Shop Talk

Check Out Line:Teen retailers’ painful holiday

Check out how teen retailers have miscalculated demand this holiday season and are resorting to steep discounts to get savvy young shoppers into their stores.

A visit this week to a Bay Area mall by Reuters reporter Alexandria Sage found that teen retailers such as American Eagle as well as Abercrombie & Fitch and its Hollister chain, have been reduced to slashing prices and offering “buy one, get one for half off” promos to salvage a holiday season that was supposed to be merrier than last year.

Like other retailers, the teen stores reined in inventory in the hopes of avoiding the deep discounts they’ve ended up have to offer anyway.

Their biggest goof? Bland, homogenous items, leaving pricing as the only differentiator. 

Many teen retailers’ stocks have tumbled since 2009 highs reached just two months ago, and at the rate they’re going, investors may just leave them lumps of coal in their stockings next week.

Also in the basket: - Rite Aid narrows loss despite sales drop, shares up - Pier 1 surprises with profit, sees better margins - National Beef pulls IPO

(PHOTO: Reuters)

Check Out Line: Lazard looks at fashion

Check out what’s hot in fall fashion.    Lazard Capital Markets looked at 10 September fashion magazines and identified these trends:   Boots, with Jones Apparel getting seven call-outs in the magazines.   Skinny denim and leggings, both getting play with looser, less form-fitting tops.   Motorcycle jackets, military jackets, trench coats, sheath dresses and one-shoulder tops.   Also, “studs appear everywhere in clothing and accessories, including handbags, belts, shoes, dresses.”   Companies best capitalizing on the various trends include Jones, Gap, American Eagle and Guess, among others, Lazard said in a research note.   We were going to toss in a kicker of some fashion trend that is never coming back.  But face it, they all seem to come back at some point.  We expect to pull out our Members Only jackets any day now.   Also in the basket:   Tween Brands Q2 loss narrower than expected

BJ’s Wholsesale profit beats Street, raises FY view 

Popcorn, a hidden source of antioxidants, study says (ABC News)

(Reuters photo from 2004, because leggings always come back)

Latest back-to-school outlook brings little cheer

Citigroup retail analysts held a call with the media to discuss their outlook for this year’s back-to-school season and, as we’ve been hearing, there are few bright spots on the horizon.

Deborah Weinswig, who covers retailers including Costco, Wal-Mart and Nordstrom, said Citi expects back-to-school same-store sales for those retailers to fall 3 percent to 4 percent.

That compares with a gain of 0.9 percent last year.

“This is the first year since at least 1995 that we are projecting a decline in back to school same store sales,” she said. “In addition, if back-to-school sales don’t materialize early we believe that retailers could become very promotional in an attempt to drive traffic and sales.”

She said Citi’s proprietary back-to-school survey found that 45 percent of consumers plan to spend less for this year’s new school season than they did a year ago. The survey found that most consumers plan to buy apparel (75% vs. 79% last year), while the second most common purchase is expected to be a personal computer (15% vs. 19% last year) –although, as you can see, the percent planning to buy in both categories is down year-over-year.

J.C. Penney is one of Weinswig’s top picks for back to school – helped mainly by the fact that they have very easy comparisons to a year ago when sales fell.

Kimberly Greenberger, another analyst, said she is cautiously optimistic for improving sales and profit trends for the back to school season for softline retailers, or chains like Aeropostale and Pacific Sunwear. Greenberger said she was bullish on the outlook for American Eagle Outfitters and Urban Outfitters.

Check Out Line: March sales slip

Check out the drop in sales at most retailers.

The results coming in show that things might not be so bleak after all.  Sure, some retailers still disappointed with March same-store sales down more than expected.  Take a look at American Eagle, whose same-store sales fell 16 percent, while analysts expected a 10.4 percent drop.  Still, the company raised the low end of its profit forecast since it marked down less merchandise.

Over on the discount side, Wal-Mart’s same-store sales were only up 1.4 percent, while the Street expected them to rise 3.2 percent.  Still, they were up.  And they should be up again in April.  The CEO of smaller discounter Target, meanwhile, had this to say:

“Our guests continue to be cautious, but we have begun to see encouraging signs in the operating results of both of our business segments. In light of the Easter shift and recent trends, we expect our April reported comparable-store sales results to be essentially flat to last year.”

Are consumers finally out shopping again, and for more than just the basics?

Also in the basket:

U.S. jobless claims ease in latest week

Check Out Line: Retail suffers in all sorts of fashion

Check out the weak quarters at American Eagle and Talbots.

Apparently the tough U.S. retail environment is not age-specific.

American Eagle Outfitters, which sells teen apparel said fourth-quarter profit fell more than 6 percent amid weak sales, higher markdowns and competition from rivals.

The retailer also forecast first-quarter earnings well below analysts’ expectations as it has had to take higher markdown.

Meanwhile, Talbots, which sells apparel for women who generally are not in their teens, posted a quarterly loss, hurt by a charge related to its J. Jill business, store closings and declining sales.

But the company still posted a loss even without the charges. The company, like its rivals that also sell classic clothing to women over the age of 40, has struggled for more than a year with slow consumer traffic and declining sales.

Talbots said it is planning conservatively for 2008, with leaner inventories, better pricing and “more compelling” clothes in the fall, all of which it hopes will lead to a profit this year.