Money world

In preparation for the traditional kickoff of the holiday shopping season, Wal-Mart Stores Inc. announced Wednesday that most of its stores will be open 24 hours for "post-Thanksgiving Day events."

Nearly all 2,737 Wal-Mart Supercenters are already 24 hours, but the change will apply to almost all of the retailer’s 810 discount stores. Local law in some areas prevent stores from operating 24 hours.

Last year, Wal-Mart (WMT, Fortune 500) discount stores closed in the evening on Thanksgiving Day and reopened early for Black Friday. In some instances, shoppers became unruly, with one worker trampled to death at store in Valley Stream, N.Y low cost payday loans.

In a statement, Wal-Mart said store-specific plans "were developed in consultation with leading safety experts" to address how customers will enter, flow throughout the store and around sales merchandise and through checkout aisles.

"This is part of our overall program to make our stores safer and more convenient for our customers this year," said Daphne Moore, spokeswoman for Wal-Mart.

The in-store specials will be available in all stores beginning at 5 a.m. on Black Friday.  

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U.S. wine and spirits maker Constellation Brands Inc does not think drinkers will be bellying up to the bar in full force this holiday season, despite some signs of economic recovery.

“I would not be over-optimistic about the consumer this holiday season,” said Rob Sands, chief executive of the maker of Robert Mondavi wine, Svedka vodka and Black Velvet Canadian Whisky.

“I don’t think it’s going to be awful, awful, awful — but I don’t think it will be great,” Sands said in an interview ahead of the company’s investor meeting on Wednesday.

Sands said Constellation, which also has a joint venture with Mexico’s Grupo Modelo to import beers like Corona, will likely not see sales at bars, restaurants and convenience stores turn around until employment improves.

“When we’ve seen unemployment peak and start turning around, you’ll start seeing the on-premise and convenience sector start coming back,” Sands said, noting that people often buy beer at gas stations after work. By contrast, the grocery store business has been less hurt by the economy, he said.

NO UPDATE ON MERGER

Constellation, the world’s biggest maker of branded wine, said earlier this month it was in talks to sell or merge part of its Australian and U.K. wine operations.

At the time, the company said the talks included a potential combination of part of the Australian and British wine operations with Australian Vintage Ltd.

Sands did not offer any new details on the discussions, saying they were ongoing online cash advances. But he did say his plan was to improve margins and reduce investment in those regions, since a recovery is unlikely to come immediately.

“Finding a way to create synergies, improve margins and reduce investment is a prudent course of action, so that’s what this is all about,” Sands said.

As Constellation aims to sell assets, it is not looking for new ones, though Sands did not rule out acquisitions entirely.

“It’s not outside the realm of possibility, but it would be somewhat inconsistent right now with the other things we’re trying to accomplish,” Sands said, noting that he was more focused on improving organic sales growth, return on capital and free cash flow.

Constellation, which recently sold off some less-expensive brands, has closed facilities, cut jobs and consolidated distribution. It has also cut more than $1 billion in debt since March 2008.

Jay Wright, chief commercial officer of Constellation’s U.S. wine business, said it should complete the consolidation of its U.S. wine and spirits distributor network by the spring of 2010, giving it exclusive relationships with distributors in 30 states.

“By consolidating, we were able to … achieve a whole bunch of benefits to our business to help us with profitable organic sales growth,” Wright said. 

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Sprint is betting the farm on the WiMax standard. The U.S. mobile phone carrier’s customers are melting away. Yet it has scrimped on cellular network capex to double down on wireless broadband. Putting another $1 billion into cash-burning partner Clearwire, while a rival technology is catching up, amounts to a binary bet for shareholders.

Sprint’s problem is simple — its customers are dissatisfied. It lost another 801,000 of its most profitable customers in the third quarter. More than four million have fled to other networks over the past year. Sprint’s bigger rivals scent blood and have been aggressively courting customers with advertising campaigns and handset offers.

Yet Sprint (S, Fortune 500) has slashed capital expenditure to an unsustainable level. Its current budget is equal to 7% of sales, which is less than half what rival AT&T (T, Fortune 500) spends — and AT&T’s revenues are more than 15 times as large as Sprint’s, so it has the advantage of scale as well.

Instead, Sprint is increasing its bet on Clearwire (CLWR), the company rolling out WiMax. This wireless technology could make broadband ubiquitous, even in rural areas. But it will face stiff competition. While WiMax is the only "4G" technology currently deployed, a rival technology backed by Sprint’s deeper-pocketed rivals will be available soon payday advance. This standard, called LTE, may be widely used within two years.

Moreover, Clearwire may need even more cash. It thinks it will burn up to $1.3 billion in the second half of the year. The $4 billion it has in the bank after the current round won’t last long at that rate. If it needs more, Sprint would have to pony up to keep majority control. That might be difficult, as it is already heavily indebted — its market capitalization is $9 billion, while its net debt was almost $16 billion at the end of last quarter.

Sprint’s stock has really become a highly leveraged bet on WiMax. The payoff for success would be enormous. But WiMax has fewer than half a million customers. The odds of it becoming a widespread standard are low if it can’t quickly build on its temporary advantage before a more powerful competitor gets going. If WiMax doesn’t catch on, it would exacerbate Sprint’s troubles.

Handset makers don’t like designing equipment for second-tier standards, and customers tend to flock to operators with the best phones. At worst, Sprint could even be forced to adopt LTE, which would be a heavy burden for the already indebted company. The clock is ticking on Sprint. 

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Recently a friend was shopping for boots at Saks, only to be told the store was out of her size. "You’re the sixth person I’ve had to turn away," the sales clerk said. My friend is not alone. But at a time of slumping sales, shouldn’t it be easier to find what you want?

Not necessarily. It looks as if some retailers ordering merchandise in the depths of the credit crisis overestimated just how bad things would get. Now certain stores appear at risk of running short of inventory heading into the crucial holiday shopping season.

What does all this mean for consumers? While there will still be plenty of discounts this season, the markdowns probably won’t approach last year’s rock-bottom level. And hot items — like Netpal laptop or Sony’s e-reader — will sell out fast. "You’re not going to see merchandise piled high like you did last year," says Stevan Buxbaum, a consultant.

The cost of inventory is one of the biggest expenses for retailers, and therefore a natural place to cut when sales are falling, as they have been for most of this year. Retailers typically try to order slightly less goods than they expect to sell. It’s a fine balancing act: Not cutting enough results in markdowns to clear unsold goods, while cutting too much risks turning customers away empty handed.

The former scenario played out last Christmas. Caught unprepared by the sharp slowdown in sales following the collapse of Lehman Brothers and other financial institutions, retailers were awash in extra goods. That resulted in lots of great deals for consumers, but those discounts ate into store profits.

This year, the opposite situation appears to be playing out. Retailers were extremely cautious heading into the holiday season, and some may not have ordered enough goods.

During the second quarter, for example, Abercrombie & Fitch’s (ANF) inventory was down 42%, compared with a 28% decline in sales. Ann Taylor (ANN) and Talbots (TLB) both shrank inventory 30% in the period. "These are some of the biggest declines in inventory we have seen since we started tracking the measure in 1992," says Lazard analyst Todd Slater.

These retailers may have miscalculated. Suddenly, the doom and gloom of the past year has been replaced by a slight optimism. Sales at stores open at least a year in September rose for the first time since August 2008. The October figures, due to be released Thursday, are also expected to show strength.

Third quarter GDP grew at a surprisingly strong 3.5%, marking an official end to the Great Recession, although most of that growth was the result of government stimulus programs such as the Car Allowance Rebate System (popularly "Cash for Clunkers). The National Retail Federation predicts holiday sales will decline 1% to $438 billion — less than last year’s 3.4% drop.

Some analysts are predicting an even stronger turnout. Customer Growth Partners, a consulting firm, released a report last week that estimated holiday sales would rise 2.4%, compared with a year ago.

Retailers that try to reorder goods to meet this small but promising uptick in demand may run out of time. For instance, American Eagle Outfitters (AEO) has one of the more nimble supply chains, but it still takes the retailer 45 days to restock merchandise that is made in China. "Many of the companies that I cover have cut inventory too much," says Richard Jaffe, a retail analyst with Stifel Nicolaus. "What do you do Dec. 15 when you’re out of goods?"

Time isn’t the only problem. Dozens of Asian factories have gone bust during the financial crisis, which will restrict supply when demand picks up, says James Lawton, a senior vice president with Dun & Bradstreet, a research and credit-monitoring firm. "A lot of capacity is coming out of the system permanently," he says.

That problem is not just restricted to apparel. Lawton says he knows of one retailer forced to delay store openings because the company that made its shopping carts went bankrupt. "They literally didn’t have enough carts," he says.

The lesson: If you can’t live without those Christian Louboutin booties, you’d better buy them now. 

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Shares of Starbucks Corp jumped 1.5 percent to $20 after the bell on Thursday as the coffee chain operator posted its quarterly results.

(Reporting by Ellis Mnyandu)

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Wal-Mart Stores Inc on Monday announced its second round of price cuts on toys as the world’s biggest retailer backs up its intention to be the “price leader” this holiday shopping season.

U.S. Walmart stores are cutting prices on 100 toys, like the Buzz Lightyear talking action figure and Star Wars light sabers, by roughly 20 percent to 30 percent.

The cuts are in addition to ones the retailer implemented at the end of September, when it began selling 100 toys for $10 each.

The new prices will be available through December 25 or while supplies last.

Wal-Mart has vowed to be the “price leader” this holiday season, and announced plans on October 21 to cut prices every week until Christmas to fend off rivals and win over shoppers easy online payday loans.

After it reduced toy prices at the end of September, Target Corp responded with price cuts of as much as 50 percent on toys like Barbie and G.I. Joe.

Analysts said many of these holiday price cuts are planned in advanced, allowing retailers to protect their margins.

But such cuts can be damaging to manufacturers, because they train shoppers to expect lower prices for their goods. They can also hurt retailers’ profits if they must slash prices lower than expected to match competitors’ prices, or they can not sell enough goods to offset the lower prices.

(Reporting by Nicole Maestri, editing by Leslie Gevirtz)

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