Macy’s Names Ongman EVP

September 23, 2010

Macy’s on Tuesday named Patti Ongman executive vice president and general merchandise manager for center core, overseeing the merchandising for handbags, fashion accessories, hosiery, watches, fashion jewelry and fine jewelry.

Ongman has served as executive vice president and general planning manager for cosmetics, fragrances and shoes since May 2009. Her successor has not been named. She succeeds Richard Arnstein, who was recently named executive vice president and gmm for men’s. Ongman will report to Jeff Gennette, chief merchandising officer and start her new job Oct. 1.

Ongman joined Macy’s in 1981 as a sales manager in the Northlake store in the Atlanta area. She rose to divisional merchandise manager, a regional vice president of the home store division and gmm, among other jobs.

For further information, visit: http://www.wwd.com/retail-news?module=tn#/article/retail-news/macys-names-ongman-evp-3294408

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

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

Sample Sales Are No Longer Exclusive

June 9, 2009

It’s the summer of the sale. Designers and retailers saddled with extra merchandise that didn’t move because of the economic downturn are trying to get rid of it — at steep discounts.

Last week, Gabay’s Outlet in the East Village (225 First Ave., gabaysoutlet.com) became a temporary downtown Henri Bendel outpost when it received huge shipments of designer denim, dresses and signature Bendel knits from the uptown luxury retailer, all marked down by 50% to 80%.

This month alone promises more than 20 sample sales, including designers like Gucci, Prada and Rag & Bone.

“I think we’re reaching a peak right now,” says Kathryn Finney, founder of thebudgetfashionista.com. Her prediction: This kind of leftover glut won’t happen again!

“I think toward the end of the year, we won’t see that many crazy, wacky sales — not at the level we’re seeing now,” says Finney (above). “I think the recession really took the retail industry by surprise and a lot of retailers have adjusted production for fall/winter.”

She’s got a few tips for maneuvering the bargain basements:

How do you find out about sample sales?

A lot of high-end designers, like Vera Wang, Prada, DVF, Vivienne Westwood and Ferragamo, are marketing their sample sales. In a given week we get 30 to 40 notices of sample and warehouse sales. Prada’s sample on Sullivan St. used to be very exclusive and you had to really be in the know. Now, you don’t have to be an insider. Go to thebudgetfashionista.com/sales for an up-to-date listing.

What kinds of deals are you seeing at sample sales and discount retailers?

There are definitely better deals on more luxury pieces and better selection. It used to be at sample sales that unless you went first day, all that was left was the stuff you didn’t want.

Now it’s actually stuff you want. You can find Ferragamo shoes for $50 to $75, Vera Wang wedding dresses for $300 to $400.

Why are we seeing such steep sales, especially from luxury brands that don’t normally get marked down?

They produced all these things they couldn’t sell, so I think that’s why we’re seeing a lot of these warehouse and stock sales. All the gluttony of things they couldn’t sell six months ago — they’re trying to clear their warehouses.

This was stuff that was made to sell, stuff that is left over in their stock, and they need to move it. It costs money to store the merchandise, and the longer it sits there the more it costs them. So it’s better to get rid of it, which is why you find things at Gabay’s.

Are there still deals to be found shopping at the major department stores?

Department stores are offering coupons, especially if you have a store credit card, because people aren’t using them right now. If you buy at Macy’s with your store card and, say, they’re having a sale in three or four days, you can buy it on sale that day and they’ll ship it to you later when it goes on sale.

You don’t even have to be there for the sale — it’s called a presale. And you can get alterations done under presale. This is what they’re offering in order to generate loyalty.

You can negotiate other perks, like free shipping and free alterations, in addition to the discount. Before you go to any store, you should go to their Web site for coupons.

Lord & Taylor has really good deals. They have sales every week. You can get coupons online (lordandtaylor.com) and you don’t need a store credit card to use them.

For further information, visit: http://www.nydailynews.com/lifestyle/fashion/2009/06/04/2009-06-04_sample_sale_frenzy_.html

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

The End Of May Results For Retail

June 5, 2009

Macy’s Inc. reported a 9.1 percent drop in same-store sales in May, as consumers continued to put off unnecessary spending.

The Cincinnati-based department store chain said sales at stores open at least a year are in line with management expectations. Total sales declined to $1.7 billion from $1.9 billion a year ago, or 9.5 percent.

For the year, Macy’s said its same-store sales declined by 9.1 percent, with total sales down 9.5 percent, to $6.9 billion from $7.7 billion.

Macy’s, like most retailers, has been struggling to attract parsimonious shoppers while not giving away the store through deep discounts, a strategy that erodes profit margins. But recent reports regarding rising manufacturing activity and home sales gave a lift to retail stocks earlier in the week, based on hopes that consumers may be encouraged to go out and splurge on a few summer items.

Total May retail sales were projected to drop by 3.6 percent, according to Retail Metrics, a Massachusetts firm that tracks store sales. This compares with a 2.7 percent decline in April. Department stores were forecast to post the weakest results, down 8.5 percent, with “discretionary spending still in hiding,” according to its monthly report.

The retailer has projected full-year profits of 40 cents to 55 cents per share, excluding restructuring costs stemming from its companywide reorganization, part of its My Macy’s merchandising program. That said, Macy’s hedged that it will beat this guidance if the economy improves in the second half of the year. Annual sales, it has said, are expected to decline by 6 percent to 8 percent, with spring expected to be weaker than the fall, in part due to stronger performances last spring.

Macy’s operates roughly 845 department stores under the names Macy’s and Bloomingdale’s.

Other retailers reporting recent sales figures:

• Target Corp. said its May same-store sales fell 6.1 percent from the same month a year ago. Total sales, at $4.56 billion, were down 2.3 percent from May 2008. Target has consistently posted monthly same-store sales declines during the recession, as consumers have pulled back their spending on clothes, home furnishings and some of the other discretionary items that had boosted the company’s sales during better times.

• Kohl’s Corp. said its comparable store sales in May decreased by 0.4 percent and total sales increased 4.1 percent, better than management had expected. The Menomonee Falls, Wis.-based retailer (NYSE: KSS) said Thursday sales for the four-week month ending May 31 were $1.26 billion, compared with $1.21 billion in the same period of 2008. Year-to-date sales also are ahead of 2008 at $4.9 billion, compared with $4.8 billion in 2008, an increase of 1.3 percent. Comparable store sales year-to-date decreased 3.2 percent, Kohl’s said.

• Gap Inc. said that its comparable-store sales were down 6 percent year over year in May, and net sales were down 5 percent to $1.03 billion. Gap North American and Banana Republic were hit the hardest in comparable-store sales — going down 11 percent and 14 percent, respectively. International sales were down 7 percent. Old Navy was the one Gap brand that saw an increase — It was up 3 percent.

For further information, visit: http://www.bizjournals.com/louisville/stories/2009/06/01/daily36.html

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

The End Of May Results For Retail

June 5, 2009

Macy’s Inc. reported a 9.1 percent drop in same-store sales in May, as consumers continued to put off unnecessary spending.

The Cincinnati-based department store chain said sales at stores open at least a year are in line with management expectations. Total sales declined to $1.7 billion from $1.9 billion a year ago, or 9.5 percent.

For the year, Macy’s said its same-store sales declined by 9.1 percent, with total sales down 9.5 percent, to $6.9 billion from $7.7 billion.

Macy’s, like most retailers, has been struggling to attract parsimonious shoppers while not giving away the store through deep discounts, a strategy that erodes profit margins. But recent reports regarding rising manufacturing activity and home sales gave a lift to retail stocks earlier in the week, based on hopes that consumers may be encouraged to go out and splurge on a few summer items.

Total May retail sales were projected to drop by 3.6 percent, according to Retail Metrics, a Massachusetts firm that tracks store sales. This compares with a 2.7 percent decline in April. Department stores were forecast to post the weakest results, down 8.5 percent, with “discretionary spending still in hiding,” according to its monthly report.

The retailer has projected full-year profits of 40 cents to 55 cents per share, excluding restructuring costs stemming from its companywide reorganization, part of its My Macy’s merchandising program. That said, Macy’s hedged that it will beat this guidance if the economy improves in the second half of the year. Annual sales, it has said, are expected to decline by 6 percent to 8 percent, with spring expected to be weaker than the fall, in part due to stronger performances last spring.

Macy’s operates roughly 845 department stores under the names Macy’s and Bloomingdale’s.

Other retailers reporting recent sales figures:

• Target Corp. said its May same-store sales fell 6.1 percent from the same month a year ago. Total sales, at $4.56 billion, were down 2.3 percent from May 2008. Target has consistently posted monthly same-store sales declines during the recession, as consumers have pulled back their spending on clothes, home furnishings and some of the other discretionary items that had boosted the company’s sales during better times.

• Kohl’s Corp. said its comparable store sales in May decreased by 0.4 percent and total sales increased 4.1 percent, better than management had expected. The Menomonee Falls, Wis.-based retailer (NYSE: KSS) said Thursday sales for the four-week month ending May 31 were $1.26 billion, compared with $1.21 billion in the same period of 2008. Year-to-date sales also are ahead of 2008 at $4.9 billion, compared with $4.8 billion in 2008, an increase of 1.3 percent. Comparable store sales year-to-date decreased 3.2 percent, Kohl’s said.

• Gap Inc. said that its comparable-store sales were down 6 percent year over year in May, and net sales were down 5 percent to $1.03 billion. Gap North American and Banana Republic were hit the hardest in comparable-store sales — going down 11 percent and 14 percent, respectively. International sales were down 7 percent. Old Navy was the one Gap brand that saw an increase — It was up 3 percent.

For further information, visit: http://www.bizjournals.com/louisville/stories/2009/06/01/daily36.html

No High Hopes For A Better Christmas This Year

June 4, 2009

May’s disappointing same-store-sales are exacerbating jitters about the all-important Christmas season, as consumers continue to pare purchases at a time when many retailers are planning or booking their orders for the holidays.

With the year nearly half gone and each passing month showing sales declines, Madison Riley, senior partner at retail consulting firm Kurt Salmon Associates, said he didn’t “know if we will see a better Christmas from 2008.”

Without data from Wal-Mart Stores Inc. (WMT), which as of May stopped issuing monthly same-store sales figures, comparable store sales for the other 30 retailers that Thompson Reuters tracks fell 4.8%, compared with expectations for a 4.1% decline.

The poor numbers may force retailers to reduce already spartan inventory plans further to avoid the 2.8% drop in holiday sales they rang up last year and the margin crushing markdowns they had to take to move excess inventory. The Christmas season can account for a third or more of retailers’ annual sales.

Retailers are aware of the risks and are trying to act accordingly, but it is tough given no consistent signs of an economic turnaround.

“We expect our average inventory position for the fourth quarter to be below last year’s fourth-quarter levels, and that our consumer messaging will continue to highlight J.C. Penney’s (JCP) stepped up style and value proposition,” said Darcie Brossart, spokeswomen for the giant department store chain.

Macy’s Inc. (M), at least right now, is sticking to a projection it gave earlier this year for same-store sales to drop 6% to 8% in fiscal 2009, with fall expected to be stronger than spring. “Merchandise and inventories are planned consistent with our guidance,” said spokesman Jim Sluzewski.

As for getting the word out, highly promotional Macy’s is still considering just how dramatic its approach will be. “Holiday marketing plans will be announced shortly before the season begins,” Sluzewski said.

Lead times vary for retailers, with the upper-end generally making commitments sooner, while lower-end retailers have much more latitude.

“We buy very close to need and opportunistically react to market trends in doing so,” said Sherry Lang, senior vice president of investor relations at TJX Cos. (TJX), parent of off-price stores Marshalls and T.J. Maxx.

Wal-Mart representatives declined to discuss the chain’s holiday plans.

In general, though, shoppers should expect less merchandise this year after many retailers went into the 2008 holiday season way overbooked.

The three big months for bulking up on Christmas time inventory are August through October, said J. Craig Shearman, vice president for government affairs at the National Retail Federation.

The majority of merchandise – including apparel, appliances, consumer electronics and home furnishings – comes from overseas, and for each of the three big months for receiving holiday merchandise, cargo traffic is expected to drop in the 16.5% area compared with the year before.

“This gives you insight into (the) inventory retailers are thinking about – less on expectations of less buying,” Shearman said.

Fewer goods in stores does not necessarily mean less discounting, said Craig Rowley, global practice leader for retail at the Hay Group. “We aren’t really seeing sale trends improve enough to support a very robust Christmas.”

Retailers may end up beginning big promotions earlier in the holiday season this year “to prevent massive markdowns at the end,” Rowley said. “Vendors may have a terrible Christmas. If their merchandise isn’t selling in November, we could see cancelled orders.”

What retailers are doing is “staying on top of trend,” Rowley said.

Right now the trend is accessorizing what’s already in the home or the closet, not buying whole outfits, furniture sets or entertainment systems.

“People are looking to supplement and will continue to for the foreseeable future,” said Riley of Kurt Salmon. “They are willing to buy, but still want to pay less for quality and items, like exclusives, that are different from what they already have.”

The retailers that hit it right could actually end up short of inventory, Riley said, but “this Christmas, conservative is the right stance to take.”

For further information, visit: http://online.wsj.com/article/BT-CO-20090604-715048.html