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Fred’s profit rises in Q2

BY Staff Writer

Memphis — Fred’s reported Thursday that net income for the quarter ended July 28 rose 19% to $6.1 million, compared with $5.1 million in the year-ago period.

Sales rose 4% to $470.8 million from $452.7 million, and same-store sales dipped 1%.

Profit results missed Wall Street expectations, and the discounter has lowered its full-year earnings forecast.

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Survey: Consumers think economy is in dire straits; could affect holiday spending

BY Staff Writer

New York — Survey results unveiled Thursday by online coupon site RetailMeNot.com and Ipsos Public Affairs found that an overwhelming number of consumers think the economy is in dire straits. As well, this pessimistic group is shoppers to adjust their holiday consumption behaviors and shop earlier this year.

Specific findings of the report include:

  • More than 70% of consumers (71%) think the economy is in "bad" or "terrible" shape;
  • A quarter (25%) believe that the economy is in "okay" shape, and fewer than 1 in 20 think that it is in "good" (3%) or "fantastic" (1%) shape;
  • Those 55 years old and over have a particularly negative view of the economy, with nearly eight in 10 respondents (78%) saying that it is in "bad" or "terrible" shape – including 37% who think it is in terrible shape — compared with 61% of those under 35;
  • Nearly one in four (24%) feel it will be difficult to purchase things they need over the next several months;
  • Four in 10 respondents (40%) say that they should be able to get most of what they need in the coming months, but not be able to afford it all; an
  • Only about a third of respondents (36%) are not worried about being able to buy all the things they need in the coming months.

The survey also showed that, as is usually case, a large number of shoppers – (39%) start their holiday shopping before November. Women (46%) are more likely than men (31%) to start their shopping earlier than November. Nearly 25% of respondents said they start shopping in early November, 12% wait to start shopping until Black Friday/Cyber Monday and only 15% wait until after Cyber Monday to begin shopping.

Fifty-four percent of respondents finish their holiday shopping sometime between Black Friday and when they actually give away the gift during the holidays.

Nearly a third of respondents (31%) intend to do their holiday shopping online in 2012 versus a majority who intend to shop in-store (59%).

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EDLP in spotlight as Target squeaks under Walmart

BY CSA STAFF

Walmart saw its low price supremacy challenged this week by a Bloomberg report indicating Target had lower prices on a basket of 150 comparable items.

The news organization said Target’s prices were 0.46% lower than Walmart’s at stores within five miles of one another, reversing the prior month’s results which showed Walmart 2.01% lower. Either way, the results are largely immaterial, but it is perception that matters and nothing gets Walmart’s dander up or does more to erode shopper trust in its value proposition than headlines declaring that Target is cheaper than Walmart.

In reality, the gap has been very narrow for a long time as Target’s stated goal has been to hover within a few percentage points of Walmart on food and consumables prices. Meanwhile, Walmart doesn’t want to price any lower than it absolutely has to in order to maintain its price leadership perception while protecting profitability. Target is willing to suffer some on the food and consumables side of the store because it can offset the margin hit with sales of fashionable apparel and home goods. Ironically, what Bloomberg failed to mention, but analysts regularly take note of, is that Target shoppers who participate in Target’s REDcard Rewards program save an additional 5%, which regularly brings a comparable basket of goods below Walmart’s prices.

Walmart will gladly match Target’s prices, but it doesn’t have an answer yet for the 5% rewards program.

To read the Bloomberg piece and Walmart’s response, click here.

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