Check out how bad retail sales can actually mean good earnings.
 
It all comes down to inventory management. Retailers have aggressively cut inventory levels in order to cope with the slumping economy.
 
The bad news resulting from that strategy came last week when many retailers posted disappointing sales, in part because they had less goods on hand to sell.
 
“Our inventory levels in … clearance and transitional categories were significantly lower than last year, affecting sales results, but leading to improved gross margins,” Kohl’s Chief Executive Larry Montgomery said in a statement.
 
But the good news could come over the next several weeks, when retailers report second-quarter earnings. Those slashed inventories should have helped them preserve margins, which help profits.
 
So it’s not like the U.S. consumer is buying that much. But at least retailers didn’t get left with shelves of unwanted inventory.
 
Also in the basket:
 
Giant retailers look to sun for energy savings (N.Y. Times)
 
InBev seen posting modest profit growth in Q2

(Photo: Reuters)

(Due to a tabulation error in the research, STORES Magazine has issued a corrected list. This is being corrected to remove Coldwater Creek from the Top 10 list and replace it with Citi Trends at No. 10) 

Though the retail industry cooled last year to its slowest growth since 2002, a number of retail companies experienced fiery growth, according to the National Retail Federation. The hottest retailers, in general, grew through acquisitions, according to the trade group’s STORES Magazine.

NRF’s 2008 Hot 100 Retailers list, which will be included in STORES’ August issue, ranks the nation’s fastest-growing retailers that are publicly traded and have more than $100 million in annual sales.

Topping the list this year is CVS Caremark, which grew 2007 revenue by 74 percent because of its acquisition of Caremark. The No. 2 spot also went to a drugstore chain — Rite Aid, which purchased Brooks Pharmacy units in New England and Eckerd on the East Coast, saw revenue grow narly 40 percent. IHOP, which recently changed its name to DineEquity Inc, was No. 3 with last year’s purchase of Applebee’s.

WalMart, the world’s largest retailer, clocked in at No. 80, with 8.6 percent growth. Its mass market rival Target Corp, brought up the rear at No. 100, with 6.5 percent revenue growth.

Here is a list of the top 10 retailers, according to STORES Magazine: 

          1. CVS Caremark

          2. Rite Aid

          3. IHOP

          4. Amazon.com

          5. American Apparel

          6. GameStop

          7. BJ’s Restaurants

          8. Chipotle Mexican Grill

          9. FTD

          10. Citi Trends

     (Photo: Reuters)

J. Crew is getting personal with an emailed mea culpa apologizing to customers who may have had “issues” while shopping online in recent weeks.

While the email’s introduction sounds like a missing line from Sinatra’s “My Way“, it goes on to plead for patience. Humility is in fashion!

The apology also appears at the bottom of the company’s home page.

Here is the full text of the email (lowercases included):  

we’ve made some mistakes….

(too many in our mind).

we want to say that we’re sorry for any issues you have experienced while shopping J.Crew online or over the phone over the last few weeks — we know we’ve let you down.

we are in the midst of making some enhancements to our web site and call center (and, unfortunately, encountered some bumps along the way). please bear with us as we work through these issues — we know it’s not perfect.

we appreciate your patience.

millard drexler, chairman and ceo

tracy gardner, president

(Photo: CNN/Money)

Check out the majority owner of Talbots exerting more control.

The women’s apparel retailer, which has endured hardships in recent months including falling sales, job cuts, an executive departure and a credit problem, said on Thursday that Tsutomu Kajita would become chairman of its board.

Kajita is senior vice president of international operations for Japan’s Aeon Co, Talbots’ majority owner.

“The appointment of Mr. Kajita as non-executive chairman further signifies Aeon and its management’s commitment and confidence in our continued success and ability to execute our long range strategic plan,” said Talbots Chief Executive Trudy Sullivan in a statement.

Talbots is working hard to turn itself around after a string of fashion and merchandising missteps hurt sales of its classic fashions that target women over 35. The weak U.S. economy hasn’t helped either.

There is a new design team, and early reviews are positive.

Lazard Capital Markets analyst Todd Slater said the company’s new fall and holiday assortments were more “design driven” versus a “more traditional formulaic product development process.”

“While we weren’t able to preview entire floorsets, what we did see was more iconic, with the brand returning to its heritage, utilizing bold color (red), patterns (hounds tooth, plaid), directional fabrications (tweed), and iconic styles (the great white shirt, shift dresses, pea coats, totes, scarves and pearls),” Slater wrote in a research note on Thursday.

Jennifer Black, of Jennifer Black and Associates, waxed even more poetic.

“The collection in its entirety was everything we had envisioned and more.  The fabrics exuded quality.  The colors radiated the classic Talbots styling, the lines were clean and simple, and the styling was timeless.  The fall/holiday collection flows well together … The fits have been modified for today’s fashion style, but not changed as far as the fit specifications.  The waists on pants no longer cover the woman’s ribcage; gone are the days of the ugly, baggy, boxy fits,” Black wrote last week.

But Slater did have a warning for Kajita, whose company operates Japan’s Jusco chain of general merchandise stores.

“Current expectations (are) likely too high. Management is focused on reducing
inventory, which should continue to lead to improved merchandise margins. However, we believe current trends remain below plan, and near-term expectations appear to be getting too high,” Slater said.

Also in the basket:

GDP gets stimulus checks boost

Target offering Web customers installation services

CVS second-quarter profit rises

Check out how international sales and the weak dollar continue to lift quarterly results at U.S. companies.

Second-quarter profit at cosmetics firm Avon Products Inc more than doubled, as demand in Latin America and other overseas markets more than made up for sagging U. S. results.

Office Depot posted a 6 percent drop in North American retail sales, but a 13 percent rise in international sales during in its most recent quarter.

Still, investors are wondering when and if the United States’ economic malaise will spread to markets like Europe, Asia and Latin America.

Some cracks are already showing. Britain’s stressed housing market is putting pressure on consumer spending and Spain has reported a plunge in June retail sales amid a severe economic slowdown.

Also in the basket:

Los Angeles City Council passes fast-food ban

Oil slide, US glimmers of hope boost stocks

Jones Apparel 2nd-qtr profit tops estimates

(Photo: REUTERS/Jo Yong-Hak)

What would Mattel wish for if it had one wish to make? The launch of the toy giant’s “My Meebas” points to one possibility — better fortunes for its girl’s toy business, as Barbie sales continue to face trouble.

Mattel launched “My Meebas” — a toy for girls aged 6 to 12 that houses a plush “Meeba” in a plastic tube, which serves as a gaming device with a movable LCD screen.

The toy is aimed at the latest generation of girls, who like plush toys but are also into electronic games, Mattel said. The launch comes at a time when Mattel is struggling to revive sales in its girl’s division, best known for its iconic Barbie dolls. Sales of Barbie have suffered in past quarters, as other toys such as “Hannah Montana” and Bratz steal market share. 

The “Meebas”, also made in China like many other toys, will retail for $19.99, while a Barbie “Top Model” doll can be bought for $14.97 at Wal-Mart. The toys have gone through extensive checks, Mattel said, following the spate of recalls last year.

With a “Meeba,” the idea is for a user to buy the toy as they make a wish, and then go through seven levels of game play, or over 20 activities, which could take anywhere from seven to 12 hours, according to Mattel. 

The LCD screen can be moved up and down the side of the tube, showing how the “Meeba” grows as game progresses.

Once all activities are completed, the tube pops open, and the user can pull out their ”Meeba” — in a sign meant to signify that the user’s wish has finally been granted.

If the user buys another Meeba, maybe Mattel’s wish will get granted as well.

 The company has 60 such “Meebas” listed under categories such as friendship, love and intelligence.

The bonus? Some tubes have twin Meebas.

Watch out girls! (And make a wish, Mattel.)

(Photo: Mattel)

Check out Linens ‘n Things giving some of its stores a reprieve.

As part of the Chapter 11 bankruptcy petition filed in May, home goods retailer Linens ‘n Things said it would close underperforming stores.  

The chain — which sells home goods ranging from furniture and window treatments to kitchen gadgets and bedding – said on Monday it only plans to close 57 underperforming stores, instead of 87 as it had previously disclosed.

“The reduced number of store closings is the result of improvements in the outlook for these stores throughout the remainder of 2008 into 2009,” said Michael Gries, the company’s chief restructuring officer and interim chief executive.

Of the stores that are still slated for closure, many of them are in areas hit hard by the U.S. housing market decline. California will see 13 closures, with Florida seeing 10 and Arizona seeing 6.

For a full list of store closures, click here.

 Also in the basket:

Kraft Foods 2nd-quarter profit beats estimates

Alberto-Culver profit tops Wall St view

(Photo: Reuters)

Check out the back-to-school blues.
 
Nope, it’s not just kids who are likely to find going back to school depressing. Retailers are also likely to find the back-to-school season tough to take.
 
In a new survey by Deloitte, 71 percent of of respondents said they plan to spend less on back-to-school items this year. In fact, almost half plan to reduce their household spending by more than $100.
 
Stop us if you’ve heard this one before: Higher gas and food prices continue to pressure consumers, Deloitte’s U.S. Retail leader Stacy Janiak said in a news release.
 
“Retailers should focus on areas that will contribute to profitable growth, such as adapting their merchandising and promotional activities to increase loyalty among existing customers and attract new customers,” she said.
 
Among survey findings: 79 percent will buy more back-to-school items on sale, 68 percent will buy more lower-priced items and 46 percent will shop at different — or less expensive — stores than usual.
 
Also in the basket:
 
Hasbro profit tops view, costs remain challenging
 
Crisis at Mervyns: Credit concerns mount over economic woes (WWD)

(Photo: Reuters)

California, Florida and Texas — the states with the biggest populations and the most Starbucks outlets — are losing the most stores as the coffee chain slashes more than 600 stores in a bid to boost slumping U.S. results.

While big states are losing the most, few markets — even Starbucks’ hometown of Seattle — are immune.

The axe is coming down everywhere, from Manhattan’s cityscape and California’s beaches to the downtrodden Motor City and burghs in the U.S. heartland, according to a store closure list released by Starbucks.

Here’s a state-by-state list of closures:

Alabama 12
Arkansas 8
Arizona 1
California 88
Colorado 9
Connecticut 5
Washington, D.C. 1
Delaware 1
Florida 59
Georgia 13
Hawaii 5
Iowa 7
Idaho 2
Illinois 25
Indiana 23
Kansas 3
Kentucky 6
Louisiana 13
Massachusetts 7
Maryland 12
Maine 2
Michigan 18
Minnesota 27
Missouri 17
Mississippi 7
North Carolina 10
North Dakota 4
Nebraska 7
New Hampshire 1
New Jersey 5
New Mexico 4
Nevada 18
New York 39
Ohio 9
Oklahoma 15
Oregon 6
Pennsylvania 21
South Carolina 1
Tennessee 13
Texas 57
Utah 4
Virginia 5
Washington 19
Wisconsin 6
West Virginia 1

Are you losing your favorite Starbucks? And if so, where will you go to get your fix? 

(Photo: Reuters)

Check out how discounts, rebate checks and sweltering summer weather are helping some retailers thrive in the down economy.

Wal-Mart posted June sales that topped expectations and boosted its second-quarter earnings forecast after rebate check-wielding shoppers filled their carts with food, medicine and flat-screen TVs.

Discounter Family Dollar Stores posted a better-than-expected 8 percent gain in sales at stores open at least a year, boosted by government tax rebates.

Off-price retailers TJX Cos, parent of T.J. Maxx and Marshalls, and Ross Stores Inc reported June sales that topped estimates and raised quarterly profit forecasts after warm weather boosted demand for summer clothing.

But the news is not all good.

Upscale department store Nordstrom Inc said June sales tumbled almost 19 percent after it shifted the date of its half-yearly sale from June to May.

U.S. retailers avoid June Swoon; tax rebates help

Limited’s June same-store sales fall 9 percent

Gap June same-store sales down less than expected

Target posts small June same-store sales rise

(Photo: Reuters)