5 billion, an increase of 12 percent from $74.6 billion.

Excluding income from operations in Germany and South Korea that it has sold, Wal-Mart’s profit amounted to 62 cents a share. Wall Street expected a profit from continuing operations of 59 cents per share, the average estimate of 21 analysts surveyed by Thomson Financial, on projected sales of $84.48 billion.

Wal-Mart said it expects earnings per share from continuing operations for the fourth quarter to be between 88 cents and 92 cents, resulting in a full-year forecast for earnings per share of $2.85 to $2.89.

In August, Wal-Mart had forecast full-year earnings per share between $2.88 and $2.95.

Analysts polled by Thomson Financial expect 92 cents per share in the fourth quarter and $2.87 in the full year.

For the third quarter, same-store sales, or sales at stores opened at least a year, were up 1.5 percent. Wal-Mart has also forecast a flat November, the first month in a decade with no growth in same-store sales.

Scott said the slowdown was due to factors including overemphasis on its new, trendier Metro 7 women’s apparel and comparisons with heavy shopping last year before and after hurricanes Katrina and Rita.

Wal-Mart expects same-store sales to be up between 1 and 2 percent in the fourth quarter, Chief Financial Officer Tom Schoewe said.

Shares of Wal-Mart rose $1.34, or 2.9 percent, to close at $47.66 on the New York Stock Exchange.

Meanwhile, Target said it earned $506 million, or 59 cents per share, up from $435 million, or 49 cents per share, during the same period last year.

Revenue rose to $13.57 billion from $12.21 billion during the same period last year. Target attributed the growth to new stores, a 4.6 percent sales rise at stores open at least a year, and credit card revenue.

Analysts surveyed by Thomson Financial were expecting 55 cents per share on revenue of $13.59 billion.

Net charge card revenue jumped 20.7 percent to $414 million. Target cards contributed $176 million in pre-tax earnings for the quarter, up $68 million, or almost 63 percent, from the same period last year.

Chief financial officer Doug Scovanner said on a conference call that Target’s same-store sales have risen 4.8 percent for the year so far, and predicted its fourth-quarter same-store sales would be about the same. He said Target expects to earn $3.17 per share for the full year. Analysts are expecting $3.13 per share.

Target shares rose $1.40, or 2.4 percent, to end at $59.16 on the NYSE.

© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/15717556/

(This blog is posted at http://bestpriceditems.com/blog.aspx Source:http://www.msnbc.msn.com/id/15717556/)


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February 23

Ritz Camera files for bankruptcy
February 23, 2009 1:06 PM ET
 
Feeling the pinch from sliding sales, Maryland-based Ritz Camera Centers Inc. has filed for Chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del.
 
Ritz is the nation's largest camera store chain with more than 1,000 locations in 45 states, including more than two dozen locations in the Seattle area (most under the Kits Cameras brand).
 
In the filing late Sunday, Chief Restructuring Officer Marc Weinsweig said: “The loss of revenues and profit margins from the diminution in the photo-finishing business proved too much of a burden, coupled with the losses experienced by the Boater’s World business, for Ritz Camera to remain a profitable company under its current structure.”
 
In 1987 Ritz launched Boater’s World, a boating-and-fishing supply retailer with 137 stores now operating. A drop in consumer spending and slumping sales at Boater’s World prompted the bankruptcy filing. The rise in gas prices and other factors led to a “sharp” drop in sales at Boater’s World’s stores, Weinsweig added in the filing.
 
In 2001 Ritz acquired Wolf Camera, which had sought bankruptcy protection. Ritz began with a single store in Atlantic City in 1918. Its retail brands today include Wolf Camera, Kits Cameras, Inkley’s and The Camera Shop.
 
Based in Beltsville, Md., Ritz plans to continue operating as it seeks to reorganize. Court papers show the company’s 30 largest unsecured creditors without collateral backing their claims are owed about $65.6 million. The three biggest creditors listed are: Nikon Inc., owed $26.6 million; Canon USA Inc., owed $13.7 million; and Fuji Photo Film USA Inc., owed $8.4 million.
 
Copyright 2009 bizjournals.com


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January 16

Circuit City to be liquidated
ATLANTA, Jan 16 (Reuters) - Retailer Circuit City Stores (CCTYQ.PK) will be fully liquidated, the CNBC cable network reported on Friday, citing a source,
Circuit City was due to present the results of an auction for its assets at a hearing in U.S. Bankruptcy Court in Richmond, Virginia, on Friday. It had conducted negotiations with potential bidders to sell the company, but told the court last week it may need to liquidate if no deal was reached.
The company did not immediately respond to a request for comment about the liquidation, but a spokesman said a statement should be issued shortly.
Shares of the bankrupt electronics chain fell 53 percent to 7 cents.
Circuit City filed for Chapter 11 protection in November, citing a deteriorating cash position and tighter terms from vendors. It has liquidated and closed 155 stores, about one-fifth of its U.S. store base.
(Reporting by Karen Jacobs, editing by Dave Zimmerman)
 
(This blog is also published at http://bestpriceditems.com/blog.aspx )

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December 01

It's official: U.S. in a recession since December 2007
By Chris Isidore, CNNMoney.com senior writer
 
The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .
The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.
The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year.
Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.
The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures reached a peak between November 2007 and June 2008, the NBER said.
In addition, the NBER also considers the gross domestic product, which is the reading most typically associated with a recession in the general public.
Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining. That has yet to take place during this recession.
This downturn longer than most
The NBER did not give any reasons or causes of the recession. But it is widely accepted that the housing downturn, which started in 2006, is a primary cause of the broader economic malaise.
The fall of housing prices from peak levels reached earlier this decade cut deeply into home building and home purchases. This also caused a sharp rise in mortgage foreclosures, which in turn resulted in losses of hundreds of billions of dollars among the nation's leading banks and a tightening of credit.
The current recession is one of the longest downturns since the Great Depression of the 1930's.
The last two recessions (1990-1991 and 2001) lasted eight months each, and only two of the 10 previous post-Depression downturns lasted as long as a full year, according to the NBER.
In a statement, White House Deputy Press Secretary Tony Fratto said that even though the recession is now official, it is more important to focus on the steps being taken to fix the economy.
"The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that's where we'll continue to focus," he said. "Addressing these areas will do the most right now to return the economy to growth and job creation."
President-elect Obama's transition team did not have an immediate comment on the recession announcement. But other top Democrats said this is further proof of the need for another economic stimulus package, which Obama has advocated.
"With rising costs of living, rising unemployment, record foreclosures and depleted savings, we must do more to help families make ends meet," said Senate Majority Leader Harry Reid in a statement. "With the cooperation of our Republican colleagues, we intend to send a plan to the White House as soon as possible following President-elect Obama's inauguration next month."
How long will it go?
Nonetheless, several economists said the real concern is that there is no end in sight for the downturn.
Some suggested that the best case scenario for the economy is that it would reach bottom in the second quarter of 2009. And even if that happens, that would still make this recession the longest since the Great Depression.
Rich Yamarone, director of economic research at Argus Research, said the only good news for the economy is that some of the steps already taken by the government earlier this year could start to spur growth soon. For example, he said interest rate cuts by the Federal Reserve, which started in September 2007, "should be working their magic any day now."
In February, Congress passed a $170 billion tax rebate meant to stimulate the economy. But that only boosted GDP during the second quarter.
The financial market and credit crisis worsened during this summer, prompting Congress, the Treasury Department and the Fed to pump trillions of dollars into the economy through a variety of programs, including a $700 billion bailout of banks and Wall Street firms and hundreds of billions of lending by the Fed to major companies and lenders.
But Lakshman Achuthan, managing director of Economic Cycle Research Institute, said that at this point, the only solution for the recession is time.
"All the hand waving and real cash that policymakers are throwing at the problem won't change the fact we're stuck in this nasty recession," he said. "The ultimate cure of a recession is letting it run its course."
Achuthan's research firm tracks weekly leading economic indicators that are supposed to signal a change in direction for the economy four or five months ahead of time. Those indicators are continuing to fall at a record pace.
Still, he said he's not worried about the current recession turning into a depression, as many Americans fear.
"Even with indicators in a tailspin, this still is only a very severe recession," he said. "There's lots of gloom, but we don't see doom."


(This blog is posted at http://bestpriceditems.com/blog.aspx. Source:http://biz.yahoo.com/cnnm/081201/120108_recession.html?.v=8)

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November 24

Analysts: Stores may cut back on Black Friday specials
By Donna Goodison
 
Consumers likely will be out in force for Black Friday, the unofficial start of the holiday shopping season, but disappointment may be in store.
While there still will be deals galore to be had the day after Thanksgiving, industry analysts say the bargains may not be as sensational as those of years past.
Retailers started aggressively discounting last month to counter a loss of customers as consumer confidence waned amid each day’s news about the U.S. financial crisis. With the worst holiday sales season forecast in years - “flat is the new up,” National Retail Federation CEO Tracy Mullin said at a local stop last week - stores have pared inventories so they won’t get stuck with leftover merchandise that must be cleared with excesssive markdowns.
“Retailers are bathing in red ink at the moment, so how many times can they offer below-cost deals without going deeper into the red ink?” said Somerville consumer advocate Edgar Dworsky, founder of ConsumerWorld.org. “Certainly they want to excite consumers to come in to see what they have, but they can’t give away the store.”
Dworsky advises consumers to do their homework on products and prices to “help separate the surprisingly few real door-busters from the many ho-hum deals being promoted this year.” Case in point is the lack of a laptop computer advertised at a sub-$300 price, the type of Black Friday deal that had shoppers standing in line at 3 a.m. in prior years, he said.
But Tom McCrorey, New England retail team leader at Deloitte, believes Black Friday will remain the biggest shopping event of the year for cash-strapped consumers looking for discounts and value. Black Friday refers to the day when, traditionally, retailers move out of the red and into the black.
“Retailers have got their inventories pretty lean this year knowing that it’s going to be a difficult holiday season,” he said. “But I still think you’re going to see promotions and deals - maybe not as dramatic as in the past, but I think you’ll see them.”
Wal-Mart will have a limited number of Nintendo’s Wii video consoles for $249.24, a gaming system that sells for $289.99 at rival Target. It’s also offering a 4.5-quart KitchenAid mixer for $130, $100 less than advertised at Macy’s.
Westwood mom Kimberly Kennedy will again venture out on Black Friday because she enjoys the “primal” frenzy of it.
“But you can have a smart frenzy, too,” Kennedy said. “The rituals are still important, but I have three boys and I just have to be smart about it. Black Friday this year might not be dinner with girlfriends after a luxurious day of shopping. It will be getting up at 5 a.m. to get the early sales.”
Instead of scoffing at those who wait in line for Toys R Us to open, Kennedy might be among them with “egg on her face.” “I might freeze my rear-end off, but I would walk out of there with more money in my wallet and feeling kind of smug,” she said.
 
(This blog is posted at http://bestpriceditems.com/blog.aspx. Source:http://www.bostonherald.com/business/general/view.bg?articleid=1134713)

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