Shop Talk
Retailers, consumers and prices
Check Out Line: Olsen twins try mass-market fashion again
Check out America’s famous twins at it again.
Mary-Kate and Ashley Olsen, the former child actresses turned fashion designers, are launching a new juniors’ sportswear and accessories line for J.C. Penney. The travel-themed line is called Olsenboye, with each collection highlighting a new city.
The mid-priced line features clothes, shoes and handbags priced from $20 to $50.
Fashion is not new for the sisters, who were television stars from infancy and grew up to have a quirky bohemian style. They currently have high-end lines, such as The Row, which sells at Bergdorf Goodman, and Elizabeth and James, which sells at Neiman Marcus. They even once had a line of girls’ clothes at Wal-Mart, though it no longer exists.
Items from the new line will be available for a limited time in select JC Penney stores and online starting Nov. 6, with a full launch set for spring 2010. Let’s see if it lasts longer than the line at Wal-Mart.
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Check Out Line: Growing Penney’s-Macy’s rivalry
Check out the growing J.C. Penney-Macy’s rivalry.
Liz Claiborne’s plan, announced last week, to sell its namesake sportswear only at Penney stores and on a TV shopping network will end a decades-long tie between the Claiborne franchise and Macy’s.
The deal will give Penney more exclusive products, guarantee revenue and profits for Claiborne and free up Macy’s to better differentiate itself as its customer base increasingly overlaps with Penney’s, analysts and consultants said.
Macy’s has traditionally been positioned as a little higher-end than Penney, but the 2005 merger of Macy’s owner Federated Department Stores with May Department Stores broadened the customer base and brought the company into more direct competition with Penney, analysts said. Penney, meanwhile, has been expanding its reach into Macy’s territory.
Department stores like Macy’s and Penney have beefed up their exclusive label offerings to woo shoppers to their stores and reduce competition centered on price. Also in the basket:
This is good news for Macy’s, who can now free up more floor space for better goods. Liz Claiborne’s styles and quality has plummeted in the past decade, especially in the Woman division. Selections are so small, there’s only a few styles at any one time from which to select. I imagine this will extend to handbags and accessories also (there’s quite a range of style and quality but nothing that can’t be replaced with another brand) and there’s a men’s division called Claiborne which probably will go too (their styles are nice). In all, good news for Macy’s.
Penney for your discretionary dollars
Deciding where to spend the remainder, if any, of this month’s paycheck?
J.C. Penney is making its case for why you should be heading to its stores.
At the department store chain’s annual analyst meeting in New York, Penney discussed the steps it is taking to win consumers’ hearts (and their money).
One of the steps highlighted: A chance for its rewards program customers to meet country music band Rascal Flatts, which recently topped U.S. pop album charts with its album called “Unstoppable.”
The band, which is being sponsored by Penney on a “Rascal Flatts American Living Unstoppable Tour” will promote Penney’s American Living brand.
Penney moved its meeting from Plano, Texas, to New York City this year, saying it knew what tight budgets at Wall Street firms have done to analysts’ travel plans. To make them feel good, the retailer handed out CDs of Rascal Flatts’ Unstoppable album at the meeting venue.
(Photo/Reuters)
Check Out Line: Sit tight. They’ll bring the bad news to you.
Check out J.C. Penney trying to save people money. Not shoppers mind you — but bankers.
The company has canceled its annual analyst meeting at its headquarters in Plano, Texas. Seems the recession has hurt many firms’ travel budgets. But not to worry — J.C. Penney will come to New York to meet with analysts instead! Of course, the story Penney has to tell isn’t the greatest one right now. Profit fell 51 percent in the key fourth quarter, and the company expects a deeper loss in the first quarter than Wall Street expected. But at least the analysts get to stay home (well, the ones based in New York) and Penney executives get out of Plano! Also in the basket: Lowe’s posts sharp drop in profit As U.S. downturn deepens, repair business thrives Crop scientists say biotechnology seed companies are thwarting research (N.Y. Times)
(Photo: Reuters)
Expect more promos, less help this holiday
The financial crisis of the past two months has rocked retailers, and many are now planning to hire fewer seasonal workers and roll out promotions earlier than planned to try to salvage holiday sales, according to a recent survey by the Hay Group. The human resources consulting firm conducted an informal survey in September with 20 of the top American retailers, including Best Buy, JC Penney, Costco, and Macy’s to get a glimpse into their plans for the holiday season.
The group then ran the survey again this month to find out how those plans may have changed given the recent financial crisis. Here is what the they found: Holiday Sales
- In September, 60% of participants were planning on an increase in sales
- In November, 38% are expecting a decrease of 5-15% and 29% are expecting the same level of sales
Store Promotions
- In September, 45% indicated they would run the most store promotions on Black Friday, 45% indicated they would run consistent promotions from mid-December to January, and 13% indicated they would run the most after Christmas.
- In November, 33% indicated they’d run the most store promotions on Black Friday, and 57% indicated they’d run consistent promotions from now until New Year’s
Staffing
- In September, 75% were planning to hire the same number of seasonal workers
- In November, 53% are planning to hire the same number of seasonal workers, and 26% are planning to hire 5-15% fewer workers.
Check Out Line: Tough Month for Retail
Check out disappointing September retail sales
Many U.S. retailers posted worse-than-expected sales at stores open at least a year on Wednesday, and some cut their profit outlooks and said things won’t improve anytime soon as consumers remain shaken by the financial crisis, job worries and the housing slump.
Discounter Wal-Mart Stores and warehouse clubs managed the best sales performances in September as shoppers sought bargains on necessities. Wal-Mart, the world’s biggest retailer, stood by its third quarter earnings forecast.
Apparel retailers and department stores were particularly hard hit, and even luxury chain Neiman Marcus said consumer demand will stay weak for an extended period. Kohl’s, J.C. Penney and Nordstrom cut quarterly profit forecasts.
The results could further subdue expectations for the 2008 holiday season, expected to be one of the weakest in recent years.
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Penney puts together fabulous party for Fabulosity launch
A hot Manhattan club on a Saturday night? No, it’s the launch party for Fabulosity!
On Tuesday night, JC Penney didn’t let the difficult retail environment get it down.
The mid-priced department store operator threw a raucous party to celebrate the introduction of Fabulosity — the new sportswear line designed by former runway model Kimora Lee Simmons that it is introducing in its stores in time for the back-to-school shopping season.
At Hiro, a club in Manhattan’s trendy Meatpacking district, the lighting was low, the music was loud and the drinks were free. The tightly packed crowd danced to music and clicked pictures of themselves while waiting for Simmons to arrive and introduce her new line with a fashion show.
When the lights went dark around 9:15 pm, signaling the start of the show, Ken Hicks, Penney’s president, came on the runway to welcome the crowd and say how the retailer was excited to be working with Simmons — a great “inspiration” for the hip-hop inspired clothing line.
While the audience hooted, hollered and cheered, Simmons was the one who mentioned the difficult conditions shoppers are facing.
“I really demand that all my divas look fabulous,” she told the audience, but she added that shoppers should not have to spend their last dime to look that way.
Check Out Line: Billions can’t rescue retail sales
Check out all those billions of dollars in U.S. tax rebate checks failing to give June retail sales much of a boost.
The Commerce Department said on Tuesday that total sales at U.S. retailers rose a less-than-expected 0.1 percent in June. Economists polled by Reuters had forecast total retail sales to rise 0.4 percent in June, following a 0.8 percent gain in May.
Part of the weaker-than-expected results were due to falling demand for cars. Auto and auto parts sales fell 3.3 percent in June — their worst month since February 2006. But even excluding autos, retail sales rose 0.8 in June, which was below the consensus estimate of 1.0 percent. Excluding autos, building supplies and gasoline, retail sales rose 0.4 percent in June.
Economists had expected government tax rebate checks to give a bigger boost to retail sales in June, despite the weak overall U.S. economy, as shoppers had excess cash to spend. But last week, major retail chains, like J.C. Penney, Target and Gap, released their June sales results and many did not see a rebate boost. Penney said it might have received a “modest” sales lift from the checks but any benefit would be “short lived.”
So where did the billions of rebate cash go?
Well, Wal-Mart got a chunk. Its June U.S same-store sales rose at their highest level in years as traffic in its stores jumped. The retailer had offered to cash tax rebate checks for free.
Surging gasoline prices likely gobbled up an even bigger chuck of the rebate dollars. The Commerce Department said gasoline station sales rose 4.6 percent in June as motorists faced higher prices at the pump. Over the past year, gasoline station sales have jumped 24.5 percent to nearly $46 billion last month, on a seasonally adjusted basis.
Soaring gas sinks Goldman’s view of retailers
What does gas at $4.50 a gallon mean for some mall-based department stores?
A downgrade by Goldman Sachs.
Goldman sharply raised its forecast for oil prices in the second half of this year, saying it expects U.S. crude to average $141 a barrel, up from a previous projection of $107. Goldman also forecasts prices will rise further next year to average $148.
That is not good news for retailers.
“Higher energy spending in the second half is likely setting the stage for a more challenging backdrop for consumer discretionary sectors, particularly for the department store stocks,” Goldman noted.
Goldman downgraded JC Penney and Nordstrom to ”neutral” from “buy.” It swapped its conviction list “buy” designation on Kohl’s with Wal-Mart. It upgraded off-price retailer TJX to “buy” from “neutral.”
Goldman also cut its second half same-store sales estimates for JC Penney, Kohl’s, Nordstrom and Macy’s.
Check Out Line: Price cuts cutting Penney’s profits
Check out the 50 percent drop in quarterly profit at JC Penney.
The mid-tier department store operator had warned in late March that its first-quarter profits would be hammered after a drop in store traffic and dismal Easter sales forced it to cut prices to clear out unsold merchandise.
Penney shoppers can expect more price cuts on future visits to the retailer.
The department store operator said it is now trying to get inventory in its stores to better match the weak sales environment, meaning it will roll out more promotions and cut future merchandise orders.
Based on its forecast, Penney is expecting profits to decline yet again in its second quarter.
It forecast earnings per share of 38 cents–a dramatic drop from the 78 cents per share of earnings from continuing operations it reported a year ago.
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