A look at what may lie ahead for the Twin Cities' top retail chains.
All eyes are watching retail sales, wondering if consumers are ready to help pull us out of this Great Recession after a year of scaling back. With two of the nation's bellwether retailers based in the Twin Cities -- Target Corp. and Best Buy Co. Inc. -- their performances during the crucial holiday season could speak volumes about the mind-set of consumers. How they fare the rest of the year might also give an indication of whether the job cuts at both are over. Target and Best Buy pared headquarters staff this year. Here's a preview of what retail watchers have to say about how some of the top locally based chains could fare in the important sales weeks ahead.
Stores: 1,744 in 49 states
Stock price: $46.93, up 25 percent this year
Holiday momentum: A price-matching program and a yearlong marketing push to promote deals on everything from food to fashion jewelry has customers making their way back to Target. The nation's second-largest discount chain reported strong Black Friday and online sales, especially in electronics, toys, apparel, small appliances and beauty products.
"They're executing and focusing on the value message," said David Heupel, an analyst with Thrivent Financial in Minneapolis. "It's a critical juncture."
Although holiday shoppers like to buy clothes, Target's apparel sales continue to lag, robbing the retailer of sales in a key high-margin category. Analysts believe that Target's discretionary shoppers may be coming back, but they remain prudent about where they're spending money.
Upsides: Target remains the go-to discounter for trendy items. Belts, legwear and clothes from its newest GO International designers, Kate and Laura Mulleavy of Rodarte, arrive Sunday in most stores.
Downsides: Wal-Mart Stores Inc. is spiffing up its stores and waging a take-no-prisoners price war, forcing Target, Amazon and others to match discounts. Despite strong sales on the day after Thanksgiving, Target executives offered tepid guidance, predicting flat to negative sales for December.
BEST BUY CO. INC.
Stores: More than 3,900; in North America (1,307) Europe (2,465), China (169) and Mexico (1)
Stock price: $44.34, up 84 percent this year
Holiday momentum: Consumer electronics are hot this holiday season. With Circuit City stores shuttered, Best Buy is poised to grab market share. While shoppers flocked to Best Buy stores across the nation on Black Friday, they seemed to avoid impulse purchases.
"It appeared people came in, bought the door-busters and left," said Joe Feldman, a retail analyst with Telsey Advisory Group in New York City.
Wall Street awaits more details when Best Buy, the nation's largest consumer electronics chain, releases third-quarter earnings Tuesday.
Upsides: Best Buy has the electronics staples plus the latest gadgets, and its Geek Squad is the retailer's ace-in-the-hole for customers who want extra service. Best Buy is also the only place where consumers can make head-to-head comparisons on most smart phones, cell phones and usage plans.
Downsides: Profit margins on its biggest sellers -- especially computers and televisions -- have dropped dramatically. More shoppers are choosing Costco, Wal-Mart, Amazon or Target for TVs, GPS devices and MP3 players.
Stores: 12,900, mostly in North America and the United Kingdom
Stock price: $15.40, up 41.8 percent this year
Holiday momentum: After years of profitability, the operator of Regis Salons, Cost Cutters, MasterCuts and Supercuts posted a string of disappointing results.
Recession-plagued consumers have increased time between haircuts, and are coloring their hair at home. They've also traded down from more expensive hair care products sold in salons to products carried at Target and other discounters.
But people always want to look good for the holidays, and getting a haircut before holiday parties and family gatherings means that salons likely will get a December boost.
Upsides: CEO Paul Finkelstein said in a recent interview that he believes the company has weathered the worst of the recession.
He predicts traffic will start picking up in coming months.
Downsides: It's easy to postpone getting a haircut.
Headquarters: St. Paul
Stores: 119 in 23 states
Stock price: The company went private in October
Holiday momentum: The recession and last year's elections have been good for business at the nation's largest outdoor specialty retailer. Fears that President Obama and a Democratic-controlled Congress would tighten gun control legislation have spurred sales of weapons and ammunition. And as consumers decided to take their vacations closer to home, they headed to the great outdoors, often updating tents, clothing, fishing poles and other gear.
The retailer hasn't opened any stores in the past year, and has essentially gotten out of its profit-draining ATV and power boat sales. Profit from sales at stores, online and catalogs quadrupled in the third quarter, often a strong period driven by the fall hunting season and cooler weather.
Upsides: Stronger cost controls and inventory management will help margins.
Downsides: The store still appeals to a discretionary spender who can put off updating outdoor gear.
CHRISTOPHER & BANKS
Stores: 811 in 46 states, including its CJ Banks brand
Stock price: $7.64, up 92 percent this year
Holiday momentum: The retailer surprised Wall Street on Friday, after saying that it plans to post a third-quarter profit, with earnings between 19 and 21 cents per share. The stock price rose more than a quarter.
But the specialty retailer appeals to middle-age women, the demographic that has curbed discretionary spending the most during the current recession. With kids in college and aging parents to care for, upholding the family budget trumps getting a new winter sweater for this demographic.
Same-store sales dropped 22 percent in the most recent quarter, with fewer average transactions per store and a flat average ticket price.
Upsides: Inventory is down 20 percent from a year ago, and gross margins are up 5 percentage points.
Downsides: The retailer was promoting 50 percent off clearance items in October and a buy-one, get-one-free clearance promotion this week.
VALUEVISION MEDIA (ShopNBC.com)
Headquarters: Eden Prairie
Stores: National cable audience, website
Stock price: $4.39, up 920.9 percent this year
Holiday momentum: A year ago, the luxury cable and online shopping network went looking for a buyer and came up empty. Almost a year after taking over, CEO Keith Stewart believes that the company is turning a corner.
"Instead of being a company in turnaround, we're like an 18-year-old start-up," Stewart said in a recent interview.
ShopNBC has lowered its average selling price in the past year, from $187 to $95, to appeal to a more frugal consumer. In the most recent quarter, more than half of the shoppers were first-time customers, he said.
Still, ShopNBC racked up a $12.9 million loss in the third quarter.
Upsides: An overhaul of its distribution system means that ShopNBC customers pay one shipping and handling fee, instead of being charged separately on multiple orders. No one else in the home shopping industry is doing this. The company extended its holiday return date until Jan. 31.
Downsides: Customers are coming back more frequently to buy, but they're still buying less.
Jackie Crosby • 612-673-7335