Shop Talk

Retailers, consumers and prices

Check Out Line: The lipstick recession

January 16, 2009

FASHION/Check out the dismal economy trumping consumers’ desire (or ability) to put on a pretty face.

Both Elizabeth Arden and Estée Lauder  warned of lower-than-expected second-quarter results in the wake of a disappointing holiday sales season.

“The unprecedented global economic crisis produced one of the worst holiday seasons in decades, with many U.S. retailers experiencing double-digit sales declines in nearly all categories,” said William P. Lauder, Estee Lauder’s chief executive officer, in a statement.

“Our business was no exception to the downturn in consumer spending and our second quarter results will come in lower than we expected.”

And this is from E. Scott Beattie, chief executive officer of Elizabeth Arden: “The performance of our U.S. Elizabeth Arden prestige department store business was much weaker than we had anticipated, though consistent with overall trends experienced in this channel. Additionally, economic conditions in our higher margin travel retail and distributor markets worsened considerably in November and December, which negatively impacted our international results.”

Elizabeth Arden also said that in order to limit credit risk it cut down on shipments to certain customers “due to credit constraints at those customers.”

Looks like the company was trying to limit its risk to retail bankruptcies, which rose in 2008 as the credit markets froze and consumers cut back on spending. Department store operator Boscov’s filed for bankruptcy protection, while Mervyn’s held going-out-of-business sales. 

The new year has not ended the trend with Gottschalks filing for bankruptcy protection and Goody’s saying it intends to liquidate its remaining stores.

Also in the basket:

Private label eclipsed by brands in US retail slump

Wal-Mart Canada bracing for longer downturn

Three bidders eye retailer Circuit City: report

Consumer prices fall for third month in December

(Photo: Reuters)

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