retail news in context, analysis with attitude

• The New York Times reports that "consumer debt is rising," which is seen as a positive sign for US retailers, since people are borrowing that money to buy stuff. According to the story, "Consumer debt cuts both ways, of course. In moderation, it can help encourage economic activity. Carried too far, it can create bubbles that threaten the economy. Some analysts say debt is still in the helpful stages and consumer spending therefore has room for nontoxic growth."

Fortune reports that office supply store Staples "laid off hundreds of corporate employees" yesterday, in a situation described by sources as a "bloodbath."

The company is not commenting on the report. However, Staples has been trying to address weaknesses in its business model by moving to a more consultative approach while simultaneously trying to convince federal regulators that it won;t hurt competition or raise prices if it is allowed to merge with Office Depot.

• The Wall Street Journal reports that McDonald's yesterday "posted its best U.S. quarterly sales in nearly four years," driven largely by an all-day breakfast initiative that brought customers back into its stores.

Q4 same-store sales were up 5.7 percent, much higher than the 2.7 percent increase expected by analysts.

CEO Steve Easterbrook, while welcoming the new results, cautioned that it "would take at least six more months of positive same-store sales growth before the company moves from a turnaround mode to a growth mode." The Journal writes that "the McDonald’s chief has enacted numerous changes at a burger chain that had been struggling to remain relevant with consumers. He has pared down the menu, provided customers with more transparency about how its food is made, raised wages for workers at company-owned stores and announced that McDonald’s will switch to antibiotic-free chicken and cage-free eggs in the U.S."
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