Consumers still influenced by recession at checkout
Jeremy Hobson: We’re going to look at two companies
that reported their quarterly earnings and see what they can tell us about consumer spending.
Juli Niemann is an analyst with Smith, Moore and Company and she’s with us live from St. Louis as she is every Tuesday. Good morning, Juli.
Juli Niemann: Morning Jeremy.
Hobson: Well let’s start with Best Buy. We saw this morning profit last quarter down 30 percent — what’s the story there?
Niemann: Well the recession is still taking a toll on the consumer — we’re very cost-conscious. We go to Best Buy and browse, and then compare online on your cell phone, shop at Amazon then — no sales tax. Wal-mart and Costco — they have very limited selection but huge price advantages. The one bright spot though were mobile phones with every bell and whistle on them. The economy may be in the tank, but you’re not going to give up — anything else but your iPhone and Android and whatever. There was a recent survey that’s in the London Science Museum that said things you can’t live without: the sun, the Internet, water, Facebook, and toilets — we do have our priorities.
Hobson: That’s a good list. Alright well let’s talk about Cracker Barrel. This is this restaurant chain I think of as you know, the big, huge breakfasts right along the highway. Their same store sales were down 1.4 percent, profit down 36 percent — what’s going on there?
Niemann: Well Cracker Barrel is not a high-end restaurant — it’s middle-America goes there. And it’s not a destination restaurant, but it’s on the road. Now with gasoline over $3.25 a gallon, there are fewer trips out there. If you go from St. Louis to Kansas City, you used to stop off for Cracker Barrel about mid-trip, you get your fried chicken and your country store chotskies. Now you gas up and go at Quick Trip with a hot dog and cheaper, low-octane gas. This is a huge, honking recession. It’s crushed the consumer, and we’re simply spending very, very carefully.
Hobson: Juli Niemann, analyst with Smith, Moore and Company, thanks as always.
Niemann: You bet.
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