HR Quarterly Round-Up: Abercrombie & Fitch, Saks, Limited Brands

Abercrombie & Fitch Narrows F1Q Loss, Expanding Abroad (WSJ): Abercrombie & Fitch Co.'s (ANF) fiscal first-quarter loss narrowed, and the high-priced teen-apparel retailer outlined further plans to expand its presence overseas.

Saks Profit Surpasses Projections on Fewer Markdowns (Businessweek): Saks Inc., the New York-based luxury retail chain, reported first-quarter earnings that beat analysts’ estimates after marking down fewer goods.

Limited Brands Beats Street, Outlook Disappoints (Reuters): Limited Brands Inc., the operator of the Victoria's Secret and Bath & Body Works chains, posted better-than-expected quarterly net income on Wednesday, but the midpoint of a profit outlook fell short of expectations, sending the company's shares down 5 percent.

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.

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.

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.

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.

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.