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June Sales Fall

June 25, 2009

Although 31 per cent of retailers said year-on-year sales volumes rose in the first two weeks of June, 48 per cent said they were down.

It was the second consecutive month that the survey recorded a fall in retail sales, after a surprise lift in April.

The CBI said the decline was broadly in line with retailers’ expectations and that it was no worse than in May and less severe than falls recorded between July 2008 and March 2009.

Grocers continued to deliver the strongest performance, with more than half of respondents reporting growth on a year ago.

Furniture & carpets was the only other sector to report growth, with a balance of 19 per cent reporting sales growth — the sector’s best figure for 18 months.

There were particularly marked declines in durable household goods, with a balance of -91% reporting lower sales,hardware, china & DIY (-39%) and clothing (-46%).

Asda chief operating officer and chairman of the CBI Distributive Trades Panel Andy Clarke said: “June’s weak sales figures show that business on the high street isn’t getting any easier. The one consolation for retailers is, it isn’t getting any worse, and the dark days of the winter are behind us.

“It is too early to foresee a sustained pick-up in retailers’ fortunes over the coming months, and the savviest retailers will continue working hard to offer consumers the best possible value for money.”

For further information, visit: http://www.retail-week.com/data/monthly-sales-data/cbi-distributive-trades-survey/retailers-report-falling-sales-in-june-survey/5003820.article

Meijers Celebrating Their 75th Anniversary

June 25, 2009

To celebrate its 75th anniversary, retailer Meijer Inc. plans to hold a block party from 11 a.m. to 2 p.m. Saturday at each of its 189 stores throughout the Midwest.

The company plans to treat shoppers to free hot dog meals, food samplings, giveaways, music, games and other activities.

Meijer operates four stores in Louisville and two in Southern Indiana.

“We started as one small store 75 years ago this June,” Frank Guglielmi, director of public relations for Grand Rapids Mich.-based Meijer, said in a news release. “We wanted our celebration to reflect the personal relationship Meijer has always had with its loyal customers.”

The chain began in 1934 when Hendrik Meijer, then 50 years old, decided to open a grocery store next to his barbershop in Greenville, Mich. The chain grew to become one of the largest privately held companies in the country.

For further information, visit: http://www.bizjournals.com/louisville/stories/2009/06/22/daily43.html?surround=lfn&ana=test

Innovation At Kmart

June 24, 2009

Kmart has launched KmartDesign.com to give consumers an inside look into the design process at the company.

The site features unscripted documentaries of Kmart designers sharing personal stories and image galleries.

Kmart is utilizing social networking to get the word out about KmartDesign.com.

“I think we started with a tweet,” said Lisa Schultz, EVP apparel design at Sears Holdings. “It just said, ‘Kmart Design? You might be pleasantly surprised’ and linked to the documentaries. It was exciting.”

For further information, visit: http://www.retailingtoday.com/story.aspx?id=107615&section=ApparelAccessories

Talbot & CEO Pension

June 24, 2009

Some eyebrows have been raised after a decision by the Talbots Inc. board to pay chief executive Trudy Sullivan $1.2 million (six payments of $200,000 over a six-month period) to compensate her for a cut in retirement benefits. Ms. Sullivan saw her earning power take a hit after the company froze its pension and executive retirement plans in a cost-cutting move.

According to a Boston Business Journal report, Talbots’ board said it approved the payment because it was “required to provide a substantially comparable benefit” due to recent changes that had affected Ms. Sullivan’s pension and supplemental executive retirement plan.

Talbots, like many other retailers, has struggled during the recession and has taken a number of steps to improve its position including cutting 695 jobs (325 in the past two weeks), freezing benefits, closing underperforming locations and finding a buyer for its J. Jill chain earlier this month.

Ms. Sullivan, who earned a base salary of $1 million in 2008 also received $4.7 million from stock sales and additional compensation, according to a Boston Globe report.


Giving Apparel Manufacturers A Chance From This Phenomenal Change, Also Known As The Recession

June 24, 2009

Apparel manufacturers have had a rough year because a deteriorating consumer spending environment exacerbated issues stemming from already-tough industry dynamics. Although we expect the macroeconomic pressures to eventually subside, we believe that the firms with the most potential to rebound after the downturn have adapted well to secular changes in the industry by keeping their brands relevant and consumers engaged.

Top- and Bottom-Line Pressure

Several changes have occurred in apparel retail in recent years, which has negatively affected wholesalers. Apparel makers’ brands, once the dominant merchandise at department stores, began to feel the pinch in the mid-2000s as a wave of department store consolidation resulted in a number of store closures and increased buying power from wholesalers’ main retail customers. In an effort to differentiate products from competitors, department stores also pushed branded apparel aside in favor of private- or exclusive-label merchandise. We believe the increased popularity of specialty retailers among shoppers also negatively affected department stores and apparel manufacturers in turn.

While apparel manufacturers were adapting to these changes in the retail sector, the macroeconomic environment began to deteriorate. Manufacturers’ retail customers cut orders sharply as demand for discretionary products waned amid the downturn, creating additional pressure on sales. Retail bankruptcies, such as Goody’s and Mervyn’s, have also hurt apparel manufacturers’ revenues. In addition, profitability has suffered because of retailers’ push for additional concessions on price after running steep promotions to drive traffic. As a result, apparel makers have reported fairly substantial gross margin compression in recent quarters, especially during the extremely promotional 2008 holiday season.

To help preserve margins, there have been several rounds of cost-cutting as well as decreased inventory levels at apparel manufacturers. Some firms, such as Liz Claiborne and Jones Apparel, have divested or discontinued unprofitable lines to help lower expenses and boost cash flow, undoing a lot of the growth via acquisitions during the last several years.

Our Near- and Long-Term Outlook

We expect these macroeconomic pressures to persist in the near term, leading to muted performance at apparel manufacturers. We also believe more retail bankruptcies are likely to surface given that we see no immediate rebound in consumer spending. Even at healthier firms, such as VF , management teams continue to search for cost-cutting opportunities to mitigate some of the margin compression associated with a shrinking revenue base. We also expect further inventory reductions that should boost cash flow as retailers and manufacturers alike try to adjust to sell-through patterns. Although the retail environment should remain quite promotional to drive traffic, we believe the magnitude of markdowns should improve as 2009 progresses and inventory levels become more in line with demand. This should also help to slowly wean consumers off of the sale signs that they have become used to seeing.

Although we expect discounts to subside somewhat, pricing should still be an issue longer term. To avoid heavy markdowns at the end of each season, we have seen some manufacturers working with retailers in an arrangement to open at a lower price point right out of the gate. Even though promotional activity will still be part of the sales cycle, this should help create more stable merchandise margins for both parties and improve the planning process. Additionally, we believe the days of brand ubiquity are over. In our opinion, brands will have to fight harder in order to keep their floor space, considering that department stores are quick to move to stock the labels that consumers prefer in order to compete with other department stores and specialty retailers. We also believe that stores will continue to emphasize private and exclusive labels, and expect apparel manufacturers to attempt to profit from this phenomenon. We have seen firms keen to partner with retailers recently, including Polo Ralph Lauren creating and launching the American Living brand solely for J.C. Penney. Jones Apparel has repositioned its l.e.i. brand to be an exclusive label at Wal-Mart.

That said, we believe that there will always be a place for branded apparel at department stores. We think the most successful companies will be ones with solid portfolios that have successfully kept them relevant amid a changing industry landscape and fickle consumer tastes.

Polo Ralph Lauren and VF (both discussed below) are a couple of our favorites. Meanwhile, we believe that firms such as Liz Claiborne and Jones Apparel have an uphill battle because we think that they have lost touch with their core customer and must reconnect with women during an environment where shoppers are reluctant to open their wallets.

Polo Ralph Lauren Fair Value Uncertainty Rating: High | Price/Fair Value Estimate Ratio: 0.98* | 3 Stars

We like Polo Ralph Lauren because of its long track record in keeping consumers’ interest and its success in maintaining a presence in virtually all price points without materially diluting the brand. We believe this expertise in brand management earns the company a narrow moat. Although Polo has not been immune to the pullback in consumer spending, it has been delivering more resilient figures than other firms in the industry. We think its lower-priced offerings, such as Chaps and American Living, should perform well in this environment.

VF Fair Value Uncertainty Rating: High | Price/Fair Value Estimate Ratio: 0.60* | 4 Stars
We think VF has done a great job of realigning its brand portfolio by divesting unprofitable businesses such as its intimate apparel segment, while making major turnarounds in other brands such as The North Face. In our opinion, the company has earned a narrow moat with its well-diversified portfolio and proven track record in brand building. We believe the company is well-positioned to weather the downturn because of its strong balance sheet, expansive geographic and sales channel reach, and prudent expense and inventory management.

*Price/fair value estimate ratios calculated using fair value estimates and closing prices as of June 22, 2009.

For further information, visit: http://ca.biz.yahoo.com/ms/090624/296222.html?.v=1

Take A Closer Look At Retailers During The Recession

June 24, 2009

With the economy on the mend, retailers in general probably deserve a closer look. One company that strikes my fancy is Target. Its vast merchandise selection, competitive prices and large reach are three positives that simply shouldn’t be ignored. As for apparel retailers, some have made headlines recently after reporting earnings that exceeded expectations. Is now the time to be playing in that sandbox? With that in mind, here are a few of the big names in apparel.

J. Crew Group: The New York based company sells fashionable shirts, pants, sport coats and other items. And according to the company’s first-quarter earnings release, as of May 28 it operated more than 200 retail stores.

Of course, that’s not the only thing that stood out about the company’s first quarter. Excluding items it earned 34 cents a share, nicely ahead of the analyst expectations of just 11 cents. We can’t know whether or not it can or will beat expectations again in coming quarters, however, if recent history is any indicator, there’s a good possibility. Note that in three of the last four quarters J. Crew has actually beaten expectations.

The momentum in the stock over the last couple of months or so (it’s up sharply from its lows) is also intriguing and investors could be attracted to the shares as they often like to jump on winning bandwagons. A word of caution , however, is that the stock isn’t cheap. The company currently trades at about 26 times the current year estimate of 94 cents.

Men’s Wearhouse: The Houston-based suit retailer’s stock has received a pretty good dressing down over the last couple of years or so, as is particularly obvious from looking at a simple chart. However, it easily surpassed expectations in its first quarter, which was released earlier this month. In the period it earned 10 cents per share. That was far beyond the 1 cent loss that Wall Street was expecting.

Kenneth Cole: The New York based company sells shirts, pants and shoes and has sports retail stores. Excluding items, the company posted a loss of 41 cents a share in its first (and latest) quarter. That was a penny better than expectations.

This is no small thing, it’s expected to lose money this year and post earnings of just 18 cents next year. And that’s not enough to get me motivated and off the sidelines. In addition, the shares trade in the mid-single digits. Not that this is any type of death knell, but if the stock were to slip below the $5 mark, it could fall off the radar screen of some potential institutional investors.

For further information, visit: http://stocks.investopedia.com/stock-analysis/2009/Time-To-Shop-The-Clothing-Retailers-MW-TGT-KCP-JCG0623.aspx

Abercrombie & Look Regulations

June 24, 2009

A British student who worked for U.S. retailer Abercrombie&Fitch Co. in London said Wednesday she was discriminated against because she has a prosthetic arm.

Riam Dean is seeking up to 25,000 pounds ($41,000) in damages at an employment tribunal.

Dean, a 22-year-old law student at the University of London, told the tribunal she worked at Abercrombie’s store on London’s posh Saville Row and had been given permission to wear a sweater to cover her prosthetic arm.

After a few days Dean said she was told she was breaking the company’s “look policy” and was asked to work in the stockroom.

Dean said the company gave new employees a thick guidebook dictating everything from how employees should wear their hair to the length of their fingernails.

“I have worn a prosthetic arm since I was 3 years old,” she said. “It was part of me, not a cosmetic.”

Abercrombie&Fitch said in a statement it “has a strong anti-discrimination and anti-harassment policy.” It said Dean’s account of what happened was inaccurate.

The New Albany, Ohio-based company is known for its edgy advertisements and shops with nightclub atmosphere. It has faced criticism in the past by those who claim it deliberately selects young, good-looking people to work in its stores.

In 2004 it spent $50 million to settle a number of employment discrimination lawsuits in the United States.

The hearing began Wednesday and is expected to last for three days.


The “look policy” of the all-American fashion store Abercrombie & Fitch, which has been accused of banning a disabled sales assistant from working on the shop floor because she has a prosthetic arm, says employees must “maintain a consistent level of dress and grooming that represents what people expect from [the brand]“.

Both male and female employees are expected to have “a clean, natural, classic hairstyle”, and make-up must “enhance natural features and create a fresh, natural appearance”.

Fingernails must be “clean and presentable” and “should not extend more than one quarter-inch beyond the tip of the finger”.

The policy forbids coloured fingernail polish and says toenail polish “may be worn in an appropriate colour”. The policy, set out in the staff handbook, does not specify which shades are appropriate and staff are advised to ask a manager.

Facial hair is banned and inconspicuous tattoos are acceptable only if “they represent the Abercrombie” look, the employment tribunal was told in documents.

Riam Dean, a law student from Greenford, west London, is suing the firm for disability discrimination.

For further information, visit: http://new.u.tv/Business/Abercrombie-Fitch-the-look-policy/78bad7db-c573-473f-99d5-878fd3574438 and http://www.ottawasun.com/news/world/2009/06/24/9910801.html

Steady Sales For This Week of June Despite The Weather

June 23, 2009

Retail sales in the United States held even in the week ending June 20, the International Council of Shopping Centers-USB reported Wednesday.

Sales were unchanged in the week, but down 0.9 percent compared to the same week a year ago, the report said.

Temperatures were similar to the same week of 2008, showing no change, but rain may have influenced shopping. Weather Trends International said conditions across the country were 93 percent wetter than a year ago.

The weather may have “pared seasonal outdoor demand,” the report said.

During the week, apparel-specialty stores showed a “strong gain,” while, overall customer traffic was subdued given the Father’s Day holiday.

For further information, visit: http://www.upi.com/Business_News/2009/06/23/Retail-sales-hold-steady-in-week/UPI-95801245780829/

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

Consumers Planned To Spend More Money In May

June 22, 2009

A survey conducted by America’s Research Group revealed that 30% of American consumers planned to spend more money in May than they had in April, but 27% would only purchase merchandise that was marked down 50% or more. The Mother’s Day Holiday promised to give May sales a boost, but rising gas prices cut shopping budgets even more. Last year’s May had the infusion of $50 billion in tax refund money, while this year’s May had the inclusion of the entire Memorial Day weekend, a phenomenon that happens only once every 11 years.

When you factor all those conditions and look at the May same store sales numbers compared to charts which no longer include Wal-Mart’s numbers, what do you get? You get a whole bunch of numbers interpreted from a whole bunch of different angles. What you don’t get are many surprises or clear conclusions.

As is the case with so many aspects of retailing, same store sales analysts were looking for a new normal in May, since monthly same store figures no longer include Wal-Mart’s numbers. The easy solution for analysts was to pull up the spreadsheets, strip Wal-Mart out of the equation for the past 15 years, and redraw the charts as if the world’s largest retailer was not part of the U.S. retail industry. Simple enough.

This statistical manipulation makes the recent past look a lot worse, but it also provides a big picture look that is somewhat comforting as well. There are other points in the past when Wal-Mart significantly outperformed the rest of the U.S. retail industry, but everybody got back into alignment eventually. We can all find comfort in the hope that retail history will repeat itself in this way again. The big question is how long “eventually” will take.

Without the Wal-Mart benchmark, and the easy Wal-Mart story angle, the significance of monthly same store sales primarily lies in the comparison of individual retailer numbers with their own past performance. Perhaps that makes more sense anyway.

For the first time in seven months, Hot Topic saw a minus sign in front of its same store sales figure in May. So far, Hot Topic has been impervious to recession due to the willingness of its fickle teen customer base to chase after trends on tees, and the adeptness of the chain to spot and deliver those trends.

The teen apparel chain deserves a lot of credit for its “Twilight” fashions inspired by last summer’s movie blockbuster, and for drawing fresh blood out of that trend for almost a year. But since “Twilight” is no longer a red hot topic, and the sequel won’t be released until November, the store needs to find another big “it” to fill in the gap. Otherwise teens won’t have a good reason to spend their hard-earned money from their hard-to-find summer jobs, and Hot Topic might find itself in the middle of this recession thing that all of its mall neighbors have been whining about for so long.

Right now Harry Potter has a prominent position on the home page of Hot Topic’s website. But if the May same store sales are an indication, the fashion of wizards is nowhere near as popular as the fashion of vampires. Perhaps that will change once the half-blood prince works its magic on box office receipts.

While Hot Topic ventured into the negative in May, another chain found its way to the plus side for the first time in over a year. Stein Mart’s same store sales in May inched onto positive territory by a fraction of a percentage point. It’s a small victory that signals huge progress for the chain. After two years of net losses, store closings, salary cuts, layoffs, and a change in leadership, a 0.2% same store sales increase looks pretty darn good.

With a selling proposition of “spending less without getting less,” it might be expected that Stein Mart would be thriving more in this budget-conscious economy. When positioned, though, against competitors like TJ Maxx and Ross, which have been faring quite well lately, Stein Mart is the high-priced luxury retailer of the discount sector. A look at the bottom of the same store sales list for the past six months will tell you everything you need to know about how well luxury retailing has been doing.

Stein Mart’s new CEO, David Stovall, said what’s helped the chain recently is a “fresh, more shoppable assortment” of clothing. I think that may be corporate speak for creating a product mix that is more affordable to more people. While shoppers have been getting 70% discounts at Bloomingdales and finding bargains galore at Saks Off 5th, Stein Mart has been getting squeezed by competition from every direction.

Stein Mart helped its numbers with more aggressive marketing lately too. “We’ve been guilty of not telling our customer what a great value we have,” Stovall said. Full TV screen shots of 50% off price tags should change that.

A well-publicized national 12-hour sale staged this weekend, and the use of real customers discovered through a public casting call in an upcoming advertising campaign should help the chain too. Like other retailers who have profited in recession, Stein Mart is gaining ground by improving its visibility.

As for everybody else, May’s same store sales numbers tell the story of an industry that has shuffled its players around a bit, and then settled into a new recessed norm. A look at the 2009 same store sales comparison chart reveals few deviations for any individual retailer with the addition of its May numbers.

New rankings, new sales levels, and new patterns have been established in the new norm. Barring any major bursts of brilliance, the new status quo will probably continue until the U.S. retail industry phoenix rises from the ashes of economic recession. That, of course, will happen “eventually.”

For further information, visit: http://retailindustry.about.com/b/2009/06/21/us-retail-industry-may-same-store-sales-holiday-boosts-and-shopping-budget-cuts-compared-to-tax-refund-spending-and-charts-without-wal-mart.htm