Shop Talk
Retailers, consumers and prices
Check Out Line: Betting on Borders
Check out who’s making a bet on Borders, the struggling bookseller.
Financier Bennett LeBow, chairman of tobacco holding company Vector Group Ltd, is buying 11.1 million Borders shares through a company he controls — making him Borders’ single largest shareholder.
Borders CEO Mike Edwards praised LeBow’s turnaround prowess- fair enough. If you can help tabacco companies, you can probably help any ailing company.
Borders said it would use some of the money from LeBow to raise its profile in the fast-growing electronic books market. The No. 2 specialty bookstore chain expects to debut its e-bookstore, powered by Kobo in June. Kobo’s reader which will prominently feature Borders’ ebookstore, faces fierce competition from the likes of Amazon’s Kindle, Apple’s iPad and Sony’s Reader.
LeBow stepped in a few weeks after the bookseller repaid a $42.5 million loan to Bill Ackman’s Pershing Square Capital Management, which owns 10.6 million shares and had been Borders biggest investor prior to LeBow’s invesment.
Last week, Ackman told Reuters that Borders was still not “out of the woods” and questioned whether there was room for two national specialty bookstore chains in the United States.
Former Pershing partner Richard McGuire is resigning from the Borders’ board, which helps make room for Lebow and Vector Chief Executive Officer Howard Lorber.
from Dhanya Skariachan:
Check Out Line: A mixed bag of consumer news
Check out a mixed bag of results from the consumer world.
Investors looking for yet another clue to gauge the strength of the U.S. consumer spending recovery might find some solace in online retailer Overstock's results and women's apparel retailer Ann Taylor's strong first-quarter outlook.
Overstock, which sells excess inventories of clothing, accessories, furniture and other items, recorded a 42 percent rise in quarterly sales, while Ann Taylor forecast a same-store sales rise of 11 percent in its latest first quarter.
"Consumers are back in the malls and outlet centers...They are being lured to spend on nonessential goods by pre-planned promotions from retailers and greater confidence in their economic well-being," Wall Street Strategies' Brian Sozzi summed it up.
The U.S. consumer is certainly warming up to spending on more than essentials and maybe a tad more comfortable replenishing their wardrobes with news of an improving economy floating around. But just how far will they go? Will we see a simultaneous improvement in all sectors of retail?
Judging by the latest crop of results from the restaurant world, maybe not.
LOFT to offer style help
For the modern professional woman who may have trouble putting together separate pieces of clothing in an interesting way, Ann Taylor LOFT is offering some help.
Its latest effort, called LOFT Style Studio, involves four stylists taking various items from the brand’s fall collection and putting them together in ways that may be unexpected (think faux fur vest on top of a tweed-like jacket or a striped cardigan over a floral dress). The ensembles will appear in LOFT stores, and various executives promise there will be ways for curious consumers to interact with the stylists and the brand via social networking.
At a party on Wednesday to showcase the idea, LOFT Marketing Director Jill Gabin told Reuters that based on focus groups of prospective LOFT shoppers, the brand found that many women wanted guidance or ideas about how to put outfits together, though there were others who felt they didn’t need it.
And while Gabin admitted that the collection’s target shopper is women aged 25 to 40, she stressed that good style was more about a state of mind than an age.
What do you think? Do you want stores to tell you how to wear their clothes or offer suggested outfits? Or do you prefer to put them together on your own?
(Photo: Reuters)
Check Out Line: Food companies serve up tasty results
Check out the better-than-expected results being served up by food companies.
Chocolate maker Hershey posted a quarterly profit above analysts’ expectations, said it was on target to meet its 2010 earnings forecast and boosted its dividend. The company also said it would boost advertising to try to sell more candy, including Almond Joy and York peppermint patties.
Meanwhile, Archer Daniels Midland, one of the largest processors of corn and soybeans, saw its profit slip 2 percent, but the results still topped analysts’ forecasts, and Pepsi Bottling also topped Wall Street’s view as productivity improvements offset a dip in sales. Fruit and vegetable producer Dole Food reported a higher fourth-quarter profit and paid down debt.
Outside the food and beverages sector, Whirlpool’s profit more than doubled on cost cuts and improving sales and the world’s biggest appliance maker offered a stronger-than-expected 2010 forecast. Women’s clothing retailer Ann Taylor said its fourth quarter earnings would top expectations.
Nevertheless, investors have been giving overall U.S. earnings a big yawn up to now, and consumers are saving more and spending less according to the IMF. On the plus side, global employment services company Manpower reported a higher-than-expected profit and said job trends were improving around the world, suggesting the economic recovery would be sustained.
Also in the basket:
Check Out Line: More holiday reality checks from retailers
Check out more retailers reminding Wall Street that all is not well on Main Street.
On Friday morning, AnnTaylor Stores reported lower-than-expected quarterly revenue and gave a cautious forecast for the current holiday quarter.
The operator of the Ann Taylor and Ann Taylor LOFT chains said its fourth-quarter sales would be slightly below those of the third quarter, and that its gross margins would be lower as well, due to heightened promotions it expects to use to drive sales throughout the holiday shopping period.
Meanwhile, Foot Locker late on Thursday reported third-quarter results that missed Wall Street expectations. The athletic shoe retailer cited lower than expected U.S. sales.
On a conference call on Friday morning, Foot Locker said it expected same-store sales for the holiday fourth quarter to be negative.
Foot Locker and AnnTaylor join a chorus of retailers ranging from Macy’s to Kohl’s to Wal-Mart that have warned investors in recent weeks that the holiday shopping season may be a little less merry than the stock market is expecting as consumers continue to show a reluctance to spend.
Or as Doug Scovanner, the CFO of Target, said quite pointedly earlier this week: “In our view, sell-side analysts are somewhat more optimistic across most of our industry than we believe is warranted in light of the harsh realities of the current environment.”
These jeans have staying power
That staple in women’s fashion just turned 75!
Levi Strauss & Co created the first 701 denims for women in 1934 (the iconic 501 for men came long before) as ranchwear. But the company’s women’s jeans are now as much a favorite with the hip and chic as with the more casual wearer.
The company is celebrating the 75th anniversary of its women’s jeans by arranging store events in New York, Los Angeles, San Francisco, and Chicago — showing off women’s jeans and memorabilia from bygone eras as well as offering special discounts.
“The Levi’s brand has a rich heritage of making jeans for fiercely independent and original women – from the pioneering women of the American West who first adopted men’s jeans and inspired the creation of a women’s jeans range, to today’s movie icons,” said You Nguyen, senior vice president and creative director of the Levi’s brand, in a statement.
Though jeans have been the one salvation for apparel retailers in the tough selling climate, San Francisco-based Levi Strauss swung into the red in its second quarter on global currency fluctuations and soft global sales.
Meanwhile, the competition gets a bit tougher this year as host of brands crowd the women’s jeans market from Gap to Ann Taylor.
Check Out Line: A(nn) big loss
Check Out Ann Taylor’s huge quarterly loss.
The clothing retailer, which operates its namesake stores and Ann Taylor Loft stores, posted a loss that was almost twice as big as Wall Street analysts had expected. The company is also shuttering 46 more stores as working women curb their shopping urges amid rising unemployment and the unabating financial crisis.
Ann Taylor’s loss came a day after top U.S. retailers posted February same-store sales numbers. While the overall result was boosted by Wal-Mart, several apparel chains and department stores are still bleeding sales as consumers continue to spend their money on basics such as food.
The retailer’s dismal results are just another sign that no quick turnaround is in sight for U.S. companies that cater to consumers’ shopping whims.
Also in the basket:
So long, suits
The financial crisis has hit sales of everything from cars to homes to lattes. Now women scared about the market, and maybe even their own jobs, are wearing the old standbys in their closets rather than splurging on new clothes for work. At least, that’s what’s happening over at AnnTaylor, which expects a bleak fourth quarter. Ann Taylor, the company’s stores stocked with business and business casual clothing, is feeling the “significant impact the financial crisis is having on the professional working woman,” Chief Executive Kay Krill said during a conference call on Friday. “Corporate headcount reductions and rising fears of future unemployment have made our client cut down or even cut out her spending all together,” Krill said. Ann Taylor stores are seeing a “dramatic pull back” in items like suits and workplace separates, which represent about a third of the items in its stores. Instead of buying a new suit, a shopper might just spruce up her wardrobe with a couple of tops. “I think it’s a different day and definitely she’s not interested in suits. I think that women want their wardrobe to work harder for them. They want it to be able to go to work and on the weekend and that’s what we’re seeing happening.”
Over at the more casual Ann Taylor LOFT stores (seen here) sweaters, dresses, denim and other casual items were the top sellers last quarter, while shoppers shyed away from “refined separates,” such as shoes, bags and jewelry. One bright spot? Cashmere, Krill said. Apparently, when the going gets tough, women wrap themselves in a little bit of softness to cushion the blow.
(Reuters photo)
Check Out Line: Retail earnings optimism
Check out things looking a little better in retail? Ann Taylor raised its forecast for first-quarter earnings, citing improved results at its LOFT chain and stronger expense control. This comes a few days after many retailers posted better-than-expected sales in April and could mark the start of a trend. Goldman Sachs said the better April could lead to modest first-quarter earnings beats. “This will be particularly evident across the department store sub sector as most management teams reduced their earnings outlook post March results, which fell short of plan. Kohl’s has already kick started this trend stating EPS would ‘exceed’ previous 40 cents to 42 cents guidance. We suspect J.C. Penney will follow suit, beating management’s 50-cent forecast … given high end of plan sales,” Goldman said in a research note. Retail earnings get going in earnest this week with reports from Wal-Mart, Macy’s, J.C. Penney and others. Also in the basket: April retail sales barely budged: SpendingPulse Luxury brands Prada, Ferragamo risk competing IPOs
(Photo: Reuters)
but consumer spending is rising only because oil prices are. if you take into account the inflation, the consumer spending has been flat.
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