Shop Talk
Retailers, consumers and prices
Check Out Line: A glimmer from Zale’s
Check out who is paying full price for bling. 
More people at Zale Corp, that’s who.
The jeweler still posted a loss in the first quarter, but it was less of a loss than a year earlier.
Merchandise margins also rose, the result of less promotional
price cutting.
Zale has also cut expenses, closed stores and trimmed inventories. And it got some relief from its liquidity problems earlier this month, when private equity firm Golden Gate Capital lent it $150 million for five years and took a 19.9 percent stake.
Are Zale’s shares, priced at under $3, starting to dazzle? Well, any stock move today could be exaggerated by traders covering short positions.
As of April 30, about 14 percent of Zale shares were held short by investors betting the price would fall. That is far above the 3.5 percent average for New York Stock Exchange-listed stocks.
Affluent Chinese help Tiffany make up for stingy US shoppers
Normally double-digit sales declines don’t cheer investors.
But shares of jewelry chain Tiffany & Co rose 4 percent on Wednesday even though it reported that sales at its U.S. stores open for at least a year (“same-store-sales” in industry parlance) fell 10 percent in the third quarter.
True, much of the hemorrhaging seems to have subsided since last year’s gruesome holiday fourth quarter when U.S. same-store sales fell 33 percent, and November is off to a promising start.
A Runway Paved with Gold
Who needs the runway when Goldfinger’s got your back?
Fashion industry watchers wonder whether more designers will use Times Square’s neon signs as a virtual runway in the future, like Carmen Marc Valvo did with his spring/summer 2010 show during New York Fashion Week. More to the point, will more designers follow his lead next time by asking the World Gold Council and the Nasdaq OMX Group Inc. – or other financial markets players — to help foot the bill?
A Valvo spokesman says the cost was “about half” that of a runway show in the Bryant Park Tents. The tab usually starts at $100,000 and can run $250,000 or more, depending on how many models and special effects are involved. This was perhaps the flashiest example of how designers, hit hard by the recession, are seeking more sponsorships to finance their New York shows than in the past. Check out this video of the Times Square show, which ran on the neon signs of Nasdaq, Thomson Reuters and Fox:
Even with gold trading above $1,000 an ounce, that’s still less than what some of Valvo’s gowns go for at Bergdorf Goodman, Neiman Marcus and Saks Fifth Avenue.
The World Gold Council’s Duvall O’Steen said the group paid 10 models and other show expenses — the first time it’s taken such a high-profile role at Fashion Week. Check out this video as O’Steen talks about fashion and gold jewelry:
In fact, the World Gold Council is getting more requests now for corporate event sponsorships than it can accommodate, O’Steen said. And it’s happening after a year when a drop in world gold mining production curbed its budget for such affairs.
Bruce Aust, Nasdaq’s executive vice president of the corporate client group, also explains why the made its first foray into fashion:
Michael Quintanilla, who covers fashion for the San Antonio Express-News and two other Hearst newspapers, told Reuters: “Times Square was the perfect place for a fashion show. With all that neon, it’s very ‘Blade Runner.’ I loved the format. You could drop in when you wanted, have a cocktail, talk to Carmen, see the clothes and leave, without being herded into a space like cattle and being forced to wait.”
Check Out Line: Stuck with the bling…
Check Out who’s holding the most and least inventory these days.Jewelry retailers are now holding their merchandise the longest among retail peers, according to a study by financial analysis firm Sageworks. In the last 12 months, jewelry retailers have held inventory for 102 days — 19 days longer than they did in 2006 and the same as in 2008. The sector has been among the top sufferers in the recession, with consumers shying away from jewelry to save money, while retailers resort to discounts and promotions to sell off merchandise.”The longer it takes for inventory to turn, the more serious the implications are on cash flow and profits,” the study noted. Lawn and garden equipment stores took the No. 2 spot, holding inventory for 14 days more while beer, wine and liquor stores and building materials retailers were third and fourth on the list, holding merchandise for 12 and eight days more than they did in 2006 respectively.The surprise factor? Auto parts and tire stores came in last in the list holding their merchandise for four fewer days than in 2006. Why, you ask? “Likely because people are repairing what they already own as opposed to buying new,” the study said. That’s more bad news for car sellers.Also in the basket:Nike orders disappoint, shares fallH&M profit beats forecast Downwardly mobile: Living on less in the city (WSJ - susbscription needed)(Photo/Reuters)
Check Out Line: Diamonds no longer a girl’s best friend?
Check out the quarterly results at jeweler Tiffany & Co. It’s enough to make one question Marilyn Monroe’s choice in songs.
The company posted a slightly weaker-than-expected first-quarter profit and said sales dropped 22 percent as shoppers avoided jewelry. Companies like Tiffany and even more-affordable peers such as Zale Corp have seen demand hurt in the past year as consumers focus on buying necessities in the recession.
Check Out Line: From beef jerky to jewelry, cost cuts pay off
Check out retailers at the high end and the mass level topping Wall Street profit expectations after cutting costs.
Tiffany & Co’s fourth-quarter profit handily topped analysts’ estimates, after the luxury jeweler took aggressive steps to tighten its cost structure as even wealthy consumers pare back spending in the recession.
Check Out Line: The discretionary downtown
Check out the effect of splurge-resistant shoppers on quarterly results.
With newly frugal shoppers sticking to newly shrunk budgets, Saks posted a quarterly loss that was much steeper than Wall Street expected, and said same-store sales in its fourth quarter fell 15.3 percent.
“During the quarter, the company experienced continued weakness across all geographies, merchandise categories, and channels of distribution,” said Chairman Stephen Sadove.
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