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)

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.