The Value of Michael Kors: $666 Million Man

March 13, 2012

Let's be clear: Michael Kors is on a pretty good run, but it's not that he hasn't had a few disappointments. He, for instance, is not a teacher in Ontario.

So far, they are the real winners in Kors' December IPO. The Ontario Teachers Pension Plan Board was the only named Kors investor that didn't sell stock in the public offering.

And so instead of getting $20 a share -- as Kors himself did when he sold off 5.8 million shares, raising $117 million -- the pension plan's 13.2 million shares are now worth $42.08 each.

Kors, sadly, sold at what now seems to be a low price.

He might have another chance to get a better valuation since he, along with chief executive officer John Idol and backers Silas Chou and Lawrence Stroll, also has a stake in the Michael Kors operations in China, Hong Kong, Macau and Taiwan, which were not part of the IPO.

And he has steady employment.

The designer's contract gives him a job for life, an annual salary of $2.5 million and creative control over products bearing his name, assuming he can stay on the right side of "commercially reasonable." (The Wall Street types apparently don't approve of art for art's sake.) Kors is also eligible for a bonus and certain "perquisites" including life insurance, health club membership, car and driver for business purposes and tax services.

It's not the deal scored by Tommy Hilfiger -- who received 1.5 percent of U.S. revenues over $48 million when his company was public -- but it seems to be enough for Kors to keep the heat on.

If he does have to dip into the piggybank, he still owns 15.8 million shares of the company that bears his name, or 8.3 percent of those outstanding. On paper, that's worth $666.8 million, so he could always buy half a million of his $1,295 shearling racing jackets to keep warm.

That's something, at least.

For more information, visit: http://www.wwd.com/fashion-blogs/michael_kors_the_666_million_m-12-02

Department Stores Play an Important Role in the Success of a Designer

March 13, 2012

“American Idol” has produced Grammy winners, but reality TV has yet to produce a designer with mass commercial success. By adding retail to the formula, NBC’s “Fashion Star,” premiering Tuesday, aims to make business part of the entertainment

“It’s the fashion version of ‘American Idol,’ a real business process,” said E.J. Johnston, a former IMG Fashion executive who created the show’s concept with producing partner James Deutch, a former Hearst Entertainment executive.

The grand prize, a $6 million contract with Macy’s, Saks Fifth Avenue and H&M, will be awarded to one of 14 contestants on the 10th episode finale. In addition, each week buyers can place orders after each runway presentation, and viewers can buy product online that night and in stores the next day.

“We like the idea of big entertainment with tangible prizes, not to mention viewers like instant gratification,” said Deutch. (The show was taped over the summer, allowing retailers time to produce the clothes.)

“With other shows, winners still need to find a way to make their business work,” said Johnston. “We wanted to show that dream-come-true moment where a buyer says ‘I want that,’ so we made them the judges.”

In addition to decision making on camera, buyers must bid against one another to carry a look exclusively. “I can honestly say the show was really competitive both from the design and the buying process,” said Nicole Christie, H&M’s communications manager who was one of the show’s “featured buyers.” “It’s like going to Sotheby’s. You have to act fast and outbid the competition,” said Terron E. Schaefer, Saks’ executive vice president and chief creative officer, also a featured buyer. But the advantages far outweighed the challenges. “It’s like a 10-hour commercial for Saks,” he said.

Noted Macy’s vice president-regional planning manager for women’s apparel Caprice Willard, “We’re on the cutting edge of new ways to find talent and bring fashion to viewers. It’s important that retailers be open [to it] because we have to evolve in order to stay relevant. Customers are armed with far more product knowledge than ever before, so it puts the onus on us to be one step ahead.”

For contestants, who ranged from designers at major fashion brands to bartenders, the show means a fast track to success. “Whether or not they progress to the finale, their success is limitless. I wouldn’t be surprised if some end up in Macy’s and other storefronts,” said Willard. “There were designers who sold hundreds of thousands of dollars who didn’t win the grand prize,” added Deutsch.

While it remains to be seen how the clothes will sell, all retailers were optimistic about their profitability. As for the show, it has sold to 25 countries, and producers are in discussions to develop foreign versions with local retailers. Deutsch and Johnston are now developing a similar show with a 1,000-door home goods retailer. Said Johnston, “There are thousands of fascinating processes out there to add entertainment to.”

For more information, visit: http://www.wwd.com/media-news/film-tv/retailers-have-roles-in-fashion-star-5789620

A Boost in Spending at Retail Stores and Malls

March 13, 2012

A Boost in Spending at Retail Stores and Malls

March 13, 2012

Specialty Retailers Add Jobs

October 8, 2010

WASHINGTON — Specialty retailers added jobs in September while department stores eliminated positions, the Labor Department said Friday.

Specialty retailers added 2,500 jobs to employ 1.39 million in September. Department stores eliminated 2,100 positions to employ 1.49 million. General merchandise stores, which include department stores, added 1,300 positions to employ 2.95 million.

In the broader economy employers cut 95,000 jobs in September, driven in part by the elimination of a significant number of temporary census jobs. Unemployment remained unchanged at 9.6 percent.

Deeper in the pipeline, textile mills making apparel fabric cut 500 jobs to employ 121,900. Textile product mills, which make mostly home furnishing and industrial fabric, added 200 jobs to employ 122,200. Apparel manufacturers eliminated 900 workers to employ 163,100.

For further information, visit: http://www.wwd.com/retail-news?module=tn#/article/business-news/specialty-retailers-add-jobs-3333146?navSection=retail-news

Lord & Taylor Said Eyeing Expansion

September 21, 2010

Lord and Taylor; Taylor is aiming to expand for the first time in about a decade.

Sources said the retailer is seeking a second location in Westchester County, N.Y., largely based on the success of its Scarsdale branch in Westchester. That unit is the chain’s best-performing branch store. It is said to generate between $90 million and $100 million in annual sales, ranking second in volume behind L&T’s Fifth Avenue flagship.

The retail chain owns the 180,000-square-foot Scarsdale location, both land and building. However, a source noted it can not be expanded.

“They feel there is more opportunity for business in Westchester,” said the source.

L&T executives declined to comment.

The last time L&T opened a store was in 2000 in Willow Bend, Tex., which is in the Dallas metropolitan area. The unit closed a couple of years later.

The retailer operates 46 full-line stores and one outlet, which opened in February in Elizabeth, N.J. NRDC Equity Partners, L&T’s parent, committed to spending $250 million to renovate the current fleet of stores. The 650,000-square-foot Fifth Avenue flagship is getting $150 million of that money to overhaul the main, second and 10th floors in an effort to attract younger shoppers in addition to its core shoppers, and this year has been citing sales gains ahead of the industry average.

L&T is said to do best in suburban locations, where it has a long history. The chain was among the first fashion department stores to open a branch in the U.S. — in 1941 in Manhasset, N.Y.

For further information, visit: http://www.wwd.com/retail-news?module=tn#/article/retail-news/lord-taylor-said-eyeing-expansion-3281957?navSection=retail-news

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

Slight Increase For Employment in the Retail Sector

June 5, 2009

Retailers shed 17,500 positions last month, compared with 36,500 in April as job losses mitigated across most retail categories and a few marked employment gains, according to U.S. Labor Department data Friday.

Retail unemployment in May fell to 9.5%, from 9.6% in April, on a seasonally unadjusted basis. The last time the rate fell was April 2008, when it dropped to 4.8% from 5.4% in March.

Department stores, which have been among the biggest job shedders among retailers, saw the biggest turnaround, adding 4,500 jobs in May.

Department stores are part of a general merchandise group that added a total of 6,900 jobs. Miscellaneous store retailers, a group that includes office supply, pet and gift stores, added 3,000 positions. Non-store retailers, mostly Internet concerns, gained 300 jobs.

The nine other retail categories the Labor Department tracks all marked drops. They were led by motor vehicle and parts dealers, at 8,900, or over half the May job losses. The group is being hit by the bankruptcy protection filing of Chrysler LLC, the troubles at General Motors Corp., which filed for Chapter 11 this week, and the general sluggishness in the auto industry.

Home furnishings and furniture stores continued struggling, with 5,000 losses. Electronic stores saw about 3,000 jobs shed, as did building material and garden supply stores.

The overall picture, though, is promising, but tenuous. With stores cutting back openings, not replacing departing staff and shutting down altogether, employment conditions for the industry may not snap back very quickly. Just Thursday, retailers reported their same-store-sales for last month dropped 4.8%, when a 4.1% decline was expected.

“The swiftness of the improvement in retail unemployment during May certainly took me by surprise,” said Scott Anderson, senior economist at Wells Fargo. “You’ll probably not see as big an improvement each month going forward, but this is the start of a firming up – what we need for an overall economic recovery to develop.”

Retail is a very closely watched industry because consumer spending makes up over 70% of the gross domestic product, which consists of total purchases for goods produced by the U.S. The retail sector’s unemployment rate at 9.5%, is still higher than the nation’s overall unemployment level of 9.1% on a non-seasonally adjusted basis.

With 14.8 million workers, the retail sector stands as the nation’s third biggest employer, behind government and health care, but retail employment is at its lowest in over a decade.

The retail industry has now lost three-quarters of a million jobs since the recession began in December 2007, accounting for 12.5% of the total 6 million positions that have been shed by U.S. employers over that period.

The number of retail employees in the U.S. peaked in November 2007 at 15.6 million and is now at is lowest level since January 1999. The month with the most retail job losses so far during the recession was November 2008, when 91,000 jobs were shed. During November, the start of the last Christmas holiday season, through April, 381,000 retail positions were lost, for an average of 63,500 a month, making May well below the six month average.

For further information, visit: http://wiadomosci.onet.pl/1985205,10,us_retail_industry_job_losses_lessen_unemployment_rate_falls,item.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