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As merchants reported their November sales figures today, disappointments cut across all sectors as shoppers worried about layoffs and shrinking retirement funds focus on necessities.
Among the beneficiaries of that was Wal-Mart Stores Inc., which posted sales results that beat Wall Street estimates. However, Costco Wholesale Corp., usually a strong performer, reported a bigger-than-expected sales decline. And mall-based stores such as Columbus, Ohio-based Limited Brands Inc., Bon-Ton Stores Inc. and Pacific Sunwear of California Inc. fared much worse.
Specialty retailer Jo-Ann Stores Inc. of Hudson reported that profits for the third quarter of fiscal 2009 rose 27.5 percent, to $10.2 million, or 40 cents per diluted share.
For the same period last year, the retailer reported profits of $8.0 million, or 32 cents per diluted share.
Net income for the 13 weeks prior to Nov. 1 includes a $1.3 million gain from the repurchase of $20.4 million in senior subordinated notes. Without that gain, Jo-Ann would have logged a net income of $8.9 million, or 35 cents per diluted share, for the quarter.
Valu King Food Market, a new grocery concept wholly owned by Pittsburgh-based Giant Eagle Inc., has opened its first store in Eastlake.
The 28,000-square-foot store, located in the former Tops supermarket at 34700 Vine St. in the Vineyards Centre, sells between 6,000 and 8,000 items, including staples, health and beauty items, meat, produce, thaw-and-sell bakery items, packaged deli items, dairy, frozen foods, beer and wine.
It also carries value-priced brands such as Valu Time, Food Club, Full Circle organic foods, Top Care and World Classic.
The store employs about 30 people, including workers represented by the United Food & Commercial Workers Local 880.
NEW YORK -- The U.S. service sector contracted dramatically in November, as employment, new orders and prices fell precipitously, hurting retailers, hotels and other industries.
The Institute for Supply Management, a trade group of purchasing executives, said today that its services sector index fell to 37.3 in November from 44.4 in October. It was far below the reading of 42 expected by Wall Street economists surveyed by Thomson Reuters.
A reading below 50 signals contraction, while a reading above 50 indicates growth.
Results in Greater Cleveland might have been less upbeat, but more than 172 million people nationally went shopping on the weekend, up 17 percent since last year. Of those, 73.6 million shopped on Black Friday.
Even better, they spent an average of $372.57, up 7.2 percent over 2008, with total spending estimated at $41.0 billion, according to BIGresearch, which surveyed consumers for the National Retail Federation.
"Holiday sales are not expected to continue at this brisk pace," Tracy Mullin, president and chief executive of the Retail Federation, said in a statement, "but it is encouraging that Americans seem excited to go shopping again."
Black Friday shopping is normally a madhouse when only die-hard souls dare to venture out. But for the most part across Northeast Ohio, the stores were not terribly crowded this year, the lines weren't long and stores still had a lot of their door-buster specials available by late morning -- hours after they had opened.
Certainly, some stores had long lines (like Kohl's) and some stores had early-morning rushes (like Best Buy, RadioShack and Staples). But a check of stores around Greater Cleveland and interviews with shoppers made it clear that this Black Friday was far different from Black Fridays past.
Where was everybody?
3:04 p.m. I made one last stop at Legacy Village before heading back to the office. The crowd was about normal weekend traffic for Legacy, with the exception of the Apple store, which was packed to the brim.
Apple is actually having a sale, which I believe is pretty unusual. MacBooks and iMacs are $100 off, and there were discounts on a bunch of other items like iPods, Apple TV, and various iPod accessories.
I went in the store for a little while, but couldn't go five minutes without one of the many members of the store's staff asking me if I needed help finding something. Apparently I looked lost. It was probably because I was having trouble finding a customer to talk to who wasn't busy chatting it up with a sales rep.
Having a ton of staff proved useful for Apple: whenever a person bought a computer about 20 people were on hand to give the person a round of applause as they walked out the door. I bought my last computer online; I feel cheated.
Steve Page, who is from New York but was in town visiting relatives for Thanksgiving, bought one of the discounted MacBooks. He said going to the Apple store was the extent of his Black Friday shopping. Page said he usually wouldn't go out to a holiday sale, but needed a new computer and wanted to take advantage of the savings.
Looking back, Grant Cleveland admits that starting a business with just one product, a kit for growing cactus plants, didn't seem like the most logical thing to do. Then again, what's considered logical for a serial entrepreneur working on his fourth business?
Six years ago, Cleveland launched DuneCraft Inc. with just the cactus kit, called the Odd Pod, and less than $100,000 he raised from suppliers and angel investors. A year later he had two products to sell and lukewarm interest from a few small retail chains, Web sites and catalog companies.
Today, DuneCraft has 25 employees and offers 250 educational novelty products through national retailers including Toys 'R' Us, Borders and Kmart, and licensing agreements with Nickelodeon and others. Sales are expected to top $3.5 million this year and reach $5 million to $7 million next year, thanks to increased orders from big retailers.
With most retailers expecting a crummy Christmas, glad tidings may await cash-strapped consumers.
In normal times, the day after Thanksgiving, when stores traditionally kick off the Christmas shopping season with door-buster sales, is seen as the time to snag some real bargains.
But this year, the wobbly economy and plummeting consumer confidence caused worried retailers to start slashing prices weeks before the day known as Black Friday. Retailers count on Black Friday to help them turn a profit for the year. Analysts use the day to gauge whether deal-conscious consumers are in a spending mood.
And if shoppers aren't in the mood, the deals could get much better later.
Updated 6:07 p.m.
Cord Camera today shuttered its two remaining local stores, in North Olmsted and Macedonia, citing the poor economy.
The Columbus company, which operates retail stores in Ohio and Indiana, began a round of closings a few weeks ago. Nine of its 29 stores are now out of business.
Local store managers referred questions to the corporate headquarters, which did not return calls.
Dillard's lost 76 cents per share for the quarter ending Nov. 1. During the same period a year ago, Dillard's reported a loss of $11.3 million or 15 cents per share. Net sales were down 7 percent compared with a year ago. Total revenue was $1.546 billion, compared with $1.674 billion a year ago.
"The oppressive economic environment clearly weighed heavily on our results during the third quarter," CEO William Dillard II said. "We continue to take aggressive action to navigate these challenging times."
J.M. Smucker Co., the Orrville-based maker of jams, jellies and other consumer products, today reported a second-quarter profit of $51.5 million, or 94 cents a diluted share. That's a 2.6 percent increase from $50.2 million, or 87 cents a share, in the same quarter last year.
Smucker (NYSE: SJM) said sales for the quarter, which ended Oct. 31, jumped 19 percent, to $843.1 million from $707.9 million last year. Factors for the increase included increased prices and volume gains for most products.
Costa Rican companies producing an array of consumables -- from cream liqueurs to processed cereals -- are in Cleveland this week looking for a Midwestern beachhead.
It's the next crucial step to fulfilling the springtime promise of Mayor Frank Jackson's first foray into foreign trade.
Acting on the Cleveland Foundation's international contacts, Jackson struck a deal with Costa Rican President Oscar Arias Sanchez and 12 exporting companies to pursue a trade gateway to the Midwest, via Cleveland.
As job anxiety spreads, nervous consumers are salting away money, the prudence long recommended for our credit card-crazy nation.
But what the economy really needs is people to spend. The pullback is cramping business growth and hiring, just as thousands of Northeast Ohioans are being thrown out of work.
"It reminds me of the great line from St. Augustine, when he said 'Give me chastity, oh God, but not yet,' " said Brookings Institution economist Gary Burtless. "Well this is, 'Give me frugality but not yet.' "In the Cleveland-Elyria-Mentor area, the number of working people dropped by 7,800 in the year ending in September - the biggest annual loss 2002, when employment dropped by 25,800 in the aftermath of 9/11.
Labor market analysts say the downward spiral, mirrored nationwide, could last into the first half of 2010.
To be sure, today's losses are a long way from a Depression-like, 25 percent plunge in employment. But the losses in Northeast Ohio come on top of a decade of job deterioration across an array of businesses. The area has shed employment in many corners of the market, with health and education the major exceptions, a review of industries shows.
A tight holiday
job market
Looking for temporary work this holiday season? Your opportunities may be limited.
Lower-than-anticipated sales last month mean retailers are unlikely to hire a significant number of workers this month, according to the Chicago outplacement consulting firm Challenger, Gray & Christmas.
Retail hiring in October was 19 percent lower than in 2007, which turned out to be the worst holiday hiring season since 2001.
"This could end up being one of the weakest holiday hiring seasons in nearly two decades," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a written statement.
Since the mid-1990s, retailers have hired an average of about 730,000 temporary holiday workers each year. Last year, the number was less than 700,000.
That's not to say to say that some stores aren't looking for help.
Malley's Chocolates is tripling the number of seasonal workers this year, from 20 to 60, to accommodate the increased demand for its chocolates, shipped daily from its Brook Park headquarters.
Wal-Mart said it expects to hire 20,000 to 25,000 temporary workers this year, the same as last year, although hiring will vary from store to store, depending on needs.
So many retailers cut employees this year that they may be willing to hire the same number of seasonal workers as last year, and perhaps more, "because they know that on Jan. 1, the seasonals will go away," said Craig Rowley, a vice president at the Hay Group, a management consultancy in Dallas.
Retailers know they can't sell anything without people to work the registers, bring products from the back room or re-hang the clothes left in the dressing room, he said.
Moreover, seasonal employees are usually more flexible about the hours they work and are more willing to work odd hours because they're college students, part-timers or working a second job to supplement their income, Rowley said.
Deep discounts and holiday appeals have spread through Cleveland-area stores, signs of a record plunge in retail sales nationwide.
Sales fell 2.8 percent last month, the biggest monthly decline on record, the U.S. Commerce Department reported Friday. Combined with flagging consumer confidence and store closings well ahead of last year's pace, the report points to a not very merry Christmas for retailers.
Best Buy, Macy's, Nordstrom and others issued glum holiday forecasts this week, right after Circuit City filed for bankruptcy. Linens 'N Things threw in the towel last month and is closing all 471 of its stores. Overall, store closings this year are expected to run 34 percent ahead of 2007's total.
"I've been in retail for 25 years, and I've never seen it like this," said Craig Rowley, national practice leader for retail at the Hay Group consulting firm in Dallas.
The old parking lot of Geauga Lake amusement park could soon become a shopping plaza featuring major retailers and restaurants.
The Richard E. Jacobs Group is under contract to buy the 30-acre plot of land in Bainbridge Township, which is a small piece of the 540 acres that went up for sale after the amusement park shut down last year.
The Geauga Lake land, which spills into Aurora, is being sold by the Colliers-Ostendorf Morris brokerage firm in Cleveland on behalf of Cedar Fair Entertainment Co., the Sandusky-based parent company of Geauga Lake. The company still operates a water park on 100 acres adjacent to the property.
TravelCenters of America LLC, a truck stop and travel center operator, today reported a jump in revenues and profits for the third quarter, the first quarter in which the Westlake company has deferred rent payments.
TravelCenters (AMEX: TA) ended the quarter with a profit of $16.6 million, or $1.08 a diluted share, compared with a loss of $16.5 million, or $1.19 a share, during the same quarter last year. Revenues jumped 21 percent, to $2.2 billion from $1.8 billion in last year's third quarter.
American Greetings Corp., the greeting cards manufacturer and retailer in Brooklyn, announced a handful of job cuts today as part of a reorganization of the product management team that oversees greeting cards.
The reorganization clarified what people's jobs and career paths were, spokeswoman Patrice Sadd said. She said fewer than 10 people lost their jobs on a team that numbers several hundred. She did not provide additional details.
That's what customers at Buehler's Fresh Foods can do with the store's "Click, Load & Go" program, which went live toay after weeks of testing.
From home or work, shoppers create their lists by picking items from an online menu at buehlers.com, specifying size, quantity and other details. A Buehler's personal shopper then roams the store, hunting down and bagging the items on the list. The order is rung up and paid for when the customer picks it up.
Buehler's created Click, Load & Go as way to differentiate itself from competitors such as Wal-Mart, Kroger and Giant Eagle. The family-owned company based in Wooster plans to expand the program to other locations in the 13-store chain next year, said Mary McMillen, director of consumer affairs.
The nation's retailers saw their sales plummet last month to the weakest October level since at least 1969, as the financial crisis and mounting layoffs left shoppers too scared to shop.
The stunning and rare drop, from an already weak September, is further darkening the outlook for the holiday season and raising more concerns about the financial health of the industry, which is not expected to see a recovery until at least the second half of 2009.
A number of stores, including J.C. Penney Co. and Nordstrom Inc., cut their profit outlooks as they slashed prices on everything from coats to holiday ornaments in a desperate bid to pull in shoppers. Analysts expect a do-or-die holiday season for more retailers, which have already seen competitors like Mervyns LLC and Linens 'N Things forced to liquidate.
OfficeMax Inc. founder Michael Feuer is back with another big idea, and this one has nothing to do with office supplies.
Called Max-Wellness LLC, the stores will carry a range of products to salve, bandage or treat what ails you, from vitamins and supplements to walkers and exercise balls. In-store pharmacies will be run by a third party.
Feuer said his stores will offer more selection, better customer service and one-stop shopping convenience in a dignified and private setting.
"OfficeMax is what I did, not who I am," Feuer said. "All along, I've been looking for the next great retail concept.
Updated 7:36 p.m.
CityView, which this year already saw Jo-Ann Stores Inc., Wal-Mart Stores and PetSmart pull out, has now lost its fourth major retailer. The Circuit City store will be closed Tuesday, will reopen later for clearance sales and then close for good by Dec. 31.
Giant Eagle, OfficeMax, Dick's Sporting Goods, A.J. Wright and Bed Bath and Beyond remain open at CityView, along with several smaller businesses.
Circuit City, the nation's second-largest consumer electronics retailer behind Best Buy Co., said today it is closing 155 stores nationwide, including six in Northeast Ohio. The company will also fire about 17 percent of its 43,000 workers, although it would not comment on the number of employees affected in Northeast Ohio.
Halloween is a $5.8 billion business, according to the National Retail Federation, the Washington, D.C.,-based trade group.
And with more people celebrating Halloween and expected to spend a bit more than they did last year, everyone from costume shops and party stores to supermarkets and pet shops is likely to see a bump in sales.
Discount Drug Mart Inc. of Medina has lowered its longtime $4.50 generic prescription program to $3.99 to compete with those offered by Marc's, Giant Eagle, Wal-Mart and Target stores.
Like the other retailers' programs, Drug Mart will offer up to 30-day supplies of more than 300 commonly prescribed generic drugs for $3.99 and 90-day supplies of generic drugs for $9.99. Higher doses of some drugs may cost more.
A list of store locations and eligible prescriptions is available here.
Employees of Heinen's Inc. and Giant Eagle Inc. begin voting Tuesday on tentative three-year contracts that would raise wages while maintaining health care and pension benefits.
The contracts, which are retroactive to Sept. 14, cover about 9,700 employees in 111 supermarkets in Northeast Ohio. Workers will vote in their stores through Friday.
Terms of the agreements, negotiated separately with Giant Eagle grocery workers, Giant Eagle meat and deli workers, Heinen's grocery workers and Heinen's meat and deli workers, were unanimously recommended by the negotiating committee of the United Food and Commercial Workers Union Local 880.
Ohio Tax Commissioner Richard Levin on Friday asked the Ohio Supreme Court to uphold the state's Commercial Activity Tax on supermarkets and food wholesalers.
The state wants justices to overturn a Sept. 2 state appeals court ruling that the way Ohio taxes grocery stores is unconstitutional and violates a 1936 ban on taxing sales of food for off-site consumption.
"This erroneous ruling not only endangers the state's efforts in tax reform but will also cost the state hundreds of millions in annual revenue and still more in tax refunds at a time of fiscal crisis," the state said in its appeal.
A Sarah Palin Halloween costume.
Jinxed Costumes & Magic in Brooklyn carries more than 6,000 costumes, wigs, props and masks -- including rubber masks of presidential candidates John McCain and Barack Obama.
But so many customers have been clamoring for a likeness of the feisty Alaskan governor that owners Tim and Lori Bodziony created one of their own.
Smucker, best known for its namesake jams, jellies and preserves with the gingham-checked lids, has been on a shopping spree ever since its 2002 acquisition of Jif peanut butter and Crisco oils and shortenings from Procter & Gamble Co. Smucker's pantry of best-selling brands now includes Smucker's, Jif, Crisco, R.W. Knudsen, Europe's Best, Eagle Brand, Carnation, Bick's and Robin Hood.
But buying Procter & Gamble's Folgers brand, valued at $3.3 billion, is the largest and most ambitious transaction Smucker has ever attempted.
Giant Eagle Inc. wants to be more than your supermarket; it also wants to be your online mall.
Tuesday, the Pittsburgh grocer is launching fuelparksmall.com, a Web portal that lets Advantage Card customers earn discounts on gasoline purchases from online chain stores, including Apple, Best Buy, Macy's, Bloomingdales and PetSmart.
"This is another extension of the Fuelperks brand and the power of Fuelperks," spokesman Rob Borella said.
Patience, not purchases, was priceless. Credit cards were used only for emergencies. People paid cash for new cars. Paying off a home mortgage was cause for pride and celebration.
Now American consumers are drowning in debt. And last week, turmoil in the financial industry prompted Congress to step in with a $700 billion plan meant to keep the nation's economy from dissolving into a pile of broken dreams and spoiled fortunes.
SHOPWATCH
A monthly feature about retailing trends and strategies
Shoppers will be extra frugal this season, challenging retailers to be even more creative about offering the kinds of merchandise people will actually want to buy, and giving them a reason to spend more.
Holiday sales are projected at $470.4 billion, a meager 2.2 percent increase over last year.
Updated 3:36 p.m.
United Food and Commercial Workers Local 880, the union representing thousands of area grocery workers, has reached tentative contract agreements with Giant Eagle Inc. and Heinen's Fine Foods.
Details of the agreements, which the union's bargaining committees have unanimously recommended for ratification, will be mailed to employees in advance of a vote later this month.
