Tuesday, December 15, 2009

Saks Drops "Poison-Pill" Plan

From NYTimes.com:
Saks Dismantles Shareholder Rights Plan
December 14, 2009, 6:48 pm

Saks said on Monday it was ending changes it made to its shareholders rights plan last year when it sought to prevent a potential hostile takeover by Mexican billionaire investor Carlos Slim Helu, Reuters reported.

In a statement, Saks’s chief executive, Steve Sadove, said those steps were “no longer necessary” because of a change made last month to its revolving credit agreement, which raised a “change-of-control” threshold to 40 percent from 20 percent.
In November 2008, the upscale retailer, known for its flagship Saks Fifth Avenue store in Manhattan, introduced the changes to protect itself after Mr. Slim reported a stake in the company of 17.8 percent, making him the biggest investor.

At the time, the company said it would distribute one preferred share purchase right for each outstanding share of Saks common stock.

Saks had also said last year that if any individual or investor reached or surpassed a 20 percent stake, those rights would let shareholders buy shares at a 50 percent discount and give them ammunition to block an unwanted overture.

Saks said at the time that the action was intended to “impose a significant penalty upon any person or group” acquiring 20 percent.

Mr. Slim owned 25.6 million shares, or 16.1 percent, of Saks’s shares as of April 6, the most recent date for which data is available, according to Thomson Reuters.

Tuesday, November 24, 2009

HR Quarterly Round-Up: J.Crew, TIffany & Co.

(Photo: Reuters/Mike Segar)

J.Crew full-price sales spur profit beat, shares up (Reuters): J Crew Group Inc reported a quarterly net profit far above Wall Street estimates due to strong autumn sales of clothing and expanded profit margins from depressed year-ago levels. The shares of the upscale apparel retailer rose 7 percent in after-hours trading.

Tiffany Profit Tops Analyst Estimates on Sales Gains (Bloomberg): Tiffany & Co., the world’s second- largest luxury-jewelry retailer, reported third-quarter profit that topped analysts’ estimates and boosted its full-year forecast as revenue grew in Asia and Europe. The shares gained.

Friday, November 20, 2009

HR Quarterly Round-Up: Limited, Gap, Ann Taylor

(Photo: Slate.com)

Limited Brands Beats Street, Shares Up (Reuters): Limited Brands, owner of the Victoria's Secret and Bath & Body Works chains, posted a higher than expected quarterly profit on Wednesday, sending shares up 3.5 percent after hours.

Gap Says Profit Rose 25%, Plans to Buy Back Shares (Bloomberg): Gap Inc., the operator of the Old Navy and Banana Republic clothing chains, reported third-quarter profit rose 25 percent as inventory declined, and said it plans to buy back more stock.

Ann Taylor Reports Profit, but Sees Soft Holiday Sales (NYT): The clothing retailer Ann Taylor Stores posted a better-than-expected fiscal third-quarter profit on Friday, but shares fell as the company forecast soft sales for the holiday shopping season.

Tuesday, November 17, 2009

HR Quarterly Round-Up: Dillard's, Saks, Burberry

(Photo: Reuters/Shannon Stapleton)

Dillard's Swings To 3Q Profit On One-Time Gain, Beats Street (WSJ): Dillard's Inc. swung to a fiscal third-quarter profit on a tax gain, but results excluding that were much better than analysts feared as the retailer continued its turnaround effort.

Saks Beats Street, Shares Up (Reuters): Upscale U.S. department store operator Saks Inc. reported a quarterly profit that beat Wall Street expectations for a loss, stoking investor hopes for a luxury market recovery and sending shares up 4.4 percent.

Burberry First-Half Profit Fell 24% But Dividend Lifted (MarketWatch): Burberry reported a 24% fall in first-half profit, with the results buffered by cost cuts and strong demand for its leather goods, but the U.K. luxury-goods group lifted its dividend 4% and expressed optimism for the future.

Saturday, November 14, 2009

HR Quarterly Round-Up: Abercrombie & Fitch, Richemont

(Photo: Reuters/Chip East)

Abercrombie & Fitch Profit Tops View, Shares Up (Reuters): U.S. teen apparel retailer Abercrombie & Fitch posted a much better-than-expected quarterly profit helped by cost cuts and said it plans to speed up its expansion in more profitable markets overseas, sending shares up 6 percent.

Richemont Gains as Rupert Plans to Step in as Chief Executive (Bloomberg): Cie. Financiere Richemont SA, the world’s largest jewelry maker, rose the most in three months in Zurich trading after profit beat estimates and Chairman Johann Rupert said he’ll become chief executive officer to guide the company through the worst recession since the Great Depression.

Friday, November 13, 2009

HR Quarterly Round-Up: Macy's Inc., Nordstrom, Bulgari

(Photo: Reuters/Rick Wilking)

Macy's Holiday Outlook a Turkey, Stock Drops (Reuters): "U.S. department store operator Macy's Inc (M.N) forecast earnings for the fourth quarter, which includes the crucial holiday shopping season, far below Wall Street expectations on Wednesday, sending shares down 8.1 percent."

Nordstrom 3Q Profit Rises But So Do Costs (NYT): "Department store operator Nordstrom Inc. said Thursday that its profit rose 17 percent in the third quarter even though its costs were higher than expected as shoppers began spending more."

Bulgari Climbs to 14-Month High After Earnings Beat Estimates (Bloomberg): Bulgari SpA, the world’s third- largest jeweler, rose to a 14-month high in Milan trading as some brokerages raised their targets on the stock following third-quarter earnings that beat analysts’ estimates.

Thursday, November 5, 2009

October Same-Store Sales Roundup

U.S. retailers posted October same-store sales that offered a mixed bag of results, indicating that retail is in for a disappointing holiday season.

Despite total U.S. comp. sales rising 2.1% in October, the largest increase since July 2008 according to the International Council of Shopping Centers (ICSC), 52% of retailers reported October sales that came in below Wall Street estimates, according to Reuters. 
"October results are not going to give investors the overall warm and fuzzy that we're on track for a strong Christmas," said Brean Murray, Carret & Co analyst Eric Beder, "It looks like we're on track for kind of a mediocre season right now based upon October." (SOURCE: Reuters.com)
However, some industry analysts are optimistic. ICSC projects Nov. same-store sales to rise 5-8%, and holiday same-store sales to rise 1%.

The teen retail sector delivered an October surprise to analysts, claiming the "worst performer" title for the month. Aeropostale Inc. underperformed, posting same-store sales gains of 3% vs. the 14% rise analysts' estimated. Comps at American Eagle Outfitters Inc. sunk 5%, missing the 2% gain analysts projected for the company. As a result, shares in both companies dropped 13.6% and 12%, respectively, with Aeropostale experiencing its biggest one-day decline since Dec. 2008.

High end appears to be on the rise with a 1.8% increase in comp. sales in Oct. for the luxury sector, according to ICSC.
“The improvement in the stock market has had a significant impact on the affluent shopper’s willingness to spend as the luxury market has shown its first positive reading since May 2008,” said Michael Niemira, chief economist and director of research for the International Council of Shopping Centers.  (SOURCE: WWD.com)
Saks Inc. reported a comp. sales gain of 0.7% for the month, beating analysts expectations. The luxury chain reported "experienced continued weakness" in their Saks Fifth Avenue stores, however OFF 5TH and Saks Direct flourished. Management projects mid to high single digit declines in comps. for the second half of 2009.

Nordstrom, Inc. delivered a 6.5% increase in same-stores sales for the month, which topped estimates.

October comp. sales for Neiman Marcus slid 6.0%. Same-store sales in their Specialty Retail Stores segment, which includes Neiman Marcus and Bergdorf Goodman stores, fell 6.2%. Neiman Marcus Direct, which includes their online and catalog operations for Neiman, Bergdorf and Horchow, decreased 4.8%.

Abercrombie & Fitch Co. continues to struggle, posting a loss of 15% for the month, slightly worse than estimates.

Macy's Inc. reported a 0.8% dip in same-store sales, slightly higher than the 0.1% decline analysts predicted according to Thomson Reuters. Online sales (macys.com and bloomingdales.com), which were up 34.6% for the month, helped the company's comp. sales by 0.6 percentage points.

Limited Brands, Inc. posted a 4% decrease in comp. sales for October, falling short of analysts' estimates of a 3.1% decline. Same-store sales losses in Victoria's Secret Stores and La Senza, 6% and 7% respectively, helped drive down Limited's comps.

Wednesday, October 21, 2009

PPR Falls in Paris on Missed Sales Estimates, Gucci’s Decline

PPR Falls in Paris on Missed Sales Estimates, Gucci’s Decline

By Ladka Bauerova

Oct. 21 (Bloomberg) -- PPR SA, the owner of the Gucci brand, fell the most since July in Paris trading after reporting revenue that missed analysts’ estimates, hurt by declining luxury-goods orders in the U.S. and western Europe.

Sales dropped 7.6 percent to 4.56 billion euros ($6.8 billion) from 4.94 billion euros a year earlier, Paris-based PPR said yesterday after stock markets closed, below the 4.63 billion-euro median estimate of three analysts surveyed by Bloomberg. At Gucci Group, which accounts for almost a fifth of revenue, the sales drop accelerated to 6.4 percent.

Chief Financial Officer Jean-Francois Palus blamed the shortfall on a “low point” in demand from third-party luxury retailers such as U.S. and western European department stores. Gucci’s figures were worse than those posted earlier this week by PPR’s largest rival, LVMH Moet Hennessy Louis Vuitton SA, whose Louis Vuitton brand posted growth on “exceptional” demand for its handbags in China.

“The market may have expected a positive surprise” for PPR after Vuitton’s figures, Citi analyst Thomas Chauvet said in a note this morning, calling the figures “a bit light.”

PPR shares fell as much as 6 percent, the most since July 2, and were down 3.49 euros, or 4.1 percent, to 81.68 euros at 10:38 a.m. in Paris. The stock has gained 75 percent this year, outperforming LVMH, which has risen 52 percent.

Gucci Group’s decline was paced by a 3.2 percent drop at the core Gucci brand. Excluding currency moves, Gucci brand stores open at least a year saw their sales decline 8 percent. Palus said a lull in tourism by rich shoppers, especially from Russia and the Middle East, hurt Gucci Group outlets in Monte Carlo, Cannes and Paris.

Analysts including Luca Solca of Sanford C. Bernstein said PPR sales may rebound in the fourth quarter, as wholesale customers are likely to replenish their inventories.

(SOURCE: Bloomberg.com)

Tuesday, October 20, 2009

Coach 1Q Profit Dips As Sales Rise; Beat Wall St. Analysts Estimates

Coach Inc.'s new pricing strategy is starting to look promising, as the luxury accessories company posted FY 1Q profits and sales that beat Wall St. estimates.

The company reported a fiscal first-quarter earnings drop of 3.4% to $141M, or  $0.44 per share, vs. $146M, or $0.44 per share in the previous year.

Sales for the quarter rose 1.2% to $761.4M from $753M in fiscal 1Q '08. 

Analysts surveyed by Thomas Reuters expected $0.39 per share, and sales of $753.8M.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc., attributed the recent decision to revamp Coach's pricing strategy, and the introduction of the Poppy line, to this quarter's better-than-expected results:
“We experienced sequential improvement in our North American retail business this quarter, as the initiatives put into place earlier this year proved successful. Specifically, Coach benefited from the well received launch of the Poppy collection and other products at particularly compelling prices.”
Analysts also noted that Coach increased usage of 20% off coupons for their outlets stores, which helped to drive demand.

Direct-to-consumer sales, which include their China business, rose 10% to $654M for the quarter vs. $592M for the previous year. Total sales in Japan, Coach's second largest market, declined 3%, minus exchange rate fluctuations. Comp. sales in North American fell 1.1%, an improvement from the 6.1% decline in the previous quarter. China continued to show strength with double-digit same-store sales growth.

Indirect consumer sales, which represents 15% of Coach's business, dropped 33% to $108M as a result of reduced shipments to U.S. department stores.

As a result of the rapid growth the company is experiencing in China, Mr. Frankfort said Coach plans to open their first Mainland China flagship store in Spring 2010 in Shanghai. To help manage their growth in China, they also plan to open an Asian distribution center in Shanghai.

The company announced plans to open their first stand-alone men's store in NYC this Spring.

Despite beating analysts expectations, investors were apprehensive about the company's expansion, causing the stock to slip 2.8% during midday trading.
"Expectations for Coach have risen pretty noticeably, so anything that detracts from that basis is going to be viewed as a negative," said Wall Street Strategies analyst Brian Sozzi. (SOURCE: Reuters.com)

However, analysts remain upbeat:
"They're very well positioned to have a strong holiday," Needham & Co analyst Christine Chen said. "They should be able to return back to positive same-store sales ... because the product seems to be gaining traction with consumers." (SOURCE: Reuters.com)
For the holiday season, Coach plans to implement the same marketing strategy used to introduce Poppy, concentrating more on email campaigns, online ads, fashion blogs and social networking sites, like Facebook.
The company also plans to launch several new items including new accessory groups, Waverly and Gramercy, a new tote group, Alex and new Poppy items under $100.

Coach shares were down 3.2% to close at $33.41.

Disclosure: Haute Retail holds positions in Coach, Inc.

LVMH Beats Estimates on Vuitton, Says Cognac Sales Picking Up

LVMH Beats Estimates on Vuitton, Says Cognac Sales Picking Up

By Ladka Bauerova

Oct. 19 (Bloomberg) -- LVMH Moet Hennessy Louis Vuitton SA, the largest luxury-goods maker, reported third-quarter revenue that beat analysts’ estimates after “exceptional” demand for Vuitton bags in China, and said cognac demand is improving.

Sales slipped to 4.14 billion euros ($6.2 billion) from 4.16 billion euros a year earlier, the Paris-based company said today after markets closed. That surpassed the 4.07 billion-euro median estimate of five analysts surveyed by Bloomberg News.

Sales of Louis Vuitton apparel and accessories posted “double-digit” growth, LVMH said. Demand for cognac “significantly” improved as wholesalers in the U.S. began to replenish their inventories during the quarter, the company said, echoing the outlook from smaller liquor rival Remy Cointreau SA released last week.

“I can’t say the crisis is over yet, but we are beginning to see some light at the end of the tunnel,” Chief Financial Officer Jean-Jacques Guiony said during a conference call. “Louis Vuitton’s performance in China was exceptional.”

LVMH shares rose 2.45 euros, or 3.4 percent, to 74.90 euros in Paris trading today, the highest in more than a year. They have rallied 57 percent in 2009 after tumbling 42 percent last year, when Lehman Brothers Holdings Inc.’s bankruptcy spooked luxury-goods buyers.

Revenue at the company’s fashion and leather goods division gained 5.3 percent, fueled by Vuitton sales. Wholesale sales of other LVMH fashion brands including DKNY and Fendi had a “double-digit” decline in the third quarter, though they improved in September, Guiony said.

Revenue at LVMH’s wines and spirits division, which makes Veuve Clicquot champagne and Hennessy cognac, fell 8.6 percent in the quarter as drinkers in the U.S. and Russia cut back. Unlike cognac, the champagne market “remains difficult” as some consumers switch from LVMH’s expensive vintages to cheaper brands, Guiony said.

Watch and jewelry sales, which make up about 5 percent of total revenue, dropped 22 percent, while perfumes and cosmetics slid 4.6 percent. The retail unit, which includes the Sephora cosmetics chain and Duty Free Shops, climbed 2.5 percent.
(SOURCE: Bloomberg.com)

Friday, October 9, 2009

US Retail Sales Rise In September, Raise Holiday Hopes

US retail sales rise in Sept, raise holiday hopes

By Jessica Wohl

CHICAGO, Oct 8 (Reuters) - U.S. retailers gave investors an early Christmas present, posting their first monthly sales increase in more than a year and suggesting wounded consumers might begin to heal in time for the crucial holiday season.

Chains such as Macy's Inc (M.N), Abercrombie & Fitch (ANF.N) and Kohl's Corp (KSS.N) surprised Wall Street on Thursday with better-than-expected September sales as shoppers headed back to stores for back-to-school purchases.

"It signals a bottom," said Wharton School marketing professor Stephen Hoch. "This month was not just not as bad as we thought it could be, but it was actually not so bad."

But retail experts cautioned that the sales results did not yet presage a consumer-driven recovery to the U.S. economy. The International Council of Shopping Centers said October same-store sales should be about flat with a year earlier.

"It might be too early to say consumers are actually coming back to the stores and spending more," said Booz & Co Principal Marcelo Tau. "I still feel that there is a lot of pressure on consumers."

Based on 30 retailers, sales at stores open at least a year climbed 0.6 percent, compared with expectations for a 1.1 percent decline, according to Thomson Reuters data. Nearly 80 percent of the companies beat expectations.

Thursday, October 8, 2009

Irving Penn, Iconic Fashion Photographer, 92

(Photo: Irving Penn/ tfs: Gold Star)

From The New York Times:
Irving Penn, Fashion Photographer, Is Dead at 92

Irving Penn, one of the 20th century’s most prolific and influential photographers of fashion and the famous, whose signature blend of classical elegance and cool minimalism was recognizable to magazine readers and museumgoers worldwide, died Wednesday morning at his home in Manhattan. He was 92.

His death was announced by Peter MacGill, his friend and representative.

Mr. Penn’s talent for picturing his subjects with compositional clarity and economy earned him the widespread admiration of readers of Vogue during his long association with the magazine, beginning in 1943. It also brought him recognition in the art world; his photographs have been exhibited in museums and galleries and are prized by collectors.

His long career at Vogue spanned a number of radical transformations in fashion and its depiction, but his style remained remarkably constant. Imbued with calm and decorum, his photographs often seemed intent on defying fashion. His models and portrait subjects were never seen leaping or running or turning themselves into blurs. Even the rough-and-ready members of the Hell’s Angels motorcycle gang, photographed in San Francisco in 1967, were transformed within the quieting frame of his studio camera into the graphic equivalent of a Greek frieze.

Instead of spontaneity, Mr. Penn provided the illusion of a seance, his gaze precisely describing the profile of a Balenciaga coat or of a Moroccan jalaba in a way that could almost mesmerize the viewer. Nothing escaped the edges of his photographs unless he commanded it. Except for a series of close-up portraits that cut his subjects’ heads off at the forehead, and another, stranger suite of overripe nudes, his subjects were usually shown whole, apparently enjoying a splendid isolation from the real world.


Tuesday, October 6, 2009

Jimmy Choo Expands Into The World of Fragrance

Jimmy Choo, the UK luxury accessories company best known for its sexy shoes, has entered into a worldwide license agreement with Inter Parfums SA.

The 12-yr agreement will begin on Jan. 1, 2010 and will include the creation, development and distribution of fragrances under the Jimmy Choo brand.

Tamara Mellon, founder and president of Jimmy Choo states, "It has always been my vision to fully accessorize the woman, and fragrance is an integral part of the modern wardrobe. Through our association with Inter Parfums, I look forward to bringing this important aspect of my vision to life."

"This relationship with Jimmy Choo offers a perfect fit with our strategy of expanding our brand portfolio to include new universes and represents an important milestone in the company's development", said Jean Madar, Chairman & Chief Executive Officer of Inter Parfums, Inc. "This brand possesses the quintessential qualities to ensure the ambitious development of fragrance lines that will be supported by significant advertising commitments over the coming years".

This isn't the first fragrance licensing deal for Jimmy Choo. According to WWD, Selective Beauty, a subsidiary of  Investindustrial, held the fragrance license for the company. However, a scent was never developed. 

Macy's Inks Exclusive Deal With Ellen Tracy

After much industry speculation, Macy's, Inc. has announced they have entered into a strategic alliance with Ellen Tracy owner, Brand Matter LLC, and and its sportswear licensee, RVC Enterprises that will make Macy's the exclusive department store retailer of Ellen Tracy women's sportswear, beginning in spring 2010.

The exclusive Ellen Tracy better sportswear line will have a modern twist, focusing on separates that consist of jackets, shirts, pants, sweaters, woven tops, knit tops and bottoms. Price points will range from $99 to $149 for jackets and $50 to $99 for pants.

"Ellen Tracy is a legendary brand that is well-known to our customers and backed by an outstanding design team. In particular, Ellen Tracy delivers exceptional value to women who expect quality and want a relevant look for today's world at work and on the town," said Jeff Gennette, Macy's chief merchandising officer.

Mark Mendelson, president and CEO of the Ellen Tracy division of RVC, said, "My team and I are thrilled to bring the Ellen Tracy heritage and style to a more accessible pricepoint. We look forward to entering, building and eventually becoming one of the leading brands in the better department".

"We are excited to form this long term tri-partnership with RVC and Macy's. Macy's is the preeminent national department store in the United States and we believe that the Ellen Tracy brand will add significant accretive sales to the better sportswear floor", says Bill Sweedler, co-chairman and CEO of Brand Matter.

Initial launch of the exclusive sportswear line will begin in 100 Macy's stores and online at macys.com in March 2010, with plans for additional stores in the future. Macy's flagship stores in Herald Square in NYC, Union Square in San Francisco, State Street in Chicago and Dadeland in Miami are among those who will carry the Ellen Tracy shops in the initial launch.

This is a major coup for Macy's that could put them ahead of their competitors. When Ellen Tracy decided to move from bridge to better sportswear, a huge gap was left for retailers, since, for years, the brand served as an anchor for the bridge floors of department stores like Nordstrom, Lord & Taylor, Saks, Bloomingdale's and Dillard's. These department stores have been scrambling for a replacement ever since. Now, that Macy's will be carrying the brand exclusively, retailers are doubly concerned.

Ellen Tracy will be among a group of exclusive brands in partnership with Macy's, including Tommy Hilfiger, Martha Stewart Collection, Rachel Rachel Roy and Donald Trump.

 (SOURCE: Macy's Press Release)

Monday, October 5, 2009

Coach Slaps Target With Another Lawsuit

It's back to the courtroom for Coach, Inc. and Target.

WWD reports that the luxury accessories maker has filed a complaint with the U.S. District Court in Manhattan alleging that Tarjay "has sold knockoffs of its Patchwork and Ergo designs" in its stores. Coach claims that they saw the items for sale at the retailer over the summer.

Brand attorneys for Coach wrote, “Target is not authorized by Coach to manufacture, distribute, advertise, offer for sale, and/or sell merchandise bearing Ergo Designs or the Signature Patchwork Designs or designs confusingly similar there to". Target has made no comment.

This latest lawsuit comes almost three years after an earlier courtroom drama between the two companies. In 2006, Coach filed a $1M trademark infringement suit against Target, accusing them of selling a Coach handbag at a Target store in Largo, FL. The case was dismissed.

Monday, September 28, 2009

H&M Teams Up With Sonia Rykiel For Winter '09 and Spring '10 Collections

Nathalie Rykiel, President and Artistic Director at Sonia Rykiel
(Photo: Matthieu Salving/H&M)

H&M has tapped Sonia Rykiel as guest designer for their Winter 2009 and Spring 2010 collections. This will be H&M's eighth partnership with a high-end designer.

The winter collection will consist of lingerie and accessories, making this the first time H&M has ventured into the world of lingerie. The line will launch on December 5th, and will be available in 1500 H&M stores worldwide. The lingerie collection will simultaneously be available in Sonia Rykiel boutiques worldwide.

The Spring 2010 collection will consist of Rykiel's infamous knitwear for women and girls, as well as accessories. This collection will launch in 250 H&M on February 20, 2010.

“Sonia Rykiel is a true fashion icon who invented a signature style around femininity, Parisian chic and modernity - as well as functional, comfortable, wearable clothes", says Margareta van den Bosch, H&M's creative advisor.

Nathalie Rykiel, president and artistic director of Sonia Rykiel says, "The Sonia Rykiel pour H&M lingerie collection is the ideal way to offer the essence of Rykiel to a great number of women around the world, and a beautiful way to close the year. The knitwear collection is perfect for welcoming a colourful new season".

Obit: Donald Fisher, 81. Gap Co-Founder

SAN FRANCISCO (Reuters) - Donald Fisher, who co-founded Gap Inc (GPS.N) with his wife Doris forty years ago, died on Sunday after a battle with cancer, the clothing retailer said.
He was 81.

The company that the Fishers began as a little denim store in San Francisco now operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Japan and Ireland, and it has been credited with inventing the specialty retail category.

The Fishers opened their first store in San Francisco in 1969, and named it The Gap in reference to the generational differences between baby boomers and their parents.

When it first opened, the Gap mainly sold Levi's jeans, tapes and records, and it flourished in 1970s as consumers snapped up its denim.

Read the full story at Reuters

Thursday, September 24, 2009

H&M Sales Drop Worsens in August Because of Inventory Shortage

By Sarah Shannon

Sept. 24 (Bloomberg) -- Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, said a sales decline worsened in August because of a shortage of discounted inventory.

Revenue at stores open at least a year fell 11 percent last month, the fourth consecutive drop and worse than July’s 3 percent decrease, Stockholm-based H&M said today. The retailer also reported a 4 percent gain in third-quarter net income to 3.46 billion kronor ($504 million), below the 3.5 billion kronor average estimate of 11 analysts compiled by Bloomberg.

H&M said sales in Spain, the U.S. and France were “weak” in the third quarter because it had too little inventory to keep pace with discounting by competitors. Same-store sales declined 6 percent, though gross margins widened by 0.8 percentage points, led by internal currency hedging policies.

“The stock is down as people are looking at the markdowns and the sales deterioration,” Chris Walker, an analyst at Nomura, said by phone. “The gross margin is a positive surprise from their hedging policy, so we’re not too concerned.”

H&M fell 12 kronor, or 2.9 percent, to 396.50 kronor at 11:10 a.m. in Stockholm trading. The shares have risen 30 percent this year, compared with the 27 percent gain of rival Inditex SA.

H&M said it plans to increase store numbers by 240 this year, raising the target from 225. Planned openings include 18 Monki and Weekday stores and nine higher-priced COS outlets. The retailer will start selling fashions online in the U.K. from fall of 2010, it also said today.

‘Demonstrating Confidence’

“This is clearly demonstrating business confidence and we expect will be positively received by the market,” Alessandra Coppola, an analyst at Standard & Poor’s Equity Research in London, said by e-mail. She has a “sell” recommendation.

Third-quarter revenue was 23.5 billion kronor excluding value-added taxes, the company said, an increase of 13 percent from a year earlier, or 3 percent excluding currency swings.

“H&M results were weaker versus our expectations,” Simon Irwin, an analyst at Liberum Capital said in a report. “We believe H&M needs sustainable upgrades from same-store sales or further progress on costs to justify higher prices,” of the stock, he wrote. Irwin has a “neutral” recommendation.

(SOURCE: Bloomberg.com)

Wednesday, September 23, 2009

Is Macy's Headed Towards Bankruptcy?

Is Macy's headed towards bankruptcy? The folks at Audit Integrity think so.

In a recent report, the independent financial research and risk modeling firm listed 20 large-cap companies ($1B or more in market capitalization) "that have the highest probability of declaring bankruptcy among publicly traded firms" in the next 12 months, with Macy's making the list. The Business Insider went a step further, whittling the list to the 10 worst of the worst using the following formula:
"Which companies appear the worst off? We took the list and removed any company with a market cap under $3 billion. We then ranked the remaining names by a simple measure of the market's perceived bankruptcy risk - Market Cap (MC) divided by Enterprise Value (EV). The less MC vs. EV, the less residual shareholders' value (above what debt holders can claim) the market is pricing-in for the company. Thus a lower MC/EV means the market thinks the company is more likely to go bankrupt."
Macy's comes in at #4:
4. Macy's

Does anyone even shop at department stores anymore?
Same store sales will likely keep falling at Macy’s right through 2009. With $2.4 billion of maturing debt over the next five years, the company is trying to cut costs, and has already reduced its dividend.

Hopefully the US consumer will bounce back soon, and actually want to shop at Macy's.

I'm not ready to write off Macy's just yet. Their My Macy's initiative has made significant gains , with same-store sales of the program's 20 test market regions outperforming the rest of the company. These gains prompted Citigroup analyst, Deborah Weinswig to upgrade the stock to "Buy" from "Hold" on Tuesday, and double the price target to $30 from $15.
"We are encouraged by the consistent, positive early results that Macy's has reported from its 20 pilot My Macy's markets since spring 2008," the analyst wrote in her note to clients. "My Macy's initiative will be a key driver of same-store sales upside for the company ahead."

The program allows the company to reduce discounts. It also shows signs of improving relationships with vendors, leading to the development of more exclusive lines and unique sizes, Weinswig says. (SOURCE: Martketwatch.com)

Monday, September 21, 2009

Bye, Bye Prescriptives

It's only been six months since Fabrizio Freda took over as CEO of Estée Lauder, and already he has sent shockwaves throughout the cosmetics industry.

Last week, Estée Lauder announced that it will shut down its 30 year-old Prescriptives cosmetic line by Jan. 31, 2010.
"A core component of The Estée Lauder Companies' corporate strategy is to evaluate, and where possible, turn around underperforming brands with the goal of improving return on investment. After a thorough analysis of the Prescriptives brand, management concluded that the brand's long term business model is no longer viable given the current market environment. The Company is committed to placing as many impacted employees as possible in open positions within the Company"
Prescriptives products will continue to be sold online at www.prescriptives.com to U.S. customers only while supplies last.
Eliminating brands from their portfolio is nothing new for EL, but Prescriptives is a homegrown brand launched by Ronald Lauder in 1979, and one of the largest in retail volume in EL's arsenal. Its closure shows that Mr. Freda is serious about dramatically restructuring the company.
"We believe that the difficult decision relating to Prescriptives will allow us to redirect our resources to key strategic imperatives where we see the highest growth potential," said Fabrizio Freda, President and Chief Executive Officer, The Estée Lauder Companies. "Ultimately this action allows us to focus on those areas which we expect to benefit the Company, our shareholders and business partners. We intend to work closely with our retail partners and continue to communicate with our consumers to ensure a seamless transition."
In the May issue of WWD Beauty Biz, Mr. Freda gave a hint to the possible elimination of Prescriptives:
“We are really focused on fixing the underperforming brands,” Freda said in May. “We have finished a review of the brands and have identified which are the brands where we want to invest and which are the brands that today are underperforming by our standards. For the underperforming brands, we have put a specific plan [in place] for the next 18 to 24 months. In the case we are not successful in turning around the brands, we will make different decisions.”

When asked, he declined to identify which brands comprised that list, but emphasized that “small” and “underperforming” were not synonymous in the Lauder portfolio. “Smaller brands, if they have the right productivity per door, are very interesting businesses,” he said in May. (SOURCE: WWD.com)
Prescriptives was one of the top prestige brands in the mid-80s, enjoying prime cosmetic counter real estate in upscale department stores such as Neiman Marcus. But with the emergence of makeup artist cosmetics lines such as M.A.C. and Bobbi Brown in the mid-90s cut into Prescriptives' niche and thus began the brand's decline.

EL maintains ownership of the Prescriptives name as well as all its trademarks and assets. A company spokeswoman says that the Calyx fragrance will be merchandised by the Aramis and Designer Fragrances division.

For Prescriptives consumer support, toll free numbers have been set up in North America (1-877-819-2968, English, Spanish and French speaking), the United Kingdom (0800 088 4168) and the Republic of Ireland (1800 936 080).

(SOURCES: WWD.com, Estée LauderCompanies Inc.)

(Photo Credit: WWD.com)

Thursday, September 17, 2009

Beyonce Announces Fragrance Launch....And Gets Sued!

(Photo: Kevin Mazur/WireImage)

One day after Beyoncé Knowles announced the launch of her new fragrance,  WWD.com announces that Abercrombie & Fitch Co. have filed a lawsuit against Ms. Knowles claiming trademark infringment:
"The teen retailer alleged in a federal complaint filed Tuesday that a scent with that label would infringe on its own Fierce cologne trademark.

But Coty said Wednesday Knowles’ dual personality would not factor into plans for her perfume, which will be sold in department stores globally and launch in the Americas in the spring.

“We can confirm at this time…that the terms Fierce and Sasha Fierce are not being used as names of a Beyoncé fragrance,” a Coty spokeswoman said." (SOURCE: WWD.com)
A&F claims that a "Sasha Fierce" fragrance would cause a "likelihood of confusion" for consumers. I doubt that. Up until now, most consumers didn't know Abercrombie sold a "Fierce" cologne.

But here's something that made me go WTF?
“A&F’s intent is that all garments that leave the store have the Fierce scent attached to them,” the company’s attorneys wrote.
Now, when I buy new clothes, I like for them to be fragrance-free, and I gather I'm not alone which would explain the company's high negagtive double digit comp. sales.

Instead of worrying about its "Fierce" cologne, Abercrombie needs to worry about the fierce charges of  racism and discrimination that have piled up against them over the years, the latest being the allegation that they wouldn't let a Muslim teen girl wear her hijab because it didn't fit their "look policy". And now they're suing one of the most beloved African American stars in the world over a word?

This won't end well.

Wednesday, September 9, 2009

Neiman Marcus’ Q4 Loss Deepens

Neiman Marcus’ Q4 loss deepens

Atlanta Business Chronicle
Wednesday, September 9, 2009, 10:59am EDT

Upscale retailer Neiman Marcus on Tuesday reported a fourth-quarter net loss that has deepened over the 2008 fiscal year.

Dallas-based Neiman’s posted a fourth-quarter loss of $168.5 million, which is deeper than the $35.6 million loss reported during the same period last year. During the same period, overall sales at Neiman’s hit $768 million, down from $1.03 billion. The quarter included the recording of a $143.1 million pretax impairment charge.

Meanwhile, Neiman’s same-store sales fell 23.4 percent in the fourth quarter.

For the fiscal year, the company reported a net operating loss of $668 million, down from a profit of $142. 8 million. Sales for the year fell from $4.6 billion in 2008 to $3.64 billion this year.

Chairman and CEO Burton Tansky added that the company “tightly managed its expenses,” eliminated $100 million in costs and ended the year with 23 percent less merchandise due to better inventory management.

"Fiscal year 2009 was a very challenging year fo rour company. We quickly began addressing the many challenges we faced due to a sharp decline in our business, precipitated by the downturn in the economy," Tansky said.

Tuesday, August 18, 2009

Saks Posts Lost, Beats Wall St. Exprectations

Saks quarterly loss not as deep as expected
Tue Aug 18, 2009 9:23am EDT

CHICAGO, Aug 18 (Reuters) - Upscale department store operator Saks Inc (SKS.N) posted a narrower-than-expected quarterly loss on Tuesday as it trimmed costs while well-heeled shoppers held back from pricey purchases.

Saks' net loss widened to $54.5 million, or 39 cents per share, in the fiscal second quarter ended on Aug. 1, from $32.7 million, or 24 cents per share, a year earlier.

Excluding impairments and dispositions and a gain on the extinguishment of debt, Saks lost 40 cents per share, less than analysts' average forecast of a loss of 52 cents per share, according to Reuters Estimates.

Shares of Saks, which have more than tripled in value from their March lows, rose 7.7 percent to $5.76 in premarket trading.

The recession, an unsteady stock market since September and job losses have curbed consumers' ability to spend freely in Saks' stores. To offset languishing sales, Saks has been cutting costs and trimming inventory.

Sales fell 14.5 percent to $561.7 million, with same-store sales down 15.5 percent.

Saks, which sells designer brands such as Marc Jacobs, Versace and Oscar de la Renta, said the sales decline at its New York City flagship store continued to be steeper than at other existing locations.

The current climate makes it very difficult to predict sales and gross margin performance with any certainty, Chief Executive Stephen Sadove said in a statement.

Saks expects same-store sales to fall in a mid-to-high single digit range in the second half of the year, with the third quarter being weaker than the fourth.

It still expects same-store sales to fall in a low double digit range for the full year. Same-store sales fell 22.4 percent in the first half of the year.

Saks expects gross margins to rise in the second half of the year, partly because it is carrying less inventory.

The company is also cutting other costs. It aims to spend about $55 million on capital projects this year, after spending about $75 million last year.

(Reporting by Jessica Wohl, with additional reporting by Aarthi Sivaraman in Seattle, editing by Gerald E. McCormick)

(SOURCE: Reuters.com)

Friday, August 14, 2009

Abercrombie & Fitch Post 2Q Loss on Sales Tumble

Abercrombie Has Loss on Sales Slump, Ruehl Stores

By Allison Abell Schwartz

Aug. 14 (Bloomberg) -- Abercrombie & Fitch Co., the U.S. teen clothing retailer, reported a second-quarter loss on slumping sales and costs to close Ruehl stores. The shares rose on investor optimism results will improve in the second half.

The net loss was $26.7 million, or 30 cents a share, compared with a profit of $77.8 million, or 87 cents, a year earlier, the New Albany, Ohio-based company said today in a statement. Revenue dropped 23 percent to $648.5 million, in line with preliminary figures released last week.

Chief Executive Officer Michael Jeffries started to lower prices in the second quarter to compete with other retailers such as Aeropostale Inc. and American Eagle Outfitters Inc., which have used discounts to lure consumers on tight budgets. Pricing changes, inventory management and improved fashion should help results later this year and in 2010, said Richard Jaffe, an analyst at Stifel, Nicolaus & Co. in New York.

The second quarter showed “modest improvement,” Jaffe said in a research note today. Excluding some items, earnings were 4 cents a share, beating his estimate for a loss of 3 cents.

Marketing, general and administrative expenses declined 19 percent in the quarter to $88.7 million.

Sales at stores open at least a year dropped 30 percent in the three months ended Aug. 1, the company said last week.

The retailer said on June 17 it would close its 29 unprofitable Ruehl stores that carry clothing for 22- to 25-year olds after sales stagnated in the U.S. recession.

Abercrombie rose $1.29, or 3.9 percent, to $34.25 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 48 percent this year.

(SOURCE: Bloomberg.com)

Escada Files For Bankruptcy

Escada Files for Court Protection in Germany
August 14, 2009

FRANKFURT (AP) — The German fashion company Escada has filed for bankruptcy after being unable to obtain financing, a Munich district court said Thursday.

The filing was expected after the company, famous for women’s fashion and accessories, failed to get the necessary support for an earlier bond swap.

Escada was once one of the biggest fashion brands in the world, but its popularity, sales and earnings have declined.

The company said a number of restructuring measures had been contingent on the bond swap working, but it did not get enough support from the bondholders.

For example, a plan to raise 30 million euros, or $42 million, through the company’s bigger investors had been contingent on the bond exchange going through, as was a credit extension of more than 13 million euros. A successful swap would have also given the company some immediate liquidity to help it eliminate some of its debt.

The company said earlier this week that the situation was “regrettable,” but that it still hoped for a turnaround in its finances and business.

The company had sales of 528 million euros in fiscal year 2008, but reported a net loss of 70 million euros. In the first half of the fiscal year ending in April, it lost 92 million euros.

Escada operates 182 of its own shops and 225 franchise shops in more than 60 countries, employing about 2,300, 600 of those in Germany.

(SOURCE: NYTimes.com)

Estee Lauder Shares Decline Following 4th-Quarter Loss

Estee Lauder declines following 4th-quarter loss

(AP) – Aug 14, 2009

NEW YORK — Shares of Estee Lauder Cos. followed the broader markets lower Friday after the cosmetics company posted a fiscal fourth-quarter loss because of hefty restructuring charges and unfavorable exchange rates.

On Thursday, Estee Lauder, which is currently restructuring its business, said it swung to a loss of $17.9 million because of big restructuring charges.

Estee Lauder's restructuring plan includes cutting 2,000 jobs, or 6 percent of the work force, and maintaining a hiring freeze. The company has been hurt by softening consumer spending and deterioration in airline travel because the company sells its products in airports.

Revenue declined 16 percent to $1.68 billion because of unfavorable foreign currency translation and waning consumer discretionary spending.

Deutsche Bank analyst Bill Schmitz Jr., who rates the stock "Hold," said the company is doing what it can to manage expectations.

"The problem with the stock is that much of this is already priced in and newly named Chief Executive Fabrizio Freda has, in short-time, attained rock star status with investors," Schmitz said.

Shares of the company are up 22.1 percent so far this year. In afternoon trading, shares declined $1.73, or 4.6 percent, to $36.08.

Elsewhere on Friday, stocks fell sharply Friday, following news that the Reuters/University of Michigan index of consumer sentiment fell short of expectations for the first part of August. That may indicate consumer spending — which accounts for two-thirds of all U.S. economic activity — will remain tough amid layoffs.


Thursday, August 13, 2009

Nordstrom 2Q Profit Drops 27%; Raises Guidance

Nordstrom meets Street, raises guidance

Thu Aug 13, 2009 4:49pm EDT

SAN FRANCISCO (Reuters) - Nordstrom Inc (JWN.N) posted a steep decline in quarterly profit on Thursday that nevertheless met Wall Street's expectations, as the upscale department store chain controlled inventory and expenses to offset languishing sales.

The company raised its profit forecast for the fiscal year based on what it called better-than-expected performance in its second quarter. The quarter included three major sales campaigns, making it Nordstrom's second-largest in terms of net sales.

Nordstrom's net profit fell 26.6 percent to $105 million, or 48 cents per share, in the fiscal second quarter ended August 1, compared with $143 million, or 65 cents per share, a year earlier.

That matched the 48 cents per share expected, on average, by analysts, according to Reuters Estimates.

Sales fell 6.2 percent to percent to $2.14 billion, a touch above the $2.12 billion expected by analysts. But same-store sales, a key measure of sales at stores open at least one year, fell 9.8 percent.

For fiscal 2009, Nordstrom estimated earnings of $1.50 to $1.65 a share, with same-store sales falling by 9 percent to 12 percent.

An earlier forecast called for earnings per share of $1.25 to $1.50. Wall Street had been expecting fiscal 2009 earnings per share of $1.48.

Nordstrom shares fell less than 1 percent to $29.52 after closing up 1 percent at $29.76 on the New York Stock Exchange.

(Reporting by Alexandria Sage; Editing by Richard Chang)

(SOURCE: Reuters.com)

Elizabeth Arden Posts Narrow Loss, Stock Down on View

Elizabeth Arden posts loss, stock down on view

LOS ANGELES, Aug 13 (Reuters) - Elizabeth Arden (RDEN.O) reported a narrower quarterly loss on Thursday as shoppers continued to spend conservatively on perfume and face creams, but shares fell 4.1 percent after its 2010 profit forecast missed expectations.

Net loss at Arden was $3.6 million, or 13 cents per share, for the fiscal fourth quarter ended June, 30, narrowing from its year-earlier net loss of $10.4 million, or 38 cents per share.

Excluding restructuring and other expenses, its net loss was 7 cents per share. That just beat the 8-cent loss expected by analysts, according to Reuters Estimates.

Net sales at Arden, which sells Prevage anti-aging cream and perfumes by celebrities such as Britney Spears and Mariah Carey, fell 10 percent to $212.6 million. Excluding the unfavorable impact of foreign currency translation, net sales declined 5.8 percent.

For its fiscal year ended June 2010, the company forecast a 2 percent to 3.5 percent increase in sales and earnings per share in the range of 50 cents to 65 cents per share.

Analysts, on average were looking for a 2010 profit of 72 cents per share, according to Reuters Estimates.

Shares in Arden, which closed at $10.45, fell to $10.02 in extended trade on the Nasdaq.

(Reporting by Lisa Baertlein and Aarthi Sivaraman in Seattle; Editing Bernard Orr) 

(SOURCE: Reuters.com)

Wednesday, August 12, 2009

Macy's Profits Down, Outlook Up

Despite being bogged down with reorganization costs, Macy's, Inc. reported profits that were better-than-expected, and raised their outlook for fiscal year 2009.

The company's second quarter earnings were down to $7M, or $.02 per share, vs. $73M, or $.17 per share, from 2008. However, excluding restructing costs, earnings per share were $.20, still down from the previous year's E.P.S of $.29, but exceeding analysts' estimates of $.17 per share.
"We were able to exceed our expectations with strong earnings and cash flow in the second quarter, despite lower sales in an economic environment that continues to be very difficult," said Terry J. Lundgren, Macy's, Inc. chairman, president and chief executive officer. "In particular, we successfully lowered inventories and managed expenses to align more closely with current levels of business. Our second quarter same-store sales performed as well as or better than most department store retailers even while we were completing the largest organizational transition in Macy's recent history. Most of that transition work is behind us now.
The results from the company's "My Macy's" initiative continue to show promise:
"We continue to be very pleased with results from the My Macy's initiative, which began to roll out to 49 new districts nationwide in the second quarter. Same-store sales performance in the 20 pilot districts launched in 2008 continued to outpace the remainder of the company, and the gap continued to widen in the second quarter. Going forward, we expect the gap to become less meaningful as the 49 new districts launched in 2009 come up to speed and begin producing results that parallel the pilot districts. As previously stated, we expect to see some improvement in these new districts in the fourth quarter of 2009 and especially in spring 2010," Lundgren said.
The first half saw a loss of $.19 per share vs. earnings of $.03 per share in 2008. Minus restructuring costs, EPS was $.04 per share vs. $.28 in the first half of '08.

Sales for the 2nd quarter were down 9.7% to $5.164B from $5.718 in '08. Macy's same-store sales for the quarter dropped 9.5%. Online sales helped the company's 2nd quarter and first half '09 comp sales by 0.5%. Online sales, which count towards same-store sales, rose 9.4% in the 2nd quarter and 12.7% in the first half of fiscal 2009.

The company raise it's guidance on fiscal year 2009 earnings, projecting EPS will be $.70 to $.80 per share, excluding restructuring costs.

Macy's shares closed at $16.40, up 6%.

Friday, August 7, 2009

Limited Brands Declare Cash Dividend

COLUMBUS, Ohio, Aug 07, 2009 /PRNewswire-FirstCall via COMTEX/ --

Limited Brands (NYSE: LTD) announced today the declaration of its regular quarterly dividend of $.15 per share payable on September 11, 2009, to shareholders of record at the close of business on August 28, 2009. This is the Company's 139th consecutive quarterly dividend.


Limited Brands, through Victoria's Secret, Pink, Bath & Body Works, C.O. Bigelow, La Senza, White Barn Candle Co. and Henri Bendel, presently operates 3,006 specialty stores. The company's products are also available online at www.VictoriasSecret.com, www.BathandBodyWorks.com, www.HenriBendel.com and www.LaSenza.com.

SOURCE Limited Brands


Thursday, August 6, 2009

July Same-Store Sales Roundup

As The Four Tops sang, "It's the same ol' song..." for the U.S. retail industry.

For the 11th consecutive month, U.S retailers reported flat same-store sales, with many missing analysts' estimates. An unseasonably cool July and tax-free holidays pushed back to August, due to the Labor Day holiday falling late, were contributing factors to the decline in sales.

Although sales were down 5%, the results were on track with industry expectations and "consistent with the recent trends seen in May and June", according to Michael P. Niemira, chief economist of International Council of Shopping Centers (ICSC). In a telephone interview with Bloomberg, Mr. Niemera said, “Although July doesn’t look much different than June or even May, I think it will probably mark the turn in the industry towards better performance from here on out".

Apparel and Department Stores continue to be the worst performing sectors, however there were a few bright spots. Gap, Inc. and Macy's, Inc., posted better-than-expected 2nd quarter earnings, sending their shares to rise. Gap's shares saw it's biggest gain since Nov. 21. Limited Brands beat analysts' estimates, which caused shares to rise 15%, it's largest gain since Oct. 28.

Improvements in gross margin and expense reductions contributed to retailers’ ability to report second-quarter profit above estimates, according to Liz Dunn, an analyst at Thomas Weisel Partners LLC in New York. (Source: Bloomberg.com)
The S&P Retail Index rose 1.4%.

Here's the July Apparel/Dept. Store same-store sales roundup:

Limited Brands beat company and analysts' expectations, posting a 7% same-store sales decline for July. The company expects August comp. sales to decline in the high single-digits.

July same-store sales for Macy's, Inc. dropped 10.7%, above Thomson Reuter's analysts' estimates of a 9.1% decline. Total sales for July totaled $1.377B, a decline of 10.7% in comparison to sales of $1.543B for the same four week period ended in Aug. 2, 2008. Minus restructuring costs, Macy's, Inc. said it expects 2nd quarter earnings of $0.15 to $0.17 per share.

Gap Inc. posted an 8% same-store sales decline for July compared to an 11% drop in July 2008. Total sales were $924M, down 7%. Sabrina Simmons, CFO of Gap Inc., said the company expects earnings per share for the 2nd quarter to be between $0.30 and $0.32.

Dillard's comp. sales slid 12% coming above analysts' estimates of 10% declines. Total sales were down 15% for the month to $439,086,000.

Abercrombie & Fitch continues their downward spiral, with same-store sales falling 28% for July. Total sales for the month were down 22% to $236M. The company believes sales were negatively affected by a shift in the timing of tax-free holidays, and later back-to-school dates.

Nordstrom's same-store sales results dropped 6.9%, beating Wall St. estimates of a double-digit decline. Total sales slid 4.1% to $809M.

Saks slightly beat estimates, reporting a 16.3% decline in comp. sales. Analysts surveyed by Thomson Reuters estimated a 16.6% decline. Sales for the month totaled $159.7M, a 14.9% decrease.

Same-store sales for Neiman Marcus were down 27.3% to $195M for the month. Total sales decreased 25.8% to $199M. The company reported weakness across all merchandise categories and regions.

Tuesday, July 28, 2009

Coach Profit Drops 32% For The Quarter

Like the majority of the luxury sector, Coach Inc. felt the effects of consumers' continued preference for necessities over discretionary purchases.

The company reported fourth quarter earnings fell 32% to $146M, or $0.45 per share, vs. $214M, or $0.61 per share in the fiscal fourth quarter of 2008. Income for the fiscal year 2009 was $623M, a 20% drop from earnings of $783M for fiscal year 2008. Earnings per share were $1.91 vs. $2.17.

Excluding one-time items, earnings per share were $0.43, meeting analysts expectations according to Thomas Reuters.

Fourth quarter sales dropped less than 1% to $778M from $782M in the previous year. Total Sales for the year were up 2% to $3.23B. Coach retail store sales, which account for 85% of its business, were up 3%. The biggest sales decline was in Coach's North American stores, where retail comp. sales slid 6.1% for the quarter and 6.8% for the year. Department store sales dropped 21% for the quarter and 19% for the year.

In response to sales declines, the company has increased their offering of handbags in the $200-$300 range to 50%. In an interview with The Wall Street Journal, Coach, Inc. Chairman and CEO, Lew Frankfort said the following:

"We want to be in that sweet spot where we believe the market will settle," Mr. Frankfort said. "It's our intention for the indefinite future to maintain pricing at [these] levels."
The new pricing strategy seems to be working. In a conference call, Mr. Frankfort said that the percentage of handbag sales in its North American stores has increased to 55% compared to 50% a year ago. The introduction of the new Poppy line, which has an average handbag price of $260, has improved retail sales for the month of July. The line, which is marketed towards Coach's younger consumer, is selling at a rate two to three times that of other collections.

Coach, Inc.'s Chief Financial Officer, Mike Devine said that fiscal 2010 will be an "investment year" for the company, with plans to open 20 retail stores and 6 outlets in North America, 10 stores in Japan and 15 new locations in China, where sales have been strong.

Included in the expansion is the creation of the Reed Krakoff label. Last month, Haute Retail mentioned that this new brand, revolving around Coach's creative director, was in the pipeline. The label will be a "global brand" separate from Coach that will include women's ready-to-wear, accessories, handbags, footwear and jewelry. "We believe that this concept will serve to define the new American luxury and engage a different customer who is looking for exclusivity and limited distribution", Mr. Frankfort said of the new label.

The Reed Krakoff label will debut in Fall 2010, with a limited number of stores in the U.S., Japan and Hong Kong.

Reuters reports that shares fell 7.2% due to investor worry about Coach's increased expansion of the brand.

"With increased investment spending in China, sales volatility here at home, lower-price points within the overall assortment and increased factory channel sales mix, it appears returns will take a hit," says Wall Street Strategies analyst Brian Sozzi. "The gross margin really missed consensus by a wide margin." (Source: Reuters)
But some analysts think the market overreacted.

Needham & CO analyst Christine Chen said she thought the market was reacting to the worse same-store sales number, but they were looking at the wrong thing. "They said July trends have improved due to Poppy," she said. "Investors should be a little more forward-looking." (Source: Reuters)
Coach shares dropped $0.38 to $28.05 at the close of the market.

Disclosure: Haute Retail has positions in Coach, Inc.

Thursday, July 9, 2009

June Same-Store Sales Roundup

An unusually rainy June combined with weak consumer confidence and a rise in U.S. unemployment, lead to the tenth consecutive month of weak same-store sales for U.S. retailers.

With the unemployment rate at a 26-year high of 9.5%, consumers choose to focus on necessities and discount items, forgoing discretionary purchases. This has retailers concerned about the upcoming back-to-school sales, which gives retailers a preview of what holiday sales will look like:
“You’re going to have a lot of the clearance stuff still on the floors, and that’s going to counteract any traction in the full-price merchandise for back-to-school,” Brian Sozzi (analyst at research firm Wall Street Strategies in New York) said today in a telephone interview. (Source: Bloomberg.com)
"It could be a very difficult back-to-school shopping season," Ken Perkins, Retail Metrics president said. "If that's the case, it's going to be a negative harbinger for what we see for the holidays." (Source: Reuters.com)
Here's the apparel retail June same-store sales roundup:

Macy's June same-store sales were down 8.9%, slightly under Wall Street estimates. Results were consistent with management expectations and the company's year-to-date sales trend.

Dillard's reported soft comp. sales for June, posting a decline of 14%. Analysts predicted a 10.4% drop in same-store sales.

June same-store sales for Limited Brands dropped 12%, coming below the company's expectations of a high single digits decline. Wall St. estimated a 7.9% loss. Semi-Annual sales at both Victoria's Secret and Bath & Body Works negatively impacted sales, along with higher promo activity prior to this year's sales events. V.P. of Investor Relations, Amie Preston, said the company expects July comp. sales to fall in the low double digits.

The biggest loser in the high-end/luxury sector was Abercrombie & Fitch, whose June same-store sales plummeted a whopping 32%. Analysts projected comps. would decline 26.6%. Pressure from lower-priced competitors Aeropostle and Buckle has forced A&F to reconsider its stance against lowering prices according to The Wall Street Journal.

Nordstrom beat analysts' estimates, reporting a 10% drop in June same-store sales.

One of the biggest surprises was Saks Fifth Avenue which, after six consecutive months of same-store sales losses in the high double digits, beat analysts' estimates by posting a 4.4% percent dip in June comp. sales compared to their predictions of a 11.8% decline. But don't break out the bubbly just yet. The low sales drop was due to the company's shift of their designer sales event from May to June. So, once again, it's all about the big discount, much to Saks' chagrin.

Neiman Marcus June same-store sales fell 20.8% with the company experiencing weakness across all geographies and merchandise categories.

Friday, June 19, 2009

Coach's Creative Director To Launch His Own Brand?

Since joining Coach, Inc. in 1996, Reed Krakoff, president and executive creative director of the company, has worked behind the scenes to make the Coach brand a household name and one of the top companies in luxury retail. Now, Mr. Krakoff is going to get a chance to take center stage.

Fashion Week Daily reports that Coach is in the process of developing a brand around Mr. Krakoff.

Details are sparse, however we do know that the company registered "Reed", "Reed Krakoff" and "RK", and two design logos with the U.S. Patent and Trademark office in March and February of this year. According to the filing, the products and services that may be used under the trademarks vary, ranging from ready-to-wear to jewelry to personal care products, even pet care products and hotels.

Coach has declined to comment on this new venture, only stating that they're always developing new products.

Thursday, June 18, 2009

Jimmy Choo Comes to H&M!

Shoes from the upcoming Jimmy Choo for H&M collection
(Photo: Magnus Magnusson/H&M)


H&M has announced that they will team up with Jimmy Choo to offer a fabulous collection of shoes and handbags for the fall. This will be H&M's first collaboration with an accessories brand.

The collection will hit 200 H&M stores worldwide on Nov. 14th. Known primarily for its shoes and handbags, Jimmy Choo will also offer women's clothing and men's shoes, bags and accessories.

Wednesday, June 17, 2009

Here We Go Again

Photo: Steven Miesel/Calvin Klein

Looks like the good folks at Calvin Klein are at it again! Their new billboard ad, located in NYC's SoHo area has caused quite a commotion amongst SoHo's residents. "It's borderline pornographic," said neighborhood resident Lisa Marchese, 36, a marketing specialist. "They all look so young, particularly the girl. And to portray them in a threesome - it's just taking it too far." Alicia Shay, 24, who ironically sells jeans, also objected to the ad. "Just the positioning of them all - she's kissing him, the other guy has his hands down her pants, they're all misty even. It's really inappropriate."

However, the designers at Calvin Klein think the bru haha is much ado about nothing. "I think it is a fantastic campaign", said Italo Zucchelli, menswear designer for Calvin Klein. "That is what Calvin Klein Jeans is supposed to be. Everyone needs to be scandalized and screaming. That is what we want." Calvin Klein's Creative Director, Francisco Costa said, “I think it’s great for tourists...I think they’ll see that and walk right into our store".

From a business standpoint, I understand the need to grab the consumer's attention with provocative ads. Sex sells. However, in this case, is this ad really shocking? My initial response to it was YAAAWN. Nowadays, society is so saturated with sexually charged images, and we've come to expect this type of ad from CK, that this ad doesn't create the same controversy as previous Calvin Klein ads. In fact, it comes off as desperation for Calvin Klein to make themselves relevant again.

I hate to burst Messrs. Zucchelli and Costa's bubbles, but in today's economy consumers are looking for long-lasting quality. If Calvin Klein's products don't offer that, no sexually charged ad is going to persuade folks to spend huge amounts of money on their products.

(SOURCES: NYDailyNews.com and NYMag's The Cut)

Tuesday, June 16, 2009

And The Winner Is......

Last night, Alice Tully Hall in Lincoln Center served as the location for the Oscars of the fashion industry, the 2009 CFDA Fashion Awards. Each year, the Council of Fashion Designers of America (CFDA) gather to honor the best and brightest in the fashion industry. Comedian Tracey Ullman served as host of this year's ceremony.

This year's award was about embracing fresh, new talent, with newcomers Kate and Laura Mulleavy of Rodarte, Scott Sternberg of Band of Outsiders, Italo Zucchelli for Calvin Klein and Jack McCollough and Lazaro Hernandez of Proenza Schouler taking the top awards.

First Lady Michelle Obama made an appearance via taped message to accept the Board of Directors' Special Tribute Award for her support of fashion designers. Ralph Lauren won the Popular Vote Award, a new award sponsored by L'Oreal Paris which allowed the public to vote for their favorite fashion designer at WWD.com.

Below is a complete list of the winners and honorees:

Womenswear Designer of the Year: Kate & Laura Mulleavy for Rodarte

Menswear Designer of the Year (tie) : Scott Sternberg for Band of Outsiders and Italo Zucchelli for Calvin Klein Collection

Accessory Designer of the Year Award: Jack McCollough & Lazaro Hernandez for Proenza Schouler

Swarovski Award for Emerging Talent Womenswear: Alexander Wang

Swarovski Award for Emerging Talent Menswear: Tim Hamilton

Swarovski Award for Emerging Talent Accessory Design: Justin Giunta for Subversive Jewelry

Geoffrey Beene Lifetime Achievement Award: Anna Sui

International Award: Marc Jacobs for Louis Vuitton

Eugenia Sheppard Award for Fashion Journalism: Edward Nardoza, Editor-in-Chief, Women’s Wear Daily

Eleanor Lambert Award: Jim Moore, Creative Director, GQ

Popular Vote Award: Ralph Lauren

Board of Directors’ Special Tribute Award: First Lady Michelle Obama


Thursday, June 4, 2009

May Same-Store Sales Roundup

Major Memorial Day sales and a jump in U.S. consumer confidence in May were not enough to fend off another month of soft retail same-store sales. U.S. same-store sales for the month fell 4.8% according to Thomson Reuter vs. their estimate of a 4.1% decrease.

A 14-yr high in consumer savings and a curb on spending, both due to unemployment concerns and a troubled housing market, have negatively impacted retail sales, particularly luxury retail. Discretionary spending, which drives the luxury sector, just isn't there. Instead, consumers are focusing more on necessities such as food, gas and affordable clothing:
Upscale chains posted some of the worst May sales at stores open at least a year, or same-store sales."The high end continues to struggle, those in the discretionary spend segment are really continuing to get clocked," said Ken Perkins, president of Retail Metrics. (Source: Reuters)
Here's the apparel retail May same-store sales roundup:

Macy's same-store sales for May were down 9.1%, coming just under analysts' estimates of a 9.3% decline. The company says that sales were consistent with management's expectations.

Comp. sales dropped 12% for Dillard's in May, above projected declines of 8% by wall street.

Limited Brands met analysts' estimates and company expectations, posting a 7% decline in same-store sales in May. Amie Preston, V.P. Investor Relations, says the company projects comp. sales decline in the high single digits for June.

It was another weak month for high-end/luxury apparel sector. Abercrombie & Fitch reported comp. sales fell 28% for May, which was higher than analysts' estimates of a 24.2% drop.

Nordstrom's May comp. sales slipped 13.1%, slightly above the 12.7% decrease analysts predicted. The company experienced strength in Women's Coats and Dresses, Individualist, Savvy and Narrative merchandise categories.

Saks continues to suffer, posting same-store sales that plummeted 26.6%, way above analysts' predictions of 14.2%. The positive impact of a clearance event shift from April to May was offset by the designer sale event shift from May to June. Both event shifts caused a negative impact on May comp. sales.

Neiman Marcus May same-store sales declines 23.3%. Weakness was experienced across all geographies and merchandise categories.

Friday, May 29, 2009

Christian LaCroix Files For Bankruptcy

Christian Lacroix, one of the biggest names in Parisian haute couture, is the latest victim of the slumping global ecomony. The company has announced that it has filed for protection from creditors, the equivalent of Chapter 11 bankruptcy protection.

The filing comes after the failed attempt of Falic Group, the U.S. based duty-free company that owns Lacroix, to sell the company. Lacroix's Chief Executive, Nicolas Topiol is blaming the lack of interested parties on the financial crisis.

This particular quote stood out to me:
In an attempt to boost revenue, Falic Group has tried to play up Lacroix's reputation for haute couture -- the highest-end of the fashion scale. This long-term strategy was "dramatically hindered by the current and ongoing world financial and economic crisis," the company said in a statement.
In this particular case, Lacroix can't solely blame it on the e-e-e-e-economy this time. Fashion houses cannot live on haute couture alone. It's very expensive to make and very few people in the world can afford to purchase it, therefore couturiers don't sell enough to offset costs and make a profit. Instead, they rely on licensing aspirational, affordable luxury merchandise such as ready-to-wear clothing, fragrances and accessories. This is why luxury conglomerates like Lacroix's former owner, Moet Hennessy Louis Vuitton (LVMH) and The Gucci Group have been able to thrive, posting sales increases of 11% and 5% respectively.

Unfortunately for Lacroix, the interest has never been there for the brand as they have yet to turn a profit in its 22 year existence. Sure, the fashion house received critical acclaim, but the public never embraced Lacroix aesthetic.

Paris Couture Week is five weeks away, so will Christian Lacroix make a showing? Mr. Topiol tells WWD that there may be a more scaled-back presentation.

(Photo: Dominique Maitre/WWD.com)

Thursday, May 7, 2009

April Same-Store Sales Round-Up

As expected, retailers benefited from the late Easter holiday, posting April same-store sales that were better than expected, as well as positive outlooks for earnings. However, overall comp. sales for the apparel sector were soft, indicating that consumer confidence is still low.

Analysts expected overall same-store sales to fall 0.2%, however Thomas Reuters reports overall same-stores sales increased 1.2%. Sans Walmart's numbers, sales fell 2.7% however that still tops the 3.4% drop analysts expected.

Still some are not impressed.
"It's hard to really ... be terribly excited," said Michael Niemira, chief economist with the International Council of Shopping Centers (ICSC), since the results only demonstrate a move from "extreme weakness" to "moderate weakness. That progress toward improvement will continue."
The market's response was a dip in trading with the S&P Retail Index down 2%.

Here's the apparel retail round-up:

Walmart continues to prosper during these challenging economic times, posting a April comp. sales increase of 5% beating the 2.9% increase analysts' predicted. The company credits the Easter holiday shift as well as increased strength in seasonal and discretionary purchases. Walmart announced that they will no longer provide monthly comp. sales results, insteading opting to provide comp. sales results on a 13-week basis to be released during their scheduled quarterly earnings calls.

Macy's Inc.'s comp sales were down 9.1%, which were consistent with the company's expectations. The company forecasts a first-quarter loss of 19 cents to 21 cents per share, excluding restructuring costs. This beats Macy's earlier projections and Wall Street estimates of a 27 cents per share loss.

April same-store sales for Limited Brands fell 6%, slightly more than the 5.9% decline that was estimated.

High-end apparel retailers continues to struggle the most. April same-store sales for Abercrombie & Fitch were off 22% for April, which was under the 27.3% drop analysts predicted.

Nordstrom's April same-store sales dropped 10.8%, beating analysts' estimates of a 12.3% decline. The shift of the Easter holiday from March to April favorably affected sales, however the shift of the Nordstrom Rewards event for Nordstrom cardholders from late April to March offset any gains. The strongest performing merchandise categories were women's coats & dresses and junior women's apparel.

Saks Fifth Avenue continues to struggle, posting April comp. sales declines of 32%. The company blames the shift of a spring season clearance event from April to May as having a negative affect on sales results. However, management projects this event shift will positively impact sales in its second fiscal quarter.

Neiman Marcus April same-store sales fell 24.6% in its Specialty Retail Stores segment, which included Neiman Marcus stores and Bergdorf Goodman. Weakness was experiences across all geographies and merchandise categories.