Yarn House Rules

All fashion industry eyes are on Vietnam where the seventh round of the Trans-Pacific Partnership (TPP) trade negotiations are taking place this week.

Reps from nine countries, including the U.S., have gathered in Ho Chi Minh City in hopes of coming to an agreement on a trade deal before the Asia-Pacific Economic Cooperative (APEC) meeting in November.

Fashion industry execs are paying close attention to the U.S. stance on textile and apparel import issues, particularly the rule of origin:

Importers plan to push negotiators in Vietnam for a “flexible” rule of origin that does not restrict where the fabric and yarns are made in order to qualify for duty free benefits. The rule-of-origin debate has pitted apparel importers against the U.S. domestic textile industry, which is advocating a “yarn forward” rule of origin that would require apparel to be made of fabric and yarn supplied by the U.S. or the other TPP partner countries.

“When you have a rule that is more restrictive and burdensome, it discourages trade and investment from occurring,” said Steve Lamar, executive vice president of the American Apparel & Footwear Association, who will also be in Vietnam this week, adding that AAFA member companies often use U.S. yarn and fabric and forgo duty free benefits in other trade deals because the rules are so burdensome.

But a yarn forward rule is a linchpin for U.S. textile industry support.
A bipartisan group of 52 House lawmakers, many from traditional textile states, recently sent a letter to U.S. Trade Representative Ron Kirk making their support of any deal contingent upon a yarn-forward rule of origin, exclusion of certain products from tariff reduction or elimination, tariff reductions for specific sensitive imported products versus phaseouts for groups of products, and strong customs enforcement language to prevent transshipments from China.

“It makes no sense in our opinion to disenfranchise textile producers in the U.S. so Vietnam [a nonmarket economy that subsidizes its exports] can source product components from China and ship products to the U.S. duty free,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “What we know is that the yarn forward rule of origin will create an environment that gives support to expanding our export markets.”

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.

HR Quarterly Round-Up: Richemont, Burberry and Coach, Inc.

(Photo: Pascal Lauener/Reuters)

 

Richemont Sales Bolster Revival Hopes (FT): Richemont, the world's second-biggest luxury goods group, yesterday reinforced signs of a recovery in demand for expensive watches, jewellery and accessories with Christmas sales well ahead of expectations.

Burberry sales rise stronger-than-forecast 15% (Market Watch): U.K. luxury goods retailer Burberry reported a 15% rise in sales for its fiscal third quarter, sailing past analyst estimates, and the company said it now expects pretax profit for the year will reach the top end of market expectations.

Coach Profit Rises 11% on Holiday Sales (WSJ): Coach Inc.'s fiscal second-quarter earnings rose 11%, with a boost from holiday sales that improved over 2008's weak holiday season. Results beat Wall Street's expectations.

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)

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)

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.

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.

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.

Welcome!

Hello and Welcome!

Like any fashionista, I LOVE talking about fashion and beauty: the latest "It" bag, the hottest up and coming designers, the new must-have lip gloss.....etc.

However, I'm also interested in the business side of the industry, so I decided to create Haute Retail, a blog that waxes financial on the fashion and beauty world.

At Haute Retail, we'll discuss the business trends and financial aspects of the industry, as well as learn about the movers and shakers that help shape the beauty and fashion biz.

Enjoy!