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Barclays Capital discloses preliminary holiday outlook

BY Michael Johnsen

NEW YORK Barclays Capital forecast 2010 comparable retail sales to be up 1.5%, excluding Walmart, versus an increase of 2.1% realized last year, during its preliminary holiday outlook call held Friday morning.

That outlook is in part based on a solid back-to-school season, Barclay analysts suggested, encouraging because a robust back-to-school season usually is an early indicator of a strong holiday season. Since 1993, holiday sales have displayed an 85.7% correlation to back-to-school sales, analysts noted. Barclays Capital Broadlines/Department Stores index was up 4% over August and September combined.

The pharmacy channel may be the greater beneficiary this year as it is the channel consumers historically turn to for last-minute holiday shopping needs. That’s especially the case given consumers’ uncertainty about spending, a factor that typically initiates a rushed need to shop late in the season. “It is a fact that drug stores attract last minute shoppers, and if people are uncertain about how much money to spend, you might find that they end up at the drug store,” said Barclays Capital analyst Meredith Adler. “There was data from back-to-school that said drug store sales were better than anybody expected, probably for that [last-minute-shopping] reason.”

And the pharmacy channel’s tendency lately to tighten the reigns on its seasonal inventory — Barclays credited both CVS and Walgreens for their respective focus on inventory management — should help mitigate the need to clear any excess inventory through markdowns following the season.

The growth forecast suggested that holiday spending should be solid, if not spectacular in large part because consumers remain cautious. For example, household income may be on the rise, but more consumers are placing those increased earnings in the bank. And while the private sector that is currently generating jobs, there is some concern that that job generation is not happening fast enough.

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Save-A-Lot opens distribution center

BY Allison Cerra

ST. LOUIS Supervalu subsidiary and hard-discount grocery retailer Save-A-Lot will open a new distribution center in North Carolina.

The retailer said its 325,000-sq.-ft. distribution center in Lexington, N.C., is scheduled to open in December 2011. The new building will be a state-of-the-art food distribution center utilizing the latest in green technologies, including lights that only operate when a person is present and an HVAC system that uses smart thermostats, Save-A-Lot said.

“The Lexington distribution center will enable us to serve our current stores more efficiently and at the same time, grow our business in the region,” said Bill Shaner, Save-A-Lot president and CEO.

Save-A-Lot operates approximately 1,200 stores in 39 states, and said it plans to double the number of stores it operates nationally over the next five years.

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Safeway’s Q3 down 4.5%

BY Michael Johnsen

PLEASANTON, Calif. — Safeway on Thursday reported net income of $122.8 million for the third quarter ended Sept. 11, down 4.5% as compared with the year-ago period. Results for the third quarter included $12 million in employee severance charges, offset by a lower tax rate, compared with third quarter 2009.

"Our third-quarter results were in line with our expectations," stated Steve Burd, chairman, president and CEO. "The trend in price per item improved during the quarter. … We continue to tailor our offerings to the changing needs of our customers, with innovative consumer brand launches of Refreshe beverages and In-Kind personal care products, while offering lower everyday prices and attractive club card specials."

Total sales were down 1% to $9.4 billion in the third quarter. Same-store sales were down 2% due to a decline in price-per-item.

 

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