Retailers, consumers and prices
Founded in 1911 by Solomon Boscov, who emigrated from Russia to Reading, Pennsylvania with $1.37 in his pocket, the department-store chain grew from its first “Economy Shoe Store and Dry Goods Annex” to a chain of more than 50 stores across the Eastern Seaboard.
But the collapsing housing market, skyrocketing energy and gas prices and higher food costs caused consumers to spend less on discretionary items, and weak credit market conditions led to vendors tightening terms, which proved too much for Boscov’s to weather.
The big white tent that houses New York City’s Fashion Week was joined by another, smaller tent on Wednesday. Set up behind the main event, in a corner of Bryant Park, Sears erected what it calls a “lifestyle exhibit.” Also housed under a white tent, the meandering exhibit was meant to showcase Sears’ brands – well-established names such as Kenmore appliances and more recent products like a new clothing line by rapper LL Cool J.
The tent was divided into rooms with themes like “Alpha Dog” that featured a DieHard motorcycle, and “Boho Grunge,” that had mannequins playing Rock Band.
Upscale department store Nordstrom continues to have trouble finding a suitable site to open its first Manhattan venue.
Seattle-based Nordstrom said Thursday it wants to expand into one of the world’s most lucrative markets. But the high price of island real estate and lack of appropriate venues has hampered efforts, Nordstrom’s Chief Financial Officer Michael Koppel told analysts at the Goldman Sachs conference.
The survey, conducted by a research firm called The Luxury Institute, found Leiber scored highest on its “Luxury Brand Status Index”, which includes measurements for quality, exclusivity, social status and self-enhancement (meaning the brand can make the buyer feel special).
Consumer products and retail executive spoke at conferences hosted by, respectively, Lehman Brothers and Goldman Sachs on Wednesday. Here is some of what they had to say:
“There is no option not to take price,” — David Moran, president and CEO, Heinz North America, said on the the likelihood of more price increases.
“The macroeconomic conditions will be worse than they were 12 months ago. Our expectation is for caution,” — Tim Boyle, chief executive of Columbia Sportswear, when asked how the environment six to 12 months ahead looks to the sportswear and outerwear maker.
“We think that despite what is happening in the environment, to neglect your store base and not keep it competitive is the wrong thing to do,” — Kohl’s Chairman Larry Montgomery on the department store’s is commitment to remodel 36 stores in 2008 and about 60 in 2009, as well as opening 50 new stores next year.
“We don’t think it’s as dire as other people are saying. We’re fairly resistant. Eighty-five percent of our sales are in RX (prescriptions). The remainder are in toothpaste and deodorant and hopefully people will keep buying those.” – Thomas Ryan CVS Caremark chief executive and board president.
Check out Talbots’ sales forecast.
The struggling women’s apparel retailer said it expects same-store sales to be flat at its namesake stores in the current quarter and down low-to-mid single digits at its J. Jill stores.
That looks like progress, especially at the Talbots’ brand.
But, wait. Hasn’t the weakness in women’s apparel has been going on for some time now. So the glass-half-empty view would be to look at how that forecast compares with a year ago.
Same-store sales at Talbots’ stores fell 8.2 percent last year (and J. Jill same-store sales fell 6.5 percent).
So there might be some improvement coming at Talbots’, but it is off a weak comparison.
Then again, with how women’s apparel has gone lately, flat same-store sales might be a welcome new fashion trend.
Also in the basket:
Dollar Tree posts higher quarterly profit
Brown Shoe 2nd-quarter profit down; cuts outlook
Urban Outfitters Fashion Growth Plan (Wall Street Journal)
What makes jeans sit on the shelf instead of flying off the shelves? That’s up to the whims of American Eagle’s 15- to 25-year old target customer. The retailer’s summer offerings didn’t quite meet the expectations of its core audience, and sales suffered.
“We had a number of styles that just did not perform. And that hurt us very, very much,” American Eagle’s Chief Executive Jim O’Donnell said on a call with analysts.
Check out the falling gasoline prices.
The average U.S. price for regular unleaded gasoline fell to $3.70 on Aug. 22, down about 15 cents from two weeks ago. The price was also down 41.6 cents from the record higher $4.112 in July.
Soaring gasoline prices have been one factor that has kept consumers from going out to restaurants or spending on discretionary items like new clothes.
So if gas prices continue to fall, it could ease pressure on consumers and help retailers.
Trilby Lundberg, editor of the Lundberg survey that monitors gas prices, said if crude oil prices don’t move back up, gasoline prices would probably fall further.
That would just leave tighter credit, falling home values and higher food prices as factors that are stopping consumers from spending.
Also in the basket:
‘Beverly Hills, 90210′ products to launch (WWD, subscription required)
A home network where your TV talks to your fridge (N.Y. Times)
Soon, Signet will move its primary stock exchange listing to the New York Stock Exchange and may attract more investors to an already strong base. Signet who, you ask? They are known best as the operators of the Kay Jewelers chain and Jared The Galleria of Jewelry stores in the United States.
For Signet, sales trends in the United States are a bit different from those in the United Kingdom, according to the company. Predictably, U.S. sales peak around the year-end holidays, Valentine’s Day and Mother’s Day, though British shoppers are not keen jewelry buyers for the latter two holidays . Also, U.S. consumers are more into buying anniversary jewelry and upgrading engagement rings throughout the year. In the UK? Not so much.
Check out the bleak view of the global economy.
Expectations for the global economy have fallen to their lowest level in almost 18 years, according to the Ifo economic research institute, a Munich-based think tank.
Based on a survey of 1,025 economic experts in 92 countries, the expectations component of the group’s latest survey was 61.4 percent, the lowest reading since the final quarter of 1990.
The overall economic climate index also fell, hitting it lowest level in almost seven years.
The good news is that the the economic climate has not gotten worse in North America.
The bad news is that it has gotten worse in Western Europe and Asia, areas where U.S. based companies have done well while the U.S. economy sputtered.
Also in the basket:
BJ’s Wholesale profit up, raises full-year view
Nike launches new format (WWD, subscription required)
Nike brand head very pleased with Beijing effort
Wal-Mart shoppers favor McCain (WWD)