Shop Talk
Retailers, consumers and prices
Check Out Line: Frugal fatigue?
Check out what women buy when they get tired of being a frugalista: boots, plaid and outerwear.
Those were some of the products that helped October U.S. retail sales improve from a year ago, when the unfolding financial meltdown had shoppers fearing a second Great Depression.
“Frugal fatigue is setting in,” said NPD Group analyst Marshal Cohen. After a year of scrimping, he added, the numbers suggest that some women are going in for a little retail fix.
“Women (not only moms) are shopping their closets, discovering new and fresh looks and filling in with some key updates,” he said.
But selective shopping is not enough to ease worries about the all-important holiday sales.
Thomson Reuters research shows that while October sales rebounded, results from individual retailers were mixed.
Also in the basket:
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.
Liz picks Penney; Isaac takes TV
JC Penney stores in the United States and Puerto Rico are going exclusive with Liz Claiborne Inc’s namesake brand and celebrity designer Isaac Mizrahi will sell his upscale Liz Claiborne New York line only on QVC, a TV shopping network.
The moves from Liz Claiborne were seen by some as a downward shift to mass-market retail channels and came as department store orders for Liz Claiborne’s products have fallen during what has become the longest recession since the Great Depression.
Analysts said the JC Penney deal is more lucrative for Liz Claiborne and signals the end of a decades-long relationship between Liz’s main brand and the Macy’s department store chain – which didn’t exactly go quietly.
“The Liz Claiborne brand has sold poorly in recent years and has continued to decline. As a result, we could not justify expanding it at Macy’s,” a Macy’s spokesman said.
JC Penney is known in the United States for stressing affordability and discounts while higher-end department stores like Nordstrom or Saks carry more designer merchandise and higher price tags. Macy’s tends to be somewhere in the middle of the two extremes, but lately has been discounting aggressively and focusing on everyday values.
Liz Claiborne, which recently hired a turnaround firm, said its “bold steps” would “further the revitalization” of the Liz Claiborne brand and “significantly alter its earnings trajectory.”
The agreement with JC Penney begins in August 2010. The Liz Claiborne New York line will partner with QVC after this year’s holiday season.
Check Out Line: Earnings-palooza!
Check out all the earnings in the consumer world.
Several retailers and food companies posted quarterly results, offering different views on where they stand in a recession that has consumers dialing back spending.
Macy’s posted a better-than-expected profit as it cut costs, but the department store operator’s new, higher earnings forecast shows full-year profit could still fall short of analysts’ expectations.
Sara Lee, the maker of baked goods and Jimmy Dean sausage, also reported a stronger-than-expected profit before one-time items on improvements in North America and said it was still considering divesting its international household and personal care business.
Underwear maker Maindenform also saw a profit that topped expectations, thanks largely to strong demand for its shapewear products, and raised its full-year outlook.
However, Liz Claiborne, owner of the Juicy Couture, Kate Spade and Lucky Brand chains, posted a deeper-than-expected quarterly loss as the recession kept many shoppers from buying the company’s clothing and accessories.
Also in the basket:
Gunn guns for gay marriage
Popular “Project Runway” mentor Tim Gunn has three words for California’s gay marriage advocates: “Make it work.”
And the urbane advisor — who won the hearts of audiences with his advice to aspiring fashion designers on the fashion design reality television show – put the emphasis on W-word.
“If we are going to change the hearts and minds of people throughout the state, it’s going to take you and me working for it,” Gunn said in this video for the Courage Campaign.
Gunn, who also is creative director at Liz Claiborne Inc, is working with the group to rally Californians to repeal Proposition 8, which bans gay marriage in the nation’s most populous state.
California voters approved Proposition 8 in November. The California Supreme Court in May backed the proposition, which defines marriage as a union between a man and a woman.
Despite losses in the California courts and at the ballot box, gay rights advocates have made major strides in recent months with marriage and domestic partner rights in a handful of states, including Massachusetts, Vermont, Connecticut and Iowa.
Meanwhile, the battle rages with each side pulling out all the stops.
Check Out Line: Pier 1 profits despite falling sales
Check out how a little debt can help that bottom line.
Pier 1 posted a profit on Thursday, even though sales fell 9 percent overall and 7.5 percent at stores open at least a year.
How’d they do it? Well, recording a $48 million gain on the repurchase of debt was surely a help. Even excluding that gain, the loss per share topped analysts’ forecasts. Inventory was down a bit and while sales fell, the decline was smaller than Wall Street anticipated.
The retailer, like others, has been doing what it can to cut costs as shoppers shy away from those home furnishing extras like outdoor furniture. Who knows, maybe Times Square will want to replenish its supply with some of Pier 1′s goods.
from Summit Notebook:
Liz Claiborne says it’s adjusting to the “new normal”
Today I had the chance to sit down with the CEO of Liz Claiborne in our Times Square studios as part of the 2009 Reuters Global Retail Summit. Bill McComb says "the world has changed and it's not going back to business as usual." Click here to listen to what McComb described as the "new normal" and what the fashion company is doing to change the way it does business.
Gunn-ing for a new apparel line?
Tim Gunn lovers, alert! An apparel line under the name of fashion’s favorite is not entirely out of the question. So says chief executive of Liz Claiborne, the apparel giant that now employs Gunn as its chief creative officer. Liz Claiborne Chief Executive William McComb, attending the Reuters Global Retail Summit, was asked whether a Tim Gunn-branded apparel line could ever be in the stars.
“I do, and obviously we would be the ones to do it,” responded McComb. The strength of Gunn — who skyrocketed to fame through television’s popular “Project Runway” reality series – is his impeccable eye, McComb said. “Tim is not a designer. He does not design. What he would bring to the table is the common sense edit of how to build a wardrobe,” said McComb. “He could do the black dress, the white top, the work pants … it would be not necessarily high faloutin’ fashion, but really smart.” And so we wait in anticipation. Read Reuters’ Liz Claiborne story here. In the meantime, don’t expect a celebrity designer smack-down between Gunn and Liz Claiborne’s new creative designer, Isaac Mizrahi. “They’re friends, they knew each other from Parsons,” said McComb, referring to the prestigious New York design school. “I would characterize it as very warm, very engaging, very friendly.”
So……how about a Gunn-Mizrahi line?
(Photo: Reuters)
Check Out Line: More dark clouds in retailing
Check out more bad news in the retail sector.
U.S. retail sales slumped for the second straight month, coming in weaker than analysts had expected due to sluggish gasoline and electronic goods purchases. Meanwhile, U.S. foreclosure activity in April jumped to a record high, further pressuring home prices and making a recovery tougher.
Fashion company Liz Claiborne posted a deeper-than-expected quarterly loss as retail sales remained weak in the recession. The owner of Juicy Couture, Kate Spade, Lucky Brand and Mexx labels is cutting jobs, scaling back expansion and offering more lower priced items to combat the slowdown.
Meanwhile, General Growth chose a company to provide its bankruptcy financing. The No. 2 U.S. mall owner filed for bankruptcy in April when it could not refinance its maturing loans due to tightness in the credit markets.
Even overseas, retailers in emerging economies are opening special shops for the poor as the recession squeezes the fledgling middle classes.
Some companies are benefiting from the consumer cutbacks, however, as General Mills, a maker of cereal, yogurt and soup, said it expects consumers who have been eating more meals at home to keep doing it even after the economy recovers.
And consumers obviously love their soft drinks as Dr Pepper Snapple reported a higher-than-expected quarterly profit on demand for value-priced drinks.
Check Out Line: Liz gets new credit line — at a price
Check out the amendment to Liz Claiborne’s credit facility. The owner of the Juicy Couture, Kate Spade and Lucky Brand chains worked out a new credit agreement that will not mature until 2011, replacing a current one that was set to mature in October. Liz will get less credit — $600 million, down from $750 million — which the company says is appropriate given recent divestitures. The agreement also comes with higher fees and interest rates, but eliminates some covenants. The financial markets have closely watched Liz and other retailers to see if they can weather the tight credit markets and for any signs that those markets are loosening up. The news of the new credit agreement helped boost Liz’s stock more than 12 percent in morning trading. Investors shrugged off the fact that the company now expects to break even or post a loss for continuing operations in the fourth quarter, rather than the profit of 19 cents to 24 cents per share it previously forecast. Who needs to make money during the holiday season when your banks will let you extend your credit terms … As long as you can pay the higher prices. Also in the basket: Wendy’s scales back breakfast plans Tesco, Metro show scars of downturn, but coping Dumpster couture gets a boost at Green Inaugural Ball (WSJ)
(Photo: Reuters)
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