February 27, 2021

Retailers Attracted More Shoppers in September

September is considered a key month for retailers because back-to-school shopping, as well as bringing in sales, can indicate how the consumer is feeling about the future.

Some of the sales increases, though, seemed due to heavy promotions.

“One of the questions as we go into holidays, frankly, is where margins end up,” said Chris Donnelly, an executive in Accenture’s retail practice. “I think you’re going to see more aggressive discounting to make sure they capture as much of the holiday sales as they can. And you’ve seen it in some of the folks that reported today, where they said sales have gone up but margin and average selling prices have gone down a little bit.”

Generally, stores that go after a higher-end shopper fared better than those focusing on middle- and low-end customers.

The top performers among department stores was Nordstrom, where same-store sales rose 10.7 percent, beating estimates by more than five percentage points. There, shoppers seemed drawn to luxury purchases — Nordstrom said its top categories for the month were designer clothing, dresses and handbags.

Saks Fifth Avenue’s sales increased 9.3 percent, and there, too, people were drawn to non-essential items. Shoes, purses, jewelry and cosmetics were among its top sellers.

Macy’s, Kohl’s and Dillard’s came in a bit lower than the more plush department stores, at 4.9 percent, 4.1 percent and 3 percent respectively.

J.C. Penney had one of the few negative September results, with same-store sales down 0.6 percent. Analysts had expected growth of 0.6 percent. The company said Internet sales also dropped for the month because people were buying fewer expensive home-furnishing items.

J.C. Penney revised its profit outlook for the third quarter on Wednesday, saying that because of lower-than-expected sales, it was now expecting profit to be 10 to 15 cents a share, excluding one-time charges, versus the 15 to 20 cents a share it had previously projected.

The best performance over all was turned in by Costco, which, despite being a club store, caters to a well-off shopper. Costco’s same-store sales rose 12 percent, and its American sales, excluding gas, rose 7 percent.

Other than Costco and Nordstrom, the rest of the top five performers included Limited Brands, up 11 percent, and the teen stores The Buckle and Zumiez, up 10.3 and 10.1 percent, respectively.

On the bottom, Gap Inc.’s brands — Banana Republic, Gap and Old Navy — had a combined 4 percent drop in same-store sales, though analysts had expected about that. Smaller retailers Bon-Ton, Cato, Stein Mart and Stage Stores were also among the worst results.

Over all, according to MasterCard Advisors SpendingPulse, which tracks all forms of consumer spending, , 2011 was the best back-to-school spending season since 2006. SpendingPulse compared spending in July, August and September in school-related categories like children’s apparel and office-supply stores to earlier years,

“It’s a positive surprise that the American consumer is maintaining some degree of resilience here,” said Michael McNamara, vice president of research and analysis for SpendingPulse.

But Mr. Donnelly of Accenture warned that could soon change.

“There is a limit to how much consumers are going to be able to spend, because folks aren’t making any more — we just saw a couple of weeks ago wages are very low, real wages aren’t growing, employment’s not moving anywhere, the stock market’s got a lot of volatility — so it’s unclear how sustained this uptick in spending will last,” Mr. Donnelly said.

“As much as the consumer can surprise you on the positive side, like they did the last couple of months, they can also catch you on the negative side,” Mr. Donnelly said.

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Nokia to Cut 7,000 Jobs in Cost-Cutting Move

BERLIN — Nokia, the world’s leading cellphone maker, said Wednesday that it would slash about 7,000 jobs as part of a cost-cutting program that is deeper than expected.

The 12 percent reduction in the Finnish company’s global work force will help trim operating costs by €1 billion, or $1.47 billion, a 17 percent reduction, by the end of 2012. Analysts had expected job cuts of between 5,000 and 6,000.

Stephen Elop, the former Microsoft executive who became Nokia chief executive in September, said the cuts and reorganization were needed to prepare Nokia for its partnership with Microsoft. Nokia plans to eventually phase out the Symbian operating system as it rolls out smartphones next year running Microsoft Windows Phone software.

“With this new focus, we also will face reductions in our work force,” Mr. Elop said. “This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs.”

In a statement, Nokia said the reductions would be achieved by eliminating 4,000 jobs, mostly in Britain, Denmark and Finland, and by transferring 3,000 employees responsible for its Symbian operating system to Accenture, a global technology consultant to businesses.

The company, which is based in Espoo, Finland, employed 59,080 in its cellphone business at the end of 2010. The figure excludes staff at Nokia Siemens Networks, its network joint venture, and at Navteq, a U.S. mapping data company it also owns.

Nokia produced 108.5 million mobile phones last year, supplying 32 percent of the global market, but the company this year ceded the lead in cellphone revenue to Apple, the maker of the iPhone, according to Strategy Analytics, a research firm.

In addition to the job cuts, which will become official following negotiations with labor representatives, Nokia said it planned to consolidate its research and development division so that each site has a clear role and mission. Nokia has mobile phone RD sites in Finland, China, India, Germany, England, Denmark and San Diego.

Some sites will grow, others will contract and some will be closed as a result of the reorganization, Nokia said, without providing further details.

“This move was largely anticipated and follows Nokia’s need to reduce its cost structure,” said Michael Schroder, an analyst at FIM Bank, a private bank in Helsinki.

Nokia’s failure to capitalize on the smartphone boom has cost the Finnish company market share and prestige as the center of gravity in its industry has shifted from hardware and communications to software and applications.

That boom is still going strong, said Ericsson, the global leader in wireless network equipment, on Wednesday, as it reported that demand for mobile broadband lifted its own sales by 17 percent in the first quarter from a year earlier to 53 billion Swedish kroner, or $8.7 billion.

Profit at Ericsson, based in Stockholm, more than tripled to 4.1 billion kroner from 1.3 billion kroner a year earlier, which the company attributed to cost-cutting and greater profitability in its networks business.

Most of the demand came from the United States and Canada, Ericsson said, where wireless operators like Verizon Wireless, ATT and Rogers Communications are expanding the capacity of their 3G networks and installing new, even faster, networks based on a technology called Long-Term Evolution to handle rising traffic.

Ericsson said the level of data traffic on the world’s global mobile networks doubled in 2010 from 2009 and will continue to double each year for the next few years.

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