Macy's Workers Threaten To Strike [UPDATE 3 6/17]

UPDATE III 6/17:

Women's Wear Daily reports details of the contract agreement:

Under the terms of the contract, all union workers will receive a general raise of $3.05 an hour over the next five years, full-time employees who work between 35 and 40 hours a week are guaranteed to hold onto those hours, workers will get one guaranteed day off a month expect during the holiday season and they can select the day. Extra hours can be picked up by part-timers, who will be eligible to participate in the medical plan if they reach full-time hours, no vacation benefits will be reduced and Macy’s will contibute more to cover the cost of health care while the workers will pay less.

According to a union officials, the new contract “delivers real gains and protections for the Macy’s workforce in the New York City area.”

UPDATE II 6/16 @10:20am:

NYC Macy's workers reach tentative agreement

The retailer and the union representing workers at several of its New York City area locations reached a tentative contract agreement Thursday morning.

(AP) - Macy's and the union representing workers at its flagship Manhattan store and three other New York locations reached a tentative contract agreement Thursday following all-night negotiations.

The union and Macy's made the announcement on the five-year proposed pact in separate statements.

Local 1-S of the Retail, Wholesale and Department Store Union said workers at the Herald Square flagship store would begin voting on the proposed contract on Thursday. Workers at the other stores, in the Bronx, Queens and Westchester County, would vote next Monday through Wednesday, it said.

"This is a solid contract and it reflects the fact that our workers are the true magic of Macy's," said RWDSU President Stuart Appelbaum. (MORE...)

UPDATE 6/16 @7:30am: Reuters reports negotiations continue past the midnight deadline into the morning.

If you live in Manhattan, the Bronx, Queens or White Plains, NY, and you need to get a few items at Macy's, you better hurry!
After five weeks of intense negotiations between Macy's management and the Local 1-S of the Retail, Wholesale and Department Store Union, 4000 workers have voted to strike if they can't come up with a new contract by 11:59pm Wednesday. Among the issues are benefits, wages and work hours:

Under the contract proposed by Macy’s, new employees would receive a 401(k) package rather than a defined-benefit pension plan; hours would be set by a new computerized system, which would dole out work assignments on a first-come-first-served basis, rather than recognize seniority or student or family schedules; and workers would pay more for health care.

Management has proposed a 35-cent hourly wage increase for current workers, and no change to the starting hourly wage of $7.50, which union negotiators have said does not constitute a living wage in New York.

However, with Macy's posting comp. sales up 7.4% in May, first quarter sales for FY 2011 up 5.7% to $5.89M and net income for the quarter increased to $131M from $23M, union officials feel management can afford to share the wealth.

“This is a company that’s in great shape financially, so it’s unacceptable for Macy’s to try to extract such massive concessions when many members of its workforce are struggling,” said Stuart Appelbaum, president of the RWDSU. “This is a textbook case of corporate greed and excess. Macy’s is in a position to give its workers a much better contract. It must stop trying to take away everything its dedicated workers have fought so hard and so long to get.”

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

A yellow gold, diamond, pearl and emerald necklace from the Bvlgari Heritage Collection

(Photo: Catherine Bigelow/SFGate.com)

Bulgari Loss Narrows on Sales of Necklaces, Perfume (Businessweek): Bulgari SpA, the world’s third- largest jeweler, reported a narrower first-quarter loss on rising sales of necklaces and perfume.

Macy's Swings to Profit, Aided By Move to Meet Local Demand (MarketWatch): Department-store operator Macy's Inc. on Wednesday said it swung to a better-than-expected $23 million first-quarter profit, helped by its strategy to tailor stock to local demand.
 
Nordstrom 1st-Qtr Net Rises, But Misses Street view (Reuters): Nordstrom Inc (JWN.N) said its first-quarter net profit rose 43 percent over last year, but it missed analysts' forecasts and shares fell after hours.

Madonna Inks Deal With Iconix; Reveals

After much speculation, Madonna has official announced her joint venture with Iconx Brand Group Inc, called MG Icon LLC, and revealed details of her exclusive juniors' collection with Macy's:

MG Icon will be 50 percent owned by Iconix and 50 percent by Madonna and Guy Oseary, her longtime manager and the “G” in the joint venture’s name. MG Icon will develop a range of fashion-related business projects, including the creation of new brands, the acquisition of existing labels and the exploration of opportunities within the portfolio of 21 brands that Iconix and its other joint ventures already own, said Neil Cole, chairman and chief executive officer of Iconix.

[...]

Under terms of the joint venture, MG Icon will hold the right to use Madonna’s name and associated personality for apparel, footwear, accessories and other products. Madonna will also provide creative input and endorsement services in connection with the development and marketing of the venture’s brands and projects.

[...]

The Material Girl line at Macy’s will launch in 200 doors and on macys.com in time for back-to-school, with the aim of expanding to almost all of the department store’s 850 doors, said Jeff Gennette, chief merchandising officer at Macy’s Inc.

[...]

The collection initially includes apparel, footwear, handbags and jewelry, with retail prices ranging from $12 to $40. Offerings could expand into beauty and fragrance categories next year.

Material Girl is targeted at 13- to 25-year-olds, and Lourdes Leon, Madonna’s 13-year old daughter, is serving as the muse for the line and has been involved in design meetings for the collection. “Lourdes has an incredible sense of style and her point of view on fashion has definitely been an inspiration for the line,” said Gennette. (SOURCE: WWD.com)

Both Macy's and Madonna are about twenty-five years too late. The 13-25 yr-old demographic is not looking to Madonna for fashion inspiration.

HR Quarterly Round-Up: Nordstrom, Macy's, Liz Claiborne

(Photo: Kyle Ericksen/WWD)

Nordstrom's 4Q Profit More Than Doubles (NY Times): Carrying less inventory helped upscale retailer Nordstrom Inc. more than double its second-quarter profit compared with a year earlier, though it tempered its sales outlook for 2010 and its profit results fell slightly short of forecasts.
Lower Costs Lead Macy's To 4Q Profit (Crain's New York Business): Macy's Inc. returned to a fourth-quarter profit Tuesday as lower expenses helped the department store operator even as sales dipped.
 
Liz Claiborne quarterly sales, forecast miss view (Reuters): Liz Claiborne Inc. reported a fourth-quarter loss that matched analysts' expectations but sales and a first-quarter forecast that fell short, hurt by weak sales at wholesale and at its Mexx store chain.

Madonna For Macy's?

In today's "You're About Two Decades Late" headlines, WWD is reporting that Madonna is in talks with Iconix Brand Group to launch a contemporary women's line that will be sold exclusively at Macy's department stores:

The merchandise would include apparel, accessories, intimates and footwear. Label names under serious consideration for the product lines include Material Girl for the apparel and Truth or Dare for the lingerie and underwear.

I know I should reserve judgement until I see the clothes, but I must admit that my initial reaction is: Do people want to dress like Madonna? Her M by Madonna line for H&M had several cute pieces that would fit the Macy's aesthetic, but it wasn't as well received as people expected.  Which brings us to the subject of the success rate of celebrity lines:

Speaking to American Public Media, Marshall Cohen, NPD's senior analyst, estimated that the misses in celebrity lines outnumber hits by a two-to-one margin. Jessica Simpson had a successful footwear collection but has struggled with sportswear. Jennifer Lopez pulled the plug on her Sweetface last year amid the recession. Other fashion failures included efforts from Eve, Paris and Nicky Hilton and Whitney Port. (SOURCE: Retail Wire)

Madonna must bring something new and fresh, and naming your line Material Girl or Truth or Dare won't cut it.

Macy's To Shut Down 5 Underperforming Stores

From Reuters.com:

Macy's to shut 5 underperforming stores

NEW YORK, Jan 5 (Reuters) - Macy's Inc (M.N) said on Tuesday it was closing five of its namesake department stores, affecting about 307 employees, as it pares underperforming locations.

Macy's said it would offer jobs at nearby stores to displaced employees when possible.

The five stores Macy's is closing are in Boise, Idaho; Waterford, Michigan; St. Ann, Missouri; Missoula, Montana, and Burlington, New Jersey. Those locations "no longer meet our performance requirements," Chief Executive Terry Lundgren said in a statement.

Clearance sales at the closed stores are set to begin on Sunday and last about 60 days, the company said.

The company also said it plans to open two Bloomingdale's stores in 2010, one in Santa Monica, California, and the other in Dubai, which will be the first foreign location for the upscale department store.

The Dubai store, which will be located at The Dubai Mall, is scheduled to open in February, a Macy's spokesman said.

In the three months ended in October 2009, the retailer opened or re-opened six stores. Following the closings announced on Tuesday, it will operate 809 Macy's stores and 40 Bloomingdale's locations.

Macy's has struggled with shrinking sales during the economic slowdown. In November it forecast that sales at its stores open for at least a year, or same-store sales, would fall between 5.4 percent and 5.7 percent during its current fiscal year.

Macy's is expected to announced December's same-store sales results on Thursday.

Shares fell 23 cents, or 1.4 percent, to $16.84 on the New York Stock Exchange.

(Reporting by Phil Wahba; Editing by Steve Orlofsky, Bernard Orr)

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.

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.

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.

READ FULL ARTICLE HERE.

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)

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.

MC/EV=47%

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)

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%.

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.

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.

A Sparkle of Light in March Same-Store Sales Reports

The apparel retail sector has reason to be a little hopeful today. Although retail same-store sales dropped in March, the declines were less than expected signaling an upturn in consumer confidence.

Reuters reports that more than half of the retailers that posted March sales, topped Wall Street estimates. Thomas Reuters' same-store sales index reports overall sales were down 1.8%, thanks to lower-than-expected sales growth from Wal-Mart. However, sans Wal-Mart's figures, sales fell 5%, slightly beating the 5.2% decline analysts predicted.

"The numbers are still soft, but given the deluge of negative news we have seen in the retail space over the last several months, it's got to be somewhat encouraging," said Ken Perkins, president of Retail Metrics Inc. "It looks like there is a little bit of an uptick, some pent-up demand ... for some discretionary spending." (Source: Reuters)

Investors responded to the encouraging news, pushing the Standard & Poor Retail Index up 4.6%.

The Easter shift from March to April negatively affected March sales results:

"The overall tone for March was actually stronger than the reported sales performance," said Michael P. Niemira, ICSC chief economist and director of research. "Sales performance was dampened due to several factors, two of which were calendar related; the first being a calendar-month shift that caused there to be one less Saturday in March compared with last year and the second being that Easter falls three weeks later this year, on April 12, as opposed to March 23 last year," said Niemira. "These shifts created an unfavorable month-over-month comparison with March of 2008. If we adjust for the calendar shifts sales for March were stronger than reported, in fact, up about 1 percent," Niemira added. (Source: ICSC)

Abercrombie & Fitch was the biggest loser with March same-store sales falling 34%, due to the company's continued resistance to discounting their merchandise in order to protect their brand's image. Comp. sales were weakest in week 3 and and stronger in weeks 4 and 5 reflecting the Easter shift. Weeks 4 and 5 were positively impacted by Spring clearance event. Across all brands, jeans, fragrance and fleece were the strongest categories. Comparable sales were down across all U.S. regions and Canada.

Macy's Inc. reported a 9.2% declined in same-store sales for the month of March, slightly beating Wall St. predictions of a 9.3% decline. Online sales (which include macys.com and bloomingdales.com and are included in same-store sales results) had another good month with a sales increase of 17.9% in March and 17.1% year-to-date. All figures were in line with management's expectations. Due to the Easter holiday falling in April instead of March, the company advises that the March-April period should be viewed together.

Limited Brands, Inc. reported March same-store sales decreased 9%, beating the company's expectations of a "low double digit decline" as well as analysts' estimates of a 12% decrease. The company projects mid-single digit same-store sales declines for April.

However, the struggle continues for the luxury sector.

Neiman Marcus was the worst performer in the sector, reporting same-store sales drop of 29.9% for March. The company said it experienced weakness across all regions and merchandise categories.

March Same-store sales fell 23.6% for Saks Fifth Avenue, missing Wall St. estimates of a 20.3% decline. The luxury chain experienced weakness across all merchandise categories, while Saks Direct and OFF 5TH showed strength.

Nordstrom beat analysts' estimates of a 16% decline, posting a same-store sales drop of 13.5% in March. The company reports that while the Nordstrom Rewards triple point event for Nordstrom cardholders had a favorable affect on sales, the positive results were offset by the shift in the Easter holiday from March to April. Rob Campbell, treasurer and vice-president of investor relations, said that cosmetics and junior women apparel were their strongest categories.

Apparel Sales Continue To Suffer Despite Overall Industry Increase

U.S. retailers reported their same-store sales for February and the results were better than expected.

Reports show overall retail industry same-store sales increased 0.3%, beating analysts' predictions of a decline of 1.3%, according to Thomson Reuters. The increase was due to Wal-Mart clobbering expectations by posting a 5.1% same-store sales increase, as well as retailers controlling inventory.

A few retailers beat Wall Street estimates by either posting gains, or posting declines that were less than expected. Aeropostale reported an 11% increase in same-store sales which was higher than the 6.9% increase analysts predicted. Gap Inc. said sales fell 12%, beating estimates of a15.4% decline. Limited Brands Inc., the parent company of Victoria's Secret, dropped 7% which was better than analysts' estimate of a 7.6% drop.

So, is this a sign that the apparel sector is beginning a turnaround? Not necessarily. Despite these bright spots, reports show that apparel was down 5.6% and department stores declined 9% compared to the previous year.

Macy's Inc. reported same-store sales down 8.5% for February, more than the 7.3% analysts predicted but within management's expectations. However, online sales -- which include macys.com and bloomingdales.com -- increased 16.2%.

Luxury retail continues to struggle the most as a result of consumers opting for food and necessities instead of discretionary items like high end clothing. The International Council of Shopping Centers reports February same-store sales for luxury stores dropped 19.2% compared to a 0.1% drop of all the chains it monitors.

Saks Inc. was the worst performer in the sector with a 26.8% drop in same-stores sales in February, experiencing weakness across all merchandise categories, particularly women's apparel. Eveningwear, fragrance, women's and men's accessories and their OFF 5TH stores showed relative strength for the month.

February same-store sales for Neiman Marcus tumbled 20.9% with weakness in across all regions and merchandise categories.

Nordstrom, Inc. reported February sales decline 15.4%, more than the 13.6% drop analysts predicted.

Macy's Cuts 7000 Jobs, Slashes Dividend In Reorganization Effort

Amidst bleak guidance reports, Macy's Inc. announced on Monday that it will cut 7,000 jobs or 4% of its workforce, as one of several steps to reorganize and cut costs.

"Reducing our workforce is an unfortunate outcome of the current economic environment, and I am frustrated that so many of our people will be unable to move forward with us as we proceed into a very exciting future for Macy's and Bloomingdale's," Terry Lundgren, Macy's Chief Executive said.

The company also announced that it will slash it's quarterly dividend 62% from 13.25 cents per share to 5 cents per share. This cut in dividend is expected to save the company $138M in cash for fiscal 2009.

Other actions to reduce expenses include eliminating merit salary increases across the company, a reduction of its match to employee 401(k) plan contributions in 2009, and cutting its capital expenditure budget to $450M from an original budget of $1 billion, saving $100M to $150M.

In a separate announcement, Macy's said it will repurchase outstanding $950M in debt that will mature later in 2009.

Broad reorganization efforts include a nationwide expansion of their "My Macy's" initiative, an experimental "customer-centric" program. Launched in 20 selected geographic markets in spring of 2008, "My Macy's" is used to identify and serve consumer needs location by location. The program will expand to 49 more districts in the second quarter.

"We have been very encouraged by early results from our My Macy's district structure in capturing new sales opportunities in pilot markets over the past year," Lundgren said. "In fact, of the company's top 15 best-performing geographic markets in December, 13 were My Macy's pilot districts. We are moving quickly and decisively to expand this model to all of our markets so we can pursue sales-driving opportunities as we position ourselves to capture share in every local market.

Further reorganization will entail the elimination of Macy's geographic division structure in favor of a more "unified organization", centralizing the company's buying, merchandise planning, stores senior management and marketing functions in New York, while corporate business functions will be located in Cincinnati.

Macy's expects these moves to save them $250M in 2009 and $400M per year beginning in 2010.

Meanwhile, the outlook for Macy's continues to be bleak. The company predicts that same-store sales in 2009 will be down 6-8%. Earnings per share forecasts is in the range of $0.40 - 0.55 per share. On Monday, Moody's Investors Service said that it may cut its rating on Macy's into junk terrority, which would increase borrowing costs for the company.

Macy's To Close 11 Stores

Amid dismal same-store sales results for December 2008, Macy's Inc. announced it will close 11 underperforming stores in nine states. These closings will affect approximately 960 employees.

"These closings are part of our normal-course process to prune underperforming locations each year in order to maintain a healthy portfolio of stores," said Terry J. Lundgren, chairman, president and chief executive officer of Macy's, Inc. "While new store growth has slowed in the current economy, our long-term strategy is to continue to selectively add new stores while closing those that are underperforming."

Stores to be closed are located in:

• Ernst & Young Plaza (Citicorp Plaza), Los Angeles, CA
• The Citadel, Colorado Springs, CO
• Westminster Mall, Westminster, CO
  
• Palm Beach Mall, West Palm Beach, FL
• Mauna Lani Bay Hotel, Island of Hawaii, HI
• Lafayette Square, Indianapolis, IN
• Brookdale Center, Brooklyn Center, MN
  
• Crestwood Mall, St. Louis, MO
• Natrona Heights Plaza, Natrona Heights, PA
  
• Century III Furniture and Clearance, West Mifflin, PA
  
• Bellevue Center, Nashville, TN

December Same-Stores Sales Results Bring The Pain To The Retail Industry

Well, the December same-store sales results of the nation's retailers are in and it ain't pretty.

Deep holiday discounts were not enough to save the apparel sector. Macy's, Inc. reported same-store sales down 4% for December, less than the 5.3% decline analysts projected.

"The holiday shopping season ended with strong sales in the fourth and fifth weeks of December after a slow start to the month and unfavorable weather conditions in the Northeast, Midwest and Pacific Northwest," said Terry J. Lundgren, Macy's, Inc. chairman, president and chief executive officer. "We went into the fourth quarter with an objective of reducing inventory levels to position us for 2009. We are pleased to have accomplished that objective with approximately 7.5 percent lower inventory on a comparable store basis at the end of December compared with last year."

Ironically, meeting that objective, via markdowns and sales, has caused the company to cut its earnings per share expectations for the fourth quarter ($0.90 to $1.00 per share vs. $1.10 to $1.30 per share) and fiscal '08 ($1.10 to $1.20 vs. $1.30 to $1.50). There are also plans to close 11 underperforming stores.

Luxury stores were hit the hardest, undoubtedly a reflection of the Wall St. layoffs and affluent consumers experiencing major losses in their investment portfolios.

Neiman Marcus, Inc. led the pack with a 27.5% drop in December same-store sales, experiencing losses across all merchandise categories.

December same-store sales for Saks, Inc. decreased 19.8%, almost twice as much as analysts predicted, with weakness in the women's apparel, outerwear, men's clothing and advanced sportswear, women's shoes, and handbags categories.

Coach, Inc., one of the few retailers that did not discount their merchandise, in an attempt to protect their "brand proposition", reported same-store sales for the quarter declined 13%. As a result, earnings expectations for the second fiscal quarter were lowered 3% to $0.67 per share.

Nordstrom, Inc. cited industry wide competitive markdowns as the reason for it not meeting earnings expectations of $0.35 to $0.45 per share.

The biggest surprise was Wal-Mart. The world's biggest retailer reported same-store sales increased 1.7%, but it didn't meet the 2.7% estimate, thus it was forced to cut earnings estimates to $0.94 per share, down from projected $1.07 per share.

Things will probably get worse for retail. Thanks to some retailers not offering discounts, they have an abundance of inventory that needs to be cleared out before the spring shipments arrive. In order to get rid of inventory, they'll be forced to discount which cuts into their bottom line. Combine that with January and February historically being slow because consumers are waiting for Spring collections.