U.S. retailers, which have banked heavily on cost cuts to guard margins in the recession, may be running out of ways to trim expenses further -- putting future profits in jeopardy, unless consumers open their wallets soon.

"No company on the face of the earth can cost-cut its way to sustained success ... You need to have sales," Home Depot Inc (HD.N) Chief Financial Officer Carol Tome said in an interview this week.

From slashing jobs to shuttering stores, from maintaining leaner inventories to negotiating for lower rents, retailers seem to have done it all to preserve profits or mitigate losses in a dismal sales climate.

Some have outlined plans to postpone expansion, reduce advertising and wind down secondary brands, while a few others have gone a step further and found more creative ways to cut costs.

Home improvement chain Home Depot has made significant cost savings by using less energy in its stores. Some companies that deliver office products to retailers have started using new technology in their trucks to ensure higher fuel efficiency.

But the cost cuts can only go so far, as retailers see sales slammed by the recession.

"Retailers are very closely looking at costs now and I think today they are ahead of the curve ... I think that the costs will be out of companies ... I don't think revenues are going to come back as quickly," said William Susman, president and chief operating officer of retail investment bank Financo.

One way retailers are cutting costs is by streamlining their supply chains and purchasing

Womens' apparel retailer Ann Taylor Stores Corp said it has gone from about 100 apparel vendors at the end of 2008 to about 75 in the first quarter and will continue to try to cut down on vendors for its Ann Taylor and Ann Taylor LOFT stores.

Courtesy:- BS dt:- 24-05-2009