Retailers, consumers and prices
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.
Check out Target maintaining retail margins.
That counts as a win in retail these days. The discounter was able to better manage markups and markdowns than last year, helping it keep gross margin steady, even though consumers are spending more on less profitable staples and less on discretionary items.
The company soundly beat analysts earnings estimates for the quarter. But profit still fell 13.3 percent in the quarter, not necessarily a good thing when you are in a proxy fight with an activist investor.
The story from Target was the same as the story from most retailers during this recession. Sales are sluggish or falling, they are controlling inventories and trying to rein in expenses.
AnnTaylor had the same story and reported a smaller-than-expected loss.
But it’s outlook was also cautious as the recession keeps women from buying work clothes and luxury apparel.
The question is, if consumers keep on the sidelines, how much more cost cutting can retailers do to limited the bleeding.
Also in the basket:
Tween brands posts narrower-than-expected Q1 loss
BJ’s Wholesale profit tops view; forecast raised
Sodas a tempting tax target (N.Y. Times)
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.
Listen up, fashionistas. Celebrity stylist Jorge Ramon wants women to know that wash and wear is the new rock and roll, when it comes to fashion trends.
That’s good news for every woman who’s ever skipped lunch just to pay her dry cleaning bill.
AnnTaylor reported a quarterly loss on Friday as the struggling clothing retailer, facing lagging sales and falling store traffic, took a charge to restructure its operations. But not to worry — the CEO is aware of the problems facing the retailer and is “all over it.”