Retailers Are Buying Less To Increase Profits

July 23, 2009

Saks CEO Stephen Sadove said Monday that the company is aiming to order at least 20% less from its vendors in 2009 and forecasts a subsequent jump in gross margin, according to a report by Bloomberg.

The cuts may curb what Sadove has described as the “enormous excess” that existed last year in the luxury retail category.

“Across the board you are going to find less of the sizes, less of the availability in almost all of the categories,” Sadove told Bloomberg. “You are probably going to see less aggressive markdowns than you saw last year.”

Neiman Marcus cut its orders 25% in the quarter ended May 2 and said on June 10 that it is being “conservative” for the rest of the year. Both Neiman and Saks have said they are weeding out underperforming labels.

Nordstrom and Cincinnati-based Macy’s have said they are buying less, too.

For further information, visit: http://www.chainstoreage.com/story.aspx?id=107905&menuid=437

High-end, Low-cost

June 22, 2009

[At Saks Fifth Ave] Apparel and accessories in the men’s and women’s departments are marked down an additional 33 percent off previous markdown prices, which involves a savings of up to 60 percent off the original retail prices.

In the extensive selection of women’s shoes: Marni chunky sandals (were $640, then $447.90, now $300.09) and plenty of Prada, Tod’s, Manolo Blahnik, Miu Miu, Chanel, Gucci and other labels.

In the women’s designer sportswear department: Yigal Azrouel spring collection marked down 60 percent, so a cotton shift dress that was $925 can walk out of Saks for $619.75. Also spotted: Escada, Michael Kors, Dusan and several other collections, all at 60 percent off.

In the women’s contemporary department: A pair of white Theory pants, originally $235, previously marked down to $93.90, with additional 33 percent taken off: $62.91. Noted was a good supply of Diane Von Furstenberg, Tibi and Milly pieces.

In the Designer Salon, an Oscar de la Renta spring season coral-colored strapless party dress caught my eye. The original $2,990 price of the frock was now $1,196.53. Also saw a good selection of Dolce & Gabbana, Jil Sander and Carolina Herrera things.

In the men’s store, I asked a salesman what he thought the “best buy” was during the sale. He pointed out a pair of Edward Green monkstrap shoes. They were once $1,350 a pair. The markdown price was $944.90. Then he scanned the ticket for the additional 33 percent off. A classic pair of English shoes that he said would never go out of style could be had for $630.25.

Thought that to be fair, I should head across Worth Avenue to see what Neiman Marcus’ sale was like. In the men’s and women’s departments, already marked down merchandise was being cleared out with the promise of an extra 25 percent off.

If you’ve got the green to spread around, seems like a good time to give your wardrobe a little boost at prices [that probably won't] get lower.

And the selection will definitely not be this good.

For further information, visit: http://www.palmbeachdailynews.com/blogs/content/shared-blogs/palmbeach/style1/entries/2009/06/22/high_style_low_prices.html?cxntfid=blogs_styleland

Some Big Chains Reconstruct to Accomodate Consumers During This Recession

June 22, 2009

Shopping as we know it is on the brink of major change.

Hammered by the recession, some of the nation’s biggest retailers are seizing the moment to reinvent their business strategies. And the impact will mean both sweeping changes in the merchandise on their shelves and subtler alterations, like how many pantyhose to keep in stock.

High-end stores like Neiman Marcus, Saks and Coach will offer more midpriced merchandise. Many chains, including Wal-Mart, will carry less inventory and fewer brands. The likes of Sears and J. C. Penney will put self-service computers in stores so customers can browse collections or buy out-of-stock items. And retailers of all stripes will offer more exclusive merchandise and more attentive customer service.

One of the biggest changes consumers are likely to see is greater personalization and regionalization of merchandise.

An initiative known as “My Macy’s” requires the retailer’s merchandisers and other planners to go into stores each week to learn from the sales staff — who keep logs at the cash registers — what shoppers are requesting, snapping up or complaining about.

For instance, when strapless and bare-shouldered dresses were selling well everywhere except Salt Lake City and Pittsburgh, Macy’s employees in those stores knew the problem was that their customers wanted more modest dresses. So they passed that information on to the merchandisers. Out went the strapless dresses; in came dresses with cap sleeves. And sales went from lackluster to robust.

Under the new system it will not be unusual for a local Macy’s to stock the merchandise customers request, be it wide-width shoes or Sean John suits, and for those offerings to be different from the ones in a Macy’s store 100 miles away.

“I think what Macy’s is embarking on is perhaps the largest transformation in our company in a couple of decades,” said Terry J. Lundgren, president and chief executive.

The Macy’s change is just one example of a wide range of initiatives retailers are pursuing as they struggle to cope with an economy where sales are lower than they were just a few years ago.

At high-end stores, the era of ever-escalating prices on luxury goods appears to be over. In the future, consumers will still be able to buy chic brand names, but at a wider range of prices.

“Our customer loves our brands,” said Stephen I. Sadove, chairman and chief executive of Saks. “They don’t want to trade down to lower brands. But they want more of a range in price within the brands that they love.”

And that is what retailers intend to give them. Burton M. Tansky, president and chief executive of Neiman Marcus Group, told investors on a conference call last week that “we’re working with the designers to try and ease a portion of their collections into a new price range.”

Prices will also be lower at some “affordable luxury” chains, like Coach, which is increasing the proportion of handbags it sells for less than $300. About 50 percent of the company’s handbags will cost $200 to $300, in contrast to about 30 percent of handbags last year.

Another change is that consumers will have fewer brands from which to choose. Wal-Mart, Target, Home Depot, and PetSmart are just a few of the chains winnowing their brands. As Home Depot’s executive vice president for merchandising, Craig Menear, put it: consumers are “time-starved” and “looking for simplification in the entire shopping experience.”

That may delight minimalists, because it will be easier to find items on the shelves. But it also limits choice.

Another potential drawback for consumers is that stores may run out of stock more quickly than in the past because, as Mr. Lundgren of Macy’s explained, “retailers learned that you can’t get out of the merchandise that you ordered months before.”

“Instead,” he said, “you’re more likely to see retailers ordering fewer of each individual size and taking that risk that they’ll sell out and not capture every sale, rather than the risk of having too much inventory left over to mark down.”

Another trend is on the horizon: seasonal transitions for apparel will probably have shorter lead times. With strapped consumers buying only what they need when they need it, it has occurred to retailers that selling swimsuits to New Yorkers in early March is not necessarily a winning strategy. And so chains are beginning to work with suppliers to shorten the time between ordering and delivering merchandise.

Consumers will also see even more of the exclusive collaborations between retailers and prominent designers that are so prevalent today. That will help distinguish stores as well as avoid price wars because the same items will not be sold at multiple chains.

Yet another change will be the obliteration of any remaining divide between online and in-store shopping.

In Sears stores, “appliance research centers” with computers are enabling customers to compare local competitors’ prices. (If Sears does not offer the best price, it will match the lowest offer and hand over 10 percent of the difference.) Four J. C. Penney stores in Dallas are testing “FindMore” machines the size of arcade games, letting customers see every item J. C. Penney sells and find out if the item they want is in the store or online.

Shopping by cellphone will also become widespread.

“Everything we are developing is with a mind-set that it’s going to be running on a handset,” said J. C. Penney’s chief information officer, Thomas M. Nealon.

Despite all the new technology, consumers will be getting more attention from sales staff. During the last few years, retailers did not have to work hard to separate consumers from their dollars.

But those days are over. More middle-market chains are striving for Nordstrom-quality service to win customers. Even Home Depot has adopted its “most extensive customer service training ever,” its chairman and chief executive, Frank Blake, told investors and retailing analysts last week.

Of course, luxury chains have always featured a high level of attentiveness. But the chains say that in this economy, customers have heightened expectations. Saks, for one, has invested tens of millions of dollars in the last year on software that provides its sales staff easy access to information about client purchases and preferences, so that a returning customer might be greeted by a sales representative who recalls the shopper’s suit size and penchant for Christian Louboutin heels.

Economists and analysts forecast that it will take up to 10 years to return to 2007 levels of consumer spending — which makes now a good time for retailers to re-imagine the future. Paul A. Laudicina, chairman and managing officer of A. T. Kearney, the management consulting firm, noted that major consumer innovations like Neoprene and Teflon came out of the Depression.

Mr. Lundgren pointed out that if consumers were still throwing money around, stores might not want to alter strategies that were still working.

But with today’s recession, he said, “now is the time to aggressively rock the boat.”

For further information, visit: http://www.nytimes.com/2009/06/20/business/20retail.html

Economic Crisis Calls For A Retail-Makeover

June 17, 2009

Fashion and retail executives are adding new ingredients like extensive customer data and streamlined websites to their marketing mix to get consumers to buy in the recession.

Yet the tried and true remain in the recipe, with an emphasis on quality and strategies such as holding back supply, said executives at the Reuters Global Luxury and Retail Summits this week.

“We are able to invest any amount to be able to produce something that is outstanding, that is our strategy,” Hermes Chief Executive Patrick Thomas said, adding that the key to the crisis was to remain focused on the long term.

“My financial strategy is making sure my grandchildren are proud of me,” he said.

Swiss watchmaker Hublot said its secret was to under-supply distributors.

“Never deliver what people need,” said its chief executive, Jean-Claude Biver. “Only give them half. You have to keep them hungry.”

Yet in a shift from the old model of luxury goods makers being dominated by their creative genius founders, some are warming up to the moves used by their lower-tier peers, said Milton Pedraza, chief executive of the Luxury Institute, a research organization that studies the luxury industry.

“This severe downturn really has been a catalyst for opening luxury executives’ minds from the Victorian age now into the 21st century,” Pedraza said. “What we’re seeing is … using the collective wisdom of your team, using the collective wisdom of your customers to drive and to help the creative genius.”

Saks Inc has embraced this approach, and Pedraza said it is paying off by allowing the luxury department store operator to suggest a light blue shirt to a customer it knows just bought a navy blue suit, for example.

Saks Chief Executive Steve Sadove said the company is speaking to customers and found out they are looking for a wider array of price points and better customer service.

“We have actually interviewed over 3,000 of them in terms of their mindset right now and how they are feeling … and I think we have learned quite a lot that has implications for both the ’09 holiday season and beyond,” Sadove said.

Saks is working harder to share that data with vendors and to localize its marketing, he said.

TINKERING AND TWEAKING

Aside from continuing to invest in its Nine West loyalty program, Jones Apparel Group Inc is broadening its array of casual shoes and enhancing its website.

Milton Pedraza said many high-end brands were now making their websites more streamlined and easy to navigate.

“They’re foregoing all the flash they used to put in front of their websites because it was like a 6-foot brick wall on the left lane of the Autobahn,” Pedraza said. “It took a while for the creative people to get that consumers want to get in and get out.”

Italian jewelry designer Roberto Coin launched a Capri Plus collection, offering pieces with identical designs but varying materials and price tags ranging from $2,500 to $50,000.

“We are saying, ‘put all five different price points (in the window) now … and let (customers) decide which price they feel comfortable with,” Coin said.

Liz Claiborne Inc is offering more lower-priced items at its Juicy Couture, Lucky Brand and Kate Spade brands and in some cases adding more basic designs to attract value-conscious consumers.

Yet for some, it is old-fashioned creativity that is guiding them through the retail storm.

“Over the last year or so I have just been feeling very inspired and creative,” said Jonathan Adler, who designs home decor pieces that are sold at Barneys New York and Neiman Marcus in addition to his own boutiques.

“Complacency is sort of the enemy of growth and a lot of businesses have grown complacent. So I think that this economic climate is a great climate to breed creativity.” For further information, visit: http://www.reuters.com/article/GlobalRetail09/idUSTRE55B5L020090612?pageNumber=1

Consumers Are Not The Only Ones Cutting Back

June 16, 2009

Consumers aren’t the only ones cutting back.

Retailers are reining in their spending — with most broadline players slashing millions from their budgets as they try to counter withering sales. Although some, such as Wal-Mart Stores Inc., continue to pump money into their businesses to grab market share, the majority are drastically slimming down within their business models.

And if consumer spending doesn’t bounce back, retailers will have to start making more drastic and ultimately transformational changes that could reshape the industry, said experts.

Sears Holdings Corp., Macy’s Inc., Dillard’s Inc., J.C. Penney Co., Saks Inc., Nordstrom Inc., and Target Corp. cut a collective $668 million in selling, general and administrative expenses in the first quarter, pushing their SG&A expense down 6.3 percent from a year earlier. That means fewer dollars supporting brands and driving foot traffic, the axing of information technology projects and cramped cross-country plane rides for executives who can’t afford to be seen in first or business class as they lay off workers.

“From travel to supplies to benefits to marketing to information technology, we’re leaving no stone unturned,” said Stephen I. Sadove, chairman and chief executive officer of Saks, which reduced first-quarter expenses by $44 million, more than it planned to cut for the whole year. “How we have always done it is irrelevant. We’re approaching every area of the business asking how should we do it going forward.”

Saks rival Neiman Marcus last week revealed plans to reduce expenses by $125 million a year. “Our team has done an excellent job of decreasing their spend,” said Burt Tansky, president and chief executive officer of Neiman Marcus. “We are undergoing a comprehensive process that we believe has been thoughtful and significant.”

About 60 percent of planned expense reductions already have been realized. Neiman’s cut $38 million from selling, general and administrative expenses in the most recent quarter versus its 2008 counterpart.

Sears, which has 3,900 doors under its namesake and Kmart brands and has been criticized in the last few years for not investing enough in its stores, is the industry’s most aggressive cost cutter. The firm surprised Wall Street with first-quarter earnings after it reduced advertising spending by $107 million and payroll and benefit expenses by $84 million.

Cuts are even being made in the off-price channel, despite the competitive advantage that comes from having a value orientation during the downturn. Earlier this year Stein Mart Inc. laid off 178 assistant managers, while the rest of its managerial staff took a 5 percent pay cut and store associates’ hours were cut by 17 percent. Like other retailers, the company stopped paying shareholders a dividend, eliminated its stock buyback plan and halted contributions to employees’ 401(k) retirement plans.

All of this feeds into a vicious economic cycle, where the slowdown in consumer spending prompts businesses to cut workers, increasing the ranks of the unemployed and further weakening spending. Department stores alone eliminated a total of 10,800 jobs in February, March and April, according to government statistics that adjust for seasonal variations in workforce. Last month, the department store channel actually added 4,500 positions, although specialty stores cut 3,300 jobs.

But to every cost-cutting trend, there are exceptions.

Wal-Mart and, to a lesser extent, Kohl’s Corp., actually spent more in the first quarter, investing in their businesses in hopes of grabbing market share while most of the competition is biding its time and many are slimming down their store portfolios.

Wal-Mart upped its operating, selling, general and administrative expenses by $386 million in the first quarter. That spending increase is almost exactly what Macy’s and Sears, the two biggest cost cutters, stripped away.

“This is still Wal-Mart’s game,” said Dean Hillier, consultant and a partner at A.T. Kearney. “They are definitely taking advantage of the circumstances. The market is certainly heading their way and it seems to be sticking somewhat. The others are in a tougher spot and therefore are having to do what they need to do to eke out their profitability.”

Retailers have tried to hide their newfound austerity from consumers by working on inventory controls and cutting corporate staff while attempting to maintain the shopping experience. But chains are now tiptoeing up to cost cuts and other changes that could change the character of the industry. Both Neiman’s and Saks, for instance, said their customers want to spend less while not switching to other brands, and the retailers are trying to accommodate them by urging brands to develop lower entry-level price points.

“If Saks were to go to a lower price-point item on the same brand, would that reduce the brand impact for Saks as a company?” wondered Hillier. “Retailers are pushed into a position now, quite frankly, where they have to take risks with their business. They’ve got to start placing strategic bets. This is a new reality that retailers are dealing with.”

The next cost-saving step for retailers would entail bigger, deeper cuts and strategic moves, such as the shuttering of whole divisions, he said. That’s already occurred for a number of specialty stores, and last month Abercrombie & Fitch Co. indicated it might join them, saying it was undertaking a strategic review of its fledgling Ruehl unit.

A survey by Credit Suisse showed cash capital spending at 80 retailers fell 14.4 percent last year, the first decline since 2002. Spending by specialty apparel retailers dropped 24.2 percent to $3.71 billion and is slated to fall another 34.8 percent this year. Mall anchors cut expenditures by 22.4 percent to $4.26 billion in 2008 and plan to slash another 37.4 percent this year.

Despite the decline in spending, apparel specialty stores are expected to increase their gross selling space by 1.9 percent this year to 784.2 million square feet, while mall anchors add 1.2 percent for 506 million square feet — even as analysts at Credit Suisse say both sectors already have too much selling space.

“Capacity is not coming out of the soft-lines space fast enough,” Credit Suisse said of the apparel specialty stores. “We believe many retailers in this group are now faced with structural issues, primarily that they have too many stores, and would expect a decrease in square footage in 2010 as retailers come to this realization.”

Chains wanting to save money need not look at just their own operations. They can also take new approaches with their suppliers.

The savings so far, as large as they’ve been, are just the tip of the iceberg, said David McTague, executive vice president of partnered brands at Liz Claiborne Inc.

“They haven’t even started yet; it should be in the billions of dollars,” McTague said at the company’s annual meeting.

Together, he said, retailers and vendors can move product more efficiently from factory to selling floor and better manage inventories.

The financial stress of the moment could help set new directions on both sides of the supply/retail divide.

“Hopefully it means that they’re open to a much more collaborative relationship,” McTague said. “It’s a zero-sum game. All of us are trying to move profit dollars. It’s forcing everyone to be a lot more creative.”

For now, though, major changes appear to be mostly in the future. The more immediate question is whether retailers are cutting wisely. And there’s plenty of room for error.

“Some retailers have cut too far because they’ve cut from the top down,” said Antony Karabus, ceo of Karabus Management, noting a 10 or 15 percent across-the-board cut will trim some areas too much and others not enough.

Spending varies across the industry, meaning each company will have to cut in its own way.

According to the Karabus SG&A Retail Benchmark study, which looked at spending across 68 chains for the fiscal year ended January 2008, merchandising expenses range from 0.8 percent to more than 3 percent of sales. Supply chain costs range anywhere from 1.2 percent to 3.5 percent of sales.

As retailers lay off workers, many are concentrating their regional field staffs; for instance, giving district managers more stores to oversee or eliminating a layer of management altogether, said Karabus.

For department stores the danger is an increasingly national stance when customers want local flavor and attention — which is what Macy’s Inc. is trying to prevent with its My Macy’s program.

“When you cut expenses as a department store, you’ve still got to make sure that you’re staying relevant to your local consumer,” Karabus said. “What you’re seeing with a number of chains is that they’re cutting significantly to become more national.”

For further information, visit: http://www.wwd.com/business-news/stores-cost-cutting-may-transform-retail-2167503#/article/business-news/stores-cost-cutting-may-transform-retail-2167503?page=2

Luxury And Department Stores Lead The Decline

June 6, 2009

Retailers struggle for sales in May only reflected the larger struggle that consumers face. Across the nations job losses are widespread and manufacturing sector continues to shed jobs.

Luxury and department store led the declines in May. Even the discount stores did not escape from the same store sales decline. Teenage retailers and select apparel stores managed to report monthly and year-to-date sales increase.

Abercrombie Fitch reported the worst same store sales decline of 28% followed by losses of 26.6% at Saks and 13.1% at Nordstrom.

Aeropostale sales increased 19% and at Ross gained 4%. The Gap, Target and Costco reported more than 6% decline in sales.

Target Corporation net retail sales in May decreased 2.3% to $4.46 billion from a prior year month. The comparable sales in May fell 6.1%.

Wal-Mart Stores will no longer declare monthly same store sales but will provide quarterly same store sales increase.

Department Stores Sales Decline Accelerate

Macy’s, Inc May same store sales fell 9.1%. Total sales declined 9.5% to $1.74 billion compared to $1.93 billion for the month of year ago.

For the year to date, total sales were $6.94 billion, a decrease of 9.5% from $7.67 billion from the year ago period. For the year-to-date same-store sales fell 9.1%.

Macy’s online sales in April gained 12.2% and for the year surged 15.2%.

J. C. Penney Company, Inc. reported comparable store sales decreased 8.2% for the four week period ended May 30 compared to a decline of 4.4% from a year ago month. Total sales in April declined 6.7%.

Sales for the first thirteen weeks declined 6.1% compared to a fall of 4.5% and comparable sales decreased 7.7% compared to a fall of 6.6% in the quarter a year ago.

For the five-week period ending July 4, 2009, the company expects same store sales to fall between 9% and 12%.

Kohl’s Corporation reported total sales for the four-week period ended May 30, 2009 increased 4.1% from a year ago. On a comparable basis same store sales fell 0.4% in the month.

Total sales for the year to-date rose 1.3% and on a comparable store basis, sales for the year decreased 3.2%.

Luxury Sales Drop the Most

Dillard’s, Inc. reported sales for the four weeks ended May 30, 2009 declined 14% to $430 million compared to a year ago period. Comparable same store sales fell 12%.

For the seventeen weeks ended May 30, sales decreased 15% to $1.47 billion from a year ago period. For the period, comparable same store sales declined 13%.

Saks Inc. total sales for the four weeks to May 30 decreased 25.8% to $166.1 million compared to $223.9 million in the month last year. Comparable store sales fell 26.6% for the month.

For the year-to-date ended May 30, 2009 total sales declined 26.7% to $781.1 million compared to $1,066.4 million in the prior year period. Comparable same store sales decreased 27.4% for the fiscal year.

Nordstrom, Inc. preliminary sales for the four-week period ended May 30 decreased 8.7% to $653 million from $716 million in the month a year ago. Same store sales fell 13.1% in the month.

Preliminary year-to-date sales decreased 9.1% to $2.36 billion compared to $2.59 billion in the first quarter 2008. For the year-to-date same store sales decreased 13.2%.

Teenage Apparel Retailers, the Only Gainers

Aeropostale, Inc. net sales for the four-week period ended May 30 increased 30% to $132.9 million from $102.3 million in the month a year ago. Same store sales increased 19% for the month meeting the sales rise in the month a year ago.

Year to date total net sales increased 23% to $541.0 million from $438.7 million in the year ago period. Year to date same store sales increased 13% compared to increase of 9% in the period of year ago.

American Eagle Outfitters, Inc. for the four-week period ended May 30 sales decreased 2% to $195.5 million from $200.0 million in the month a year ago.

Comparable same store sales decreased 7% in the month compared to a declined of 9% in the month a year ago.

Total year-to-date in the seventeen week period decreased 4% to $807.5 million compared to $840.4 million in the year ago period. Comparable same stores sales decreased 9% for the year compared to the same period last year.

Management reiterating guidance of second quarter earnings per share to be 12 cent to 15 cent compared to 29 cent last year.

Abercrombie & Fitch Co. reported net sales in the four-week period ended May 30 fell 22% to $182.1 million from $233.1 million prior month period. Comparable store sales decreased 28%. May direct-to-consumer total net sales decreased 10% to $15.6 million from a year ago month.

Year-to-date sales decreased 23% to $794.2 million from $1.033 billion in the year ago period. Comparable year-to-date sales fell 29%. For the year-to-date direct-to-consumer net sales decreased 19% to $64.7 million.

The Buckle, Inc. comparable sales in the months increased 13.4% from a year ago.

Net sales in the month increased 19.2% to $60.6 million from net sales of $50.8 million for the same period of year ago.

Year-to-date seventeen-week period comparable store net sales for the period ended May 30, 2009 increased 16.7% from the period a year ago. Net sales for the seventeen-week period ended May 30, 2009 increased 23.3% to $260.2 million from net sales of $211.1 million for the prior year period.

The Cato Corporation sales in the four-week period ending in May 30 decreased 3% to $78.1 million compared to $80.5 million for the four week period ended May 31, 2008. Comparable store sales for the month fell 3%.

Sales for the seventeen weeks ended May 30, 2009 increased 3% to $316.2 million from $306.3 million for the period of year ago. Year-to-date comparable store sales decreased 1% compared to the prior year.

The Children’s Place Retail Stores, Inc net sales in four-week period ending on May 30 decreased 7% to $101.7 million from $109.4 million a year ago. Comparable store sales for May decreased 9% compared to 12% increase in the month year ago.

Comparable store sales for May in the U.S. fell 9%, in Canada decreased 7% and online sales rose 1%.

The Gap, Inc. net sales declined 5% to $1.03 billion for the four-week period ended on May 30 compared with net sales of $1.09 billion for the same period a year ago.

The comparable store sales for May decreased 6% compared to fall of 14% in the prior year month.

Comparable store sales at Gap North America locations declined 11%, at Banana Republic North America fell 14%, at Old Navy North America rose 3% and at international locations fell 7%.

Year-to-date seventeen-week period ended May 30, 2009 net sales fell 7% to $4.16 billion compared with net sales of $4.47 billion in the year ago month and comparable sales in the year-to-date declined 7% and fell 12% in the quarter a year ago.

Hot Topic, Inc. reported comparable sales decreased 6.3% for four weeks period ended May 30, 2009. Net sales decreased 3.1% to $33.5 million compared to same period of year ago.

Destination Maternity Corp, formerly Mothers Work, Inc. net sales in May decreased 5.3% to $51.3 million from $54.2 million a year ago. Comparable store sales decreased 5.4% in the period compared to prior year month.

Limited Brands, Inc. comparable store sales fell 7% to $618.7 million for the five weeks ended May 30, 2009.

The company reported for the seventeen-week comparable store sales decreased 7% to $2.34 billion.

Stein Mart, Inc. comparable store sales in May rose 0.2%. Total sales fell 2.8% from a year ago month to $105.4 million.

Stage Stores, Inc. net sales in four-week period ending May 30 decreased 4.7% to $116.8 million from $122.6 million a year ago. Comparable store sales for May decreased 7.2% compared to 0.1% increase in the month year ago.

For the year-to-date comparable store sales fell 8.6% to $450.3 million from $476.1 million from year ago.

Discount Apparel Sales Sustain Momentum

The TJX Companies, Inc. May sales increased 4% to $1.49 billion.

For the seventeen-week period to May 30 sales increased 1% to $5.84 billion from a year ago. Comparable store sales for four-week period ended May 30, 2009 rose 5% and for seventeen-week period to May 30 comparable store sales increased 3% from year ago.

Ross Stores, Inc. May sales increased 10% to $564 million compared to $513 million a year ago. Same store sales rose 4% in the month.

For the seventeen weeks ended May 30, 2009 sales increased 9% to $2.26 billion from $2.07 billion in the nine weeks ended May 31, 2008. Comparable store sales increased 3%.

For further information, visit: http://www.123jump.com/market-update/Luxury,-Department-Stores-May-Sales-Weakest/33231/61

Discounts Did Not Boost Enough Sales

June 5, 2009

U.S. retailers continued to struggle with weak sales again last month as even heavy discounting at some pricier chains failed to lift the sector.

Discounters stood out as having the best results amid a bleak May. Some of the better performers were chains offering department-store cast-offs while luxury-goods companies and midpriced department store chains continued to suffer.

“What we’ve seen recently is a very strong sentiment and sensitivity toward value” said Tom Wyatt, president of Gap Inc.’s Old Navy division. The low-priced unit of Gap posted a 3% increase in sales even as its parent reported overall sales at stores open a year declined 6%.

TJX Cos. reported a 4% increase in stores open more than a year. Ross Stores Inc. posted a 4% increase, while Kohl’s Corp. reported a 1% decline from a year ago. Their showings illustrate “the discount apparel format is starting to emerge” from the decline in consumer spending, said Brendan Langan, an analyst at retail consultants Management Ventures Inc.

Still, overall sales at stores open at least a year, a closely watched measure of retail health, slid 4.4%, according to an index of 28 retailers compiled by Retail Metrics Inc. Results didn’t include industry behemoth Wal-Mart Stores Inc., which stopped releasing its monthly sales figures. By the same measure, April sales declined a less steep 2.7%.

Among those reporting declines, Target Corp. said same-store sales fell 6.1%, Costco Wholesale Corp. posted a U.S. same-store sales drop of 1% excluding fuel, and BJ’s Wholesale Club Inc. said sales fell 6.8% from a year ago. BJ’s said it faced a difficult comparison against higher gas prices last year.

In part, all retailers faced a similar hurdle compared with results from a year ago: Government checks, meant to boost the economy, had a positive impact on sales throughout the summer of 2008. “We didn’t have that boost this year,” said Thomson Reuters retail analyst Jharonne Martis.

May’s steeper slide may show retailers efforts to woo shoppers with discounts are being ignored. Hot Topic Inc., the teen retailer, discounted its denim prices by as much as 30% and 40%. Abercrombie & Fitch Co. shifted from its full-price strategy by erecting big summer clearance signs in front of stores. Yet neither returned high dividends: Same-store sales at Hot Topic fell 6.4% last month, and Abercrombie & Fitch reported a 28% decline, far more than analysts had predicted.

Aeropostale Inc. offered a rare bright spot among middle-tier, teen apparel retailers, posting a 19% increase in same-store sales. Buckle Inc. posted a 13.4% increase, its 22nd month of double-digit gains.

In the luxury sector, Saks Inc. and Nordstrom Inc. reported steep declines, reflecting the continued woes for high-end retailers. Mid-priced department stores did not fare much better. Dillard’s Inc. said same-store sales fell 12%, Bon-Ton Stores Inc. reported a 12.1% decline while at Macy’s Inc. same-store sales fell 9.1%

For further information, visit: http://online.wsj.com/article/SB124411973852585047.html

Steeper Declines In May Than Analysts Expected

June 5, 2009

Macy’s Inc., Dillard’s Inc. and Saks Inc. reported steeper May sales declines than analysts estimated as rising unemployment prompted U.S. consumers to save instead of spend. 

Sales at U.S. stores open at least a year fell 9.1 percent at Macy’s, the second-biggest U.S. department-store chain, compared with the 8.8 percent average of analysts’ estimates compiled by Retail Metrics Inc. Sales at Dillard’s department stores dropped 12 percent, a bigger decline than the 7 percent analyst projection. Luxury retailer Saks’s sales plunged 26.6 percent; analysts had predicted 14.5 percent, on average.

Consumers are still limiting purchases and allocating leftover funds to necessities rather than discretionary items, according to Brian Sozzi, an analyst at research firm Wall Street Strategies in New York. Sales at higher-end department stores slumped as shoppers cut purchases of handbags, shoes and clothes, forcing the chains to offer more and deeper discounts.

“Diminished job prospects, wealth evaporation and weak wage growth continues to be at the forefront of consumer psyche, meaning fewer dollars sloshing around the world of retail and lack of visibility into the back half of 2009,” Sozzi said in a June 1 note.

Macy’s fell 44 cents, or 3.3 percent, to $12.88 at 4:05 p.m. in New York Stock Exchange composite trading. Dillard’s declined 71 cents, or 6.9 percent, to $9.65. Saks fell 1 cent to $4.04. The Standard & Poor’s 500 Retailing Index declined 1.2 percent today, and has climbed 20 percent this year.

Saks, based in New York, has cut 1,100 jobs in recent months and said it would reduce merchandise orders 20 percent this year. Cincinnati-based Macy’s has slashed prices to clear inventories.

Retailers that managed to attract some consumer dollars included Aeropostale Inc., Gap Inc.’s Old Navy division and TJX Cos. Their May sales beat analysts’ estimates, helped by lower prices and a focus on value. Kohl’s Corp. and J.C. Penney Co. also exceeded predictions as the budget-conscious opted to shop at lower-priced department stores.

“Kohl’s and Penney’s may be pulling share from both the traditional department stores and from discounters,” Jeffrey Klinefelter, an analyst at Piper Jaffray Cos. in Minneapolis, said today in a telephone interview.

Retail Metrics said today that U.S. comparable-store sales in May dropped 4.4 percent, worse than its projected 3.6 percent decline. Yesterday, the Swampscott, Massachusetts-based researcher said that while housing, construction spending and new factory orders are coming in “less worse” than expected, retailers and consumers remain under pressure as job cuts continue.

May accounts for the smallest portion of retailers’ second-quarter sales, according to Betty Chen, an analyst at Wedbush Morgan Securities in San Francisco.

Wal-Mart Stores Inc., the world’s largest retailer, said on May 14 that sales at U.S. stores and its Sam’s Club membership warehouse division may rise as much as 3 percent in the 13 weeks through July 31. The chain stopped reporting monthly same-store sales as of May 1, citing the difficulty of predicting shoppers’ behavior.

U.S. consumer spending fell for a second straight month in April as concern over rising unemployment and record wealth destruction prompted households to boost savings rates to the highest level in 14 years, according to the Commerce Department. The 0.1 percent drop followed a 0.3 percent decrease in March, Commerce Department figures showed. The savings rate rose to 5.7 percent, spurred by an unexpected jump in incomes linked to the fiscal stimulus.

“Until people feel confident in their employment and feel confident in their ability to maintain their housing situation, they’re going to continue to rebuild their rainy-day fund to the extent that they possibly can, and that translates to higher savings rates,” said Bryan Eshelman, managing director in the retail practice at Alix Partners LP, a consulting firm.

Retailers continue to cut prices. Aeropostale was offering 20 percent off women’s dresses. American Eagle Outfitters Inc. was giving 50 percent off the purchase of a second graphic t- shirt.

Companies in the U.S. cut an estimated 532,000 workers from payrolls in May, according to yesterday’s ADP Employer Services report. Economists surveyed by Bloomberg predict the U.S. unemployment rate for May will rise to 9.2 percent from 8.9 percent in April.

Still, confidence among U.S. consumers jumped in May by the most in six years. The Conference Board’s index surged more than forecast to 54.9, the New York-based research group said May 26.

“There is a bit of unfounded optimism out there,” Eshelman said yesterday in a telephone interview. “Once this economy turns the corner, I think it will turn the corner rather quickly, but the conditions have just not aligned to get to that point.”

The International Council of Shopping Centers said that May same-store sales dropped 4.6 percent, more than its forecast of a 2 percent decline. The New York-based trade group’s figure is based on results at 32 chains.

The comparison to a year ago was difficult because federal tax rebate checks spurred more spending last May, Michael Niemira, chief economist at the ICSC, said today in a telephone interview. June sales may drop as much as 4 percent, he said.

For further information, visit: http://www.bloomberg.com/apps/news?pid=20601087&sid=a0rrp1uLy8B4