Weekly Retail Report
Abercrombie & Fitch Reluctantly Reducing Prices
What: Abercrombie & Fitch, like any retailer that sells overpriced merchandise, is hurting right now. However, the chain won’t start slashing prices left and right - instead of putting every other clothing item on sale, A&F is going to slowly and subtly lower prices.
What They Say:
Looking ahead to the spring, the company has cut better deals with manufacturers that will allow it to charge lower prices at stores without taking a big hit to margins.
What We Say: Right after they shut down Ruehl, too! We’re not crazy about A&F to begin with - it’s a teenager’s world over there - but it’s easy enough to dip into the store randomly. And now that prices may start to go down, we’ve got a new reason to go. Wonder if other retailers are about to drop prices as well…
Tiffany’s Has Nothing on Wal-Mart
What: As the recession hangs around, we’re getting way less materialistic than we used to be. In a recent Zogby poll, 78% of respondents said they’d ditch a $500 item from Tiffany’s (in the blue box and everything) for a discounted $250 lookalike at Wal-Mart.
What They Say:
“People are moving toward a simpler, less materialistic lifestyle,” Zogby said in a statement.
“I call them Secular Spiritualists because they are looking for more meaning in their lives, and will seek it through family, friends, volunteering and leisure activities that fulfill their needs.”
What We Say: Wal-Mart just keeps going, and going, and going. This poll comes out just after the retailer announced its online expansion. We think one of the most refreshing aspects of the recession is how it’s made us all so much more tuned into good and practical fashion sense (vs labels and brand identity).
But there’s still something about that blue box…would you pay an extra 250 to upgrade from Wal-Mart to Tiffany’s?
A First Glimpse at Bebe’s PH8
What: Back in July, Bebe announced plans to scrap its Bebe Sport stores across the country and replace them with a new “retail concept” called PH8. Now the company has released the first images of its new “sporty-chic” collection—including shoes, bags, jewelry, and clothes. Although PH8 stores still aren’t expected to open nationwide until November, curious customers can start checking out pieces from the new line in select Bebe stores beginning in September.
What They Say:
“Think featherweight, monotone backpacks with substantial hardware; drapey, sequin-encrusted sweatshirts; and bib necklaces that look handmade.”
What We Say: We’ll admit it, the new looks leave us pleasantly surprised. The ubiquitous logos Bebe has become known for seem to be gone entirely, and a couple of the pieces really look like they could transition from the gym to the nightclub. Color us surprised. But more important, what do you think?
Aeropostale’s Discounts Drive Demand
What: Aeropostale is having the last laugh. The preppy teen retailer that’s generally seen as the younger sibling to more ubiquitous chains like Abercrombie & Fitch and American Eagle has announced that its recession pricing strategy of discounting merchandise to extreme levels—like $10 t-shirts and $12 hoodies—actually paid off. The retailer has managed to show sales gains over the past eight months, even while higher-priced stores like American Eagle and Abercrombie both faced declines.
What They Say:
“You can get a more fashionable polo for $15 from Aeropostale than you can get from either American Eagle or Abercrombie, and they’ll be much more expensive,” says [stock analyst Eric] Beder. “The teen customer is a very trend driven customer.”
What We Say: Good for them. It’s nice to see the underdog retailer come in for the win, and we’re holding out hope that Aeropostale’s success might encourage Abercrombie and American Eagle to discount their prices to similar levels as well. ( and, int he case of Abercrombie, put some clothes on their staff)
Abercrombie & Fitch Plans Price Drops
What: Dampened by three straight quarters of declining sales, Abercrombie & Fitch says it’s planning to shake things up in hopes of boosting profits. Up first on the agenda: lowering prices and focusing more on its target audience of tweens and 20-somethings. Abercrombie CEO Mike Jeffries says he plans to start reducing prices by the end of the year, with “most dramatic” cuts happening at spinoff stores like Hollister and Abercrombie Kids.
What They Say:
“We are young. We are sexy. We are controversial at times. That’s what we know how to do and that’s the business that we own here and are comfortable that we can around the world,” said CEO Mike Jeffries.
What We Say: It’s about time! We often complained about Abercrombie’s overly inflated prices—$50 for a plain polo tee? No thanks.
Crabtree & Evelyn Files for Bankruptcy
What: Crabtree & Evelyn—the ubiquitous bath and beauty products store known for its yummy-smelling soaps and lotions—filed for Chapter 11 bankruptcy protection in New York this week due to a “decline in consumer spending.” Although company executives say day-to-day operation of the 126 Crabtree & Evelyn stores across 34 states is unlikely to be affected, they are planning to close some of their less-profitable outlets at some point in the future.
What They Say:
“We are confident that Chapter 11 gives us the opportunity to restructure the company with a business model that will be sustainable for long-term growth,” Stephen Bestwick, the Crabtree & Evelyn’s acting president.
What We Say: While the word bankruptcy can sound scary for any Crabtree addicts, it’s not necessary to start hoarding the company’s popular lotions and body butters anytime soon. Crabtree is just the latest in a string of companies filing for Chapter 11 bankruptcy as of late, and it’s unlikely your favorite hometown location will be shutting its doors anytime soon.
You’re Not a Confident Consumer
What: A new report has come out that suggests shoppers aren’t as optimistic about the economy as originally hoped. While consumer confidence was steadily going up in March, April, and May, it’s now dropped again. This surprised all the forecasters out there, and has everyone worrying that retail sales will take another beating for the remainder of the summer.
What They Say:
Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement that the decline in consumers’ current view — caused by a less favorable assessment of business conditions and employment — “continues to imply that economic conditions, while not as weak as earlier this year, are nonetheless weak.”
What We Say: What happened? Luxury brands were getting snobby again, budget chains were doing fabulous, and it seemed like we were forgetting about that whole economy thing. Apparently that is not the case, as more and more of us face the harsh reality of an economy in recession.
Do you feel more or less confident about your pocketbook than a few months ago?
Photo from Newton Free Library
Abercrombie & Fitch Get Real with Ruehl
What: Ruehl No.925, or just plain “Ruehl,” was meant to pick up where Abercrombie & Fitch (its creator) left off. Targeted to the 22 to 35-year-old post-college, elitest crowd, the chain just couldn’t cut it in this recession. Not many 20 somethings are shelling out $100 on a pair of jeans right now. All 29 stores, located in 15 states (primarily on the East Coast), are set shut down by January 2010.
What They Say:
Wall Street criticized Abercrombie & Fitch for taking so long to close Ruehl. Abercrombie took a $51 million impairment charge related to Ruehl in the first quarter and will have to charge off an additional $65 million over the rest of the year. Same-store sales at Ruehl fell 33 percent in May alone.
What We Say: If you live near a Ruehl store, don’t rush there for a mini shopping marathon, hoping to cash in on all kinds of pre-closing deals. Find out when it’s scheduled to shut down and then check in a few weeks and even days before. We do, however, expect some great savings around the corner - Ruehl already started slashing prices before the bad news.
Filene’s Basement Files for Bankruptcy
Apparently, personal shopping services can only do so much…
The discount department store filed for Chapter 11 bankruptcy (which I guess isn’t as bad as chapter 7) this morning in an effort to reorganize their corporate structure. So what does this mean for us shoppers? Nothing right now… hopefully the store will be able to turn things around because we need MORE discount stores… not less.
Read the AP article
(Full Disclosure: Back in the day.. like waaaay back in the day.. I used to work at the Filene’s Basement in the Mall of America. Once, the Reggae star Shabba Ranks came into my check out line, buying a pair of black socks for $1.99. He wore really dark sunglasses, even though it was 8pm at night. )
The Budget Fashionista’s Weekly Retail Report for April 13
Let’s get to the good news first. Because it’s some of the best news we’ve had in a while. Nothing will change overnight, but consumers are coming out of the woodwork and buying stuff they just weren’t buying before, probably because they didn’t all lose their jobs like they thought they would. As a result, retail sales are slightly up.
Hot Topic and Jimmy Choo are some of the latest success stores - the latter’s expanding in Hong Kong.
Also, you know how everything is going bankrupt? That means there are all kinds of vacant retail spots popping up. Well, doesn’t seem they’ll last for too long. The retailers that are doing well are taking advantage of these new real estate opportunities.
Now the bad stuff.
Nordstrom cuts pay for its top execs.
Jane & Company cosmetics files for chapter 11.
Neiman Marcus slashes 131 jobs.
New York boutique Sweet Tater is set to close its doors April 19th.
LL Bean lays off 150 of its 200 call center employees in Bangor. This is just the first wave of layoffs.
The Downside of Liquidation Deals
What: If you’re headed to a local fashion boutique or mega retailer that’s shuttering its doors soon (hint: Gottschalks has just begun liquidation), you’re looking forward to once-in-a-lifetime kinda deals. But make sure to try on those clothes and leave second thoughts behind, because if you find a defect later on, you may be out of luck.
What the Denver Business Journal Says:
“Retail liquidations are a trend that’s playing out more and more as store chains — such as Circuit City, Mervyns and Linen ‘n’ Things — increasingly go out of business because of the current recession.
And in such liquidations, defective merchandise often isn’t returnable.”
What We Say: While we suggest that you take advantage of as many opportunities to save as possible (thanks to the Recession), we do remind you to double check anything you buy. In fact, with this unsteady economy, there’s no telling what stores might close down next, so even if you’re not at a liquidation sale, just be extra cautious about what you buy.
The Budget Fashionista’s Weekly Retail Report
In March, we saw signs that the economy is stabilizing - retail stocks are up, particularly for Sears Canada and UNIQLO. Other good news: Topshop finally opened in New York; it appears to have lived up to all the hype. And jewelers are thankful for brides and grooms-to-be, as the bridal industry appears to be recession-proof.
But it’s not all rainbows and sunshine. The luxury market continues to nose dive. Profits at Versace, for example, dropped quite a bit (but mostly do to exchange rate flux).
Meanwhile, Macy’s was “downgraded to junk” by an investment firm. That’s gotta hurt. Macy’s has company, though. A mall in Long Island defaulted on a $124 million mortgage payment, all because its two top stores went bankrupt.
In even gloomier news - Gottschalks is finally set to liquidate. Portland’s Zells Broz. Jewelers is following in its footsteps, announcing that it, too, is closing down.
Who were the casualties in all of this? In march, 6,500 retail jobs were lost. Ouch.
Designers Face the Music
What: Retailers, like Macy’s and Saks, are fed up with paying top dollar for designer fashions that probably won’t sell too well anyways. Who wants to buy a thousand dollar dress these days? So, instead of devising some marketing strategy to convince shoppers that they really do need a new Gucci purse, they’re just asking designers to lower prices. Why didn’t they think of that before?
What We Say: We agree with the The Cut’s take on all of this - while designer fashions might be cheaper for us down the road, they won’t be that much cheaper. If we don’t have a budget for $700 stilettos today, we won’t have a budget for $500 stilettos tomorrow. It’s more about values than anything, but some designers - like Versace, which refuses to lower prices despite its decreasing profits - just don’t get that yet.
We give them another month of misery and maybe then they’ll rethink their business plan and come to realize that “brand preservation” is a moot point when no one’s buying your stuff. Guess what Versace? You’re not too good for basic economic theory; supply and demand affects every business; it’s okay to admit you’ve been affected, too.
The Budget Fashionista’s Weekly Retail Report for March 29
It seems the news is getting worse by the minute for luxury retailers, but it’s starting to look up for the rest. Consumer spending has seen and upward trend in late February and March, and the shareholders of Saks, Ann Taylor, Liz Claiborne, Quicksilver, and Macy’s are feeling a little more optimistic about the future.
Goodwill and the Dollar General Store are both doing peachy, as you might expect, so much so that Goodwill’s expanding.
But the retailers that can’t stay relevant in this economy, in other words the retailers that don’t offer up lower cost products, are just digging themselves deeper and deeper into a hole.
Here’s a wrap-up:
Beauty sales, in general, are plummeting.
Tiffany’s earnings have fallen 76% and the retailer’s still too stubborn to lower prices.
DSW had a rough quarter, but Sketchers plans to grow its business in South America.
Luxury menswear designer Thom Browne’s on the brink of bankruptcy.
As companies suffer, so do their charities.
Wet Seal’s not doing so hot.
H&M profits fell 12%.
Hugo Boss has had better days.
Jeweler Charles and Colvard report a 47% drop in sales.
What about jobs?
Barney’s is letting go 76 employees.
Wal-Mart (yes, Wal-Mart) is shutting down an optical lab and in the process, cutting 650 jobs.
Swarovski Crystal is laying off 650.
Active Ride (skateboarders and surfers know this one well) has filed for Chapter 11.
Maybe we should all start thinking outside the shoe box, like suit maker Canali, which has just purchased a software company called Datafashion.
The Budget Fashionista’s Weekly Retail Closing Report, March 22
Sad but true:
New Jersey’s got a whole lot of vacant retail space right now, as big and small stores have closed down and skipped town - we’re pretty sure this is happening in other cities, too.
Barney’s has officially suspended spring orders until it gets its financial act together.
The National Retail Federation predicts that the average American consumer will spend $117 on Easter candy, gifts, food, and decorations, and that’s a bad thing because they spent $135 last year.
Nike’s reorganizing into six geographical focuses (rather than four), which is probably music to the ears of shareholders. It will mean a 4% workforce reduction, though.
Light at the end of the tunnel:
While most retail profits have plummeted, Ross has experienced record growth and plans to “increase its square footage by 5%” in 2009, eventually becoming a 1200-store chain.
The juggernaut of juggernauts, Wal-Mart, continues to make everyone else look like a fool. It’s giving thanks to its hard-working US hourly employees - or specifically, giving them two billion bucks, in the form of bonuses, 401K contributions, profit sharing, and in-store discounts. That’s probably Wal-Mart’s best attempt at good PR, well, ever.
Even Hermes, a luxury firm, is saving face in this economy. In nearly every market but Japan, profits are up. So, Hermes is opening up 20 new outlets in Asia and the US primarily. It seems that upscale brands/designer fashions have a fighting chance if they’ve got a global edge.
The Budget Fashionista’s Weekly Retail Report for March 15
We hate to be the bearer of bad news, but every time the retail report rolls around, we’ve gotta be just that. Here goes.
Slowly but surely, retail sales are increasing, but even though February wasn’t hit as bad as Wall Street expected, the news is still all bad. Just not as bad as everyone predicted. Men’s Wearhouse is one shining example of this; although its profits went down, they didn’t go quite as far down as anticipated.
Good News First
Wal-Mart is kicking butt and bragging about it, too, with this statement from the Vice Chairman: “Our customers have come to trust our ‘Save Money Live Better’ promise, and we exceeded our own expectations for the period.” Hot Topic also seems to be getting along without too many hangups.
Not Doing So Hot
PacSun reported major losses in Q4.
L.L. Bean is prepping employees for a wave of layoffs in 2009, but hopes some of their more senior staff members will voluntarily retire and make it easier for everyone.
American Eagle didn’t do too well in Q4.
Neiman Marcus gets the prize, though, with a whopping $509 million loss.
Up for Sale
Teen retailer Charlotte Russe is putting itself on the sales rack - who will buy it and for how much? Time will tell.
Meanwhile, American Apparel has successfully sold some of itself to Lion Capital.
Life After Bankruptcy
Well, we’ve got some new Chapter 11 team members - Robins Bros Jewelry Chain and an Icelandic investor in UK retail, Baugur. (The recession’s everywhere, folks, not just the US.) What will happen to them now?
Let’s just take a look at what’s going on with retailers that filed Chapter 11 a while back. Gottschalks department store chain will auction off its assets by March 30th. S&K Menswear has begun 30 store closing sales, with markdowns of 30 to 50%. And Hartmax Corp’s Hickey Freeman store in NY is shutting down for good.
The Outlook
JCrew, Marc Jacobs, and of course, Wal-Mart are all planning to expand in 2009.
Aeropostatle will be launching a kids chain this summer and eBay will be giving PayPal and some of its other ecommerce platforms a little more focus in the coming year.
Target, on the other hand, isn’t so daring. It’ll open less stores than it originally intended to..
Read our past retail reports:
March 9
March 3
Feb 27
Feb 20
Feb 9
Feb 4
Jan 23
Are Vampires Saving Hot Topic?
What: The Cut hypothesizes the only reason Hot Topic has been doing well in recent months is because of its Twilight merchandise.
From the Cut:
“The movie came out November 21, which means Hot Topic cashed in on the prerelease hype, a period of time we never will understand or miss. Even though sales have been increasing month to month, Hot Topic is anticipating the day they start to flag as the popularity of Twilight merchandise fades.”
What We Say: The Cut is definitely on to something - we’re not sure Twilight is the store’s only saving grace, but Hot Topic is doing well, unlike its competitors and its top execs are trying to find ways to keep the momentum of the mega teen flick going, for as long as humanly (or vampire-ly) possible.
So, what does this say about shoppers? Are there certain things we just can’t resist buying, no matter how unnecessary they are, and no matter how lifeless the economy is? Like… a Twilight shirt or choker? Maybe this is just a generational thing; Mom and Dad fund their teens’ trips to the mall and keep tight-lipped about their lack of cash. It’ll be interesting to see if the entertainment industry leads the retail one out of this mess.
The Budget Fashionista’s Weekly Retail Closing Report, March 9
So, we’re gonna have to play Captain Obvious this week, because the retail industry had no surprises for us (or Wall Street).
As you might expect, shoppers are looking for the highest markdowns and avoiding luxury outlets altogether. As a result, retailers like Saks and Victoria’s Secret are doing exponentially worse month to month, while stores that sell $15 handbags instead of $1000 handbags are still managing to hang on. (Target’s even opening some stores in Hawaii, while Gap hopes to get over this bad economy by going overseas.) But everyone’s struggling - just to different degrees. Liz Claiborne, Urban Outfitters, Macys (duh), Dillards (duh), and Ann Taylor are this week’s notable strugglers. In order to get folks into your stores, you gotta slash your prices, and that ultimately means you’re gonna make less of a profit. And so the circle of life continues.
Some exceptions to the economy’s new rules include Foot Locker, Adidas, Wet Seal, American Outfitters, The Buckle, Hot Topic, and above all, Wal-Mart, who are exceeding investors’ expectations. Are they doing awesome? Well, no. But they are doing a lot better than the rest. This is hopefully a sign that the economy is stabilizing itself and while it may not improve any time soon, it just might stop getting worse.
Read our past retail reports:
March 3
Feb 27
Feb 20
Feb 9
Feb 4
Jan 23
The Budget Fashionista’s Weekly Retail Closing Report for March 3
Could the news get any worse? Very much so. Retailers keep struggling, stores keep closing, and stuff keeps getting liquidated. The Q4 results are in… here are the losers, and, well, the losers.
Fourth Quarter Blues
Nordstrom and Saks, two of the more upscale retailers out there, aren’t doing too well, and in fact - “given the uncertain economy, [Nordstrom] no longer will provide a quarterly earnings outlook.” Eeks. So much for optimistic thinking.
Macy’s, Target, and Kohl’s also reported awful fourth quarters. Gap joined the sad chorus, too, but was quick to point out that it has still managed to outperform competitors.
Slimming Up
Neiman Marcus is lightening its load, firing a bunch of folks (450 to be exact). Valentino is also letting go of some employees. J.Crew’s taking even more drastic measures, though, slashing 95 jobs, suspending its 401K program, and even getting rid of raises that are merit-based. Jeez!
Stores Closing
Aeropostatle is closing all 11 Jimmy’Z stores.
Zales is shutting down 115 stores.
Iridesse - a pearl jewelry chain by Tiffany and Co - is over. All 16 stores will be closed.
Could Barneys be on the same path? Probably not, but it did put a stop to its spring orders, for the time being.
Finally, the economy is hammering the final nail in the Fortunoff coffin. Liquidation is beginning.
In the midst of all this doom and gloom, Christian Audigier is rubbing the opening of his new Ed Hardy store in everyone’s face, celebrating it with champagne, hors d’oeuvres, and NFL players. A little insensitive, don’t you think?
Read our past retail reports:
Feb 27
Feb 20
Feb 9
Feb 4
Jan 23
Fortunoff Accepting Gift Cards Until March 8
What: Remember back when we talked about how Fortunoff, a NY-based retailer, was going out of business? Well, because of this, they refused to take gift cards for a while. Now, they’re changing their tune… but you’ve got to cash in before March 8th.
What the NY Attorney General Says: “The liquidators who now own the store’s jewelry and furniture merchandise have agreed to honor gift cards and credit slips—but only until March 8.” There was an estimated $8.5 million in cards and credit in circulation.
What We Say: If you live in New York or New Jersey and you’ve got a Fortunoff gift card in your wallet, now’s the time to use it. If you can’t find anything for yourself, just remember graduation and wedding season is right around the corner.
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