What exactly is Victoria’s Secret? It may just be that the product the retailer could very well best be known for — the bra — is such a complex garment that it makes it hard for competitors to mimic its success.
Competitors “come and most of them go,” he said because they don’t understand the technical aspects of the product — like the importance of fit or the difficulty in putting together the 16 or 20 components of a bra.
“If the fit of a bra is off an eighth of an inch, you notice it,” he said. Wexner said there is not an item of apparel or footwear that can rival the complexity of a bra.
So what does this all mean?
According to Wexner, it means Victoria’s Secret has itself a nice little barrier to entry.
Two analysts expressed mixed views about Mattel’s near-term outlook, a day after the world’s largest toy maker posted a slightly lower third-quarter profit due to charges stemming from its recent global recalls of potentially dangerous toys.
“We believe investors may have breathed a sigh of relief, fearing results could have been worse,” BMO Capital Markets analyst Gerrick Johnson wrote in a research note.
“However, we think investors could still be in for a rocky ride and expect fourth-quarter results to be weak,” wrote Johnson, who has an “unperform” rating on Mattel’s stock.
For Wedbush Morgan Securities analyst Sean McGowan, Mattel’s outlook is far rosier.
“The majority of the costs and sales disruptions from recalls, testing and other supply chain initiatives have now been recognized,” McGowan wrote in a research note.
“We do expect fourth-quarter results to show some additional ‘extraordinary’ costs … but we believe these incremental costs will be measurable in pennies per share,” wrote McGowan, who has a “buy” rating on Mattel’s shares.
McGowan also said “Mattel’s growth prospects remain strong, its cash flow is enormous and improving and its market share is rising.”
The company’s results would have met or exceeded McGowan’s expectations excluding the added costs and supply chain disruptions caused by this summer’s recalls.
Despite concerns about reduced consumer spending this holiday season, shoppers could spend $33 billion online from Thanksgiving to Christmas this year, according to a new forecast from Forrester Research Inc.
The company, which asked consumers in September about their upcoming plans for online holiday gift-giving, says that would represent growth of 21 percent from the $27 billion spent online during the holiday season last year.
Some 80 percent of those surveyed said they planned to buy some type of apparel or accessories online, the largest category. Books and gift cards tied for second, and toys came in third place. Some 69 percent of those surveyed planned to buy consumer electronics online, compared to 55 percent last year.
But online sales still represent just a fraction of total holiday sales. The National Retail Federation is projecting 4 percent growth in total holiday sales this year to $474.5 billion. Using Forrester’s projections, that would mean online holiday sales make up 7 percent of that total this year.
Stop us if you’ve heard this one before, but consumers are expected to be very cautious in their spending this holiday season.
The latest survey that points to this comes from the National Retail Federation and says spending will only increase at about half the pace that it did a year ago.
U.S. consumers plan to spend $923.36 for holiday-related items this year, up 3.7 percent from 2006, the survey said. A year ago, shoppers said they planned to increase spending by 7.2 percent from 2005.
And 38.2 percent of respondents said sales or price discounts would be the most important factor to them when they decided where to shop, up from 36.5 percent a year earlier.
Expect the sales to be out there, early and often.
“It is safe to say that many retailers will be competing on price, causing this holiday season to be very promotional,” Tracy Mullin, NRF president and chief executive, said.
The video clip here shows a group of speakers outside KKR's building at 9 West, including New York City council member Melissa Mark-Viverito. It then follows the group to 9 West's entrance where it tried to get in. The clip ends with Emily McKhann, chief executive of The Motherhood, a nonprofit organization for mothers.
The title of Monday's event: Toys R Toxic? Barbarbians in the Playroom--The KKR and Toys "R" Us connection to toxic and dangerous toys.
About two-dozen or so protesters gathered in front of the slick, 9 West office building to call on KKR to adopt a "code of conduct" to protect children from lead-tainted toys.
Toys R Us agreed to be bought by KKR, Bain Capital and Vornado Realty Trust in March 2005 for $6.6 billion. The toy maker pulled vinyl baby bibs from shelves after testers found too much lead in them.
Dollar General, another KKR portfolio company, recalled nearly 400,000 key chains in April for lead paint poisening and recalled more toys earlier this month.
KKR owns Toys R Us with two other firms, and it's barely owned Dollar General for more than a few months. And several retailers, from toy makers to pet food sellers to drug makers have been caught up in the Chinese-made tainted product recalls that began earlier this year.
But the protest group that descended on 9 West on Monday chose to focus their attention squarely on KKR. After a few speeches, the group tried to enter the building, causing security guards to scramble. Two guys held the doors inside, while the main security person stood in front, refusing to let the group in.
He took some lip from some of the protesters, but it was a civil affair, ending with the group chanting "KKR. We'll be back" as they walked away. That's after chanting "KKR. Toxic Toys" on their approach.
A KKR spokesman declined to comment.
The event comes on the heels of several protests organized by union groups that are opposed to the private equity industry's history of slashing jobs to increase profits at their portfolio companies. Union groups have protested at private equity firms/events in other New York spots and Washington D.C. The Carlyle Group has also taken its lumps from union protesters.
KKR took some heat from some critics who said they overpaid for Dollar General at the time of the deal. Now they're taking some heat just a few month's after the deal closed.
She may not be a real doctor but she plays one on TV and she’s ready to shake up the dowdy world of medical scrubs.
Emmy-winning actress Katherine Heigl, known for playing Dr. Izzie Stevens on Grey’s Anatomy, is launching a line of “medical apparel” called the Katherine Heigl Collection.
It goes on sale Oct. 22 and is being touted as the first celebrity-endorsed line of uniforms and scrubs to come to the market.
“The collection, which reflects current runway and lifestyle trends, was designed to empower women in healthcare to express their personal style while maintaining a professional appearance,” the press release states.
Women can choose from one of four collections, like the London line that features ”mod details and pop colors along with chic city black and gray with a dose of hot pink and stark white” or the Seattle line that is designed for the adventurous - “echoing the versatility of cargo pants with multiple pockets and drawstring leg details.”
Now your real doctor can dress up like your favorite fake doctor.
The maker of Barbie dolls and T.M.X. Elmo had to recall about 21 million toys earlier this year because of lead paint or hazards caused by small magnets.
Margaret Whitfield, analyst at Sterne Agee, said early fall toy sales have been hurt by consumer response to the well-publicized recalls of toys made in China, including key Barbie products.
Mattel’s sales fell 2 percent in the United States, with Barbie sales down 19 percent.
Also in the basket:
Financial players see Saks warming to offers (WWD)
While Wal-Mart is trying to re-emphasize with shoppers that it sells for less, rival Target was the one with lower prices last month, according to a JP Morgan research note.
Analyst Charles Grom said that for the first time since beginning its monthly study, Target surpassed Wal-Mart in the price war as it became more promotional on several general merchandise items.
“In September, Target had a price lead over Wal-Mart for the first time in 18 months, during which time Wal-Mart has held a 2.0 percent price lead (on average),” he wrote.
Grom said his study was based on the pricing comparison of 50 products between Wal-Mart and Target.
He also said Target had a temporary sale at the time of the study, which had a material affect on this month’s results:
Three items in particular that we price every month were on sale: (1) Bounce 120 sheets, regular-priced at $4.89, was on sale for $4.00; (2) Listerine 1.5 Liters, regular-priced at $6.29, was on sale for $5.00, and (3) Tide with Bleach 100 ounces, regular-priced $6.99, was on sale for $5.00. In total, the sale prices were at a cumulative discount of 22.9%.
The report comes a day after Wal-Mart and Target reported September sales at stores open at least a year, or same-store sales, that were below Wall Street expectations.
Target’s final September same-stores sales gain of 1.2 percent missed its own downwardly revised forecast of a gain of 1.5 percent to 2.5 percent. It said sales were hurt by a drop in traffic and weak apparel sales.
“It will be interesting to see the extent Target remains promotional,” Grom wrote in his note.
Major U.S. retail chains weren’t the only ones issuing earnings warnings on Thursday. After the stock market closed, office products maker Acco Brands cut its 2007 EBITDA outlook, saying its customers have reduced their inventory levels as consumer demand weakens.
And the problems aren’t just confined to the United States. Acco said that despite strong sales and earnings growth in July and August, it experienced double-digit sales declines in September in the United States, and, for the first time this year, in Europe, in its three largest segments.
Credit Suisse analyst Gary Balter said the warning should weigh on the sector.
“We have been clear that we believe near-term consensus expectations for the office supply retailers (OMX, ODP and SPLS) are too high and Acco’s news may be a catalyst to bring them lower and reset expectations,” he wrote.
In particular, he said Acco’s news may pressure Staples, Office Depot, OfficeMax, Genuine Parts and United Stationers this morning.
But Acco wasn’t alone in issuing a post-market warning. Women’s apparel retailer Coldwater Creek forecast a surprise loss for the third quarter and the second half of the year, hurt by higher promotional costs and slowing sales.
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