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.”

Radha Chadha: Men Are Driving China's Luxury Goods Sales

(Source: Bloomberg.com)

In an interview with Bloomberg Television's Rishaad Salamat, author and brand consultant Radha Chadha discusses the emerging luxury market in China, and how men are the driving force behind it.

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.

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.

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)

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".

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)

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)

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.

(SOURCE: Atlanta Business Chronicle)

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)

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)

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)

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%.

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.

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.

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.

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.