Check out the recession. It appears it was still alive and well at Saks in the second quarter.
 
The upscale retailer posted a $54.5 million loss in the quarter, wider than the $32.7 million seen a year earlier.
 
Same-store sales fell 15.5 percent in the quarter and Saks expects that measure to fall in the mid-to-high single digits in the second half of the year.
 
The company has been cutting expenses and controlling inventory. The loss also was not as bad as analysts expected.
 
But unless a Versace dress becomes the “must-have” back to school item, the tough sales environment at Saks is likely to continue.
 
Also in the basket:
 
Cost cuts help Home Depot beat estimates
 
Big part of U.S. back-to-school sales still ahead: NRF
 
CKE same-store sales off 3.6 pct in latest four weeks
 
Target profit falls, but beats Wall Street view

(Reuters photo)

Many U.S. consumers are not really in the mood to go on vacation. That’s understandable, with all that’s happening in the economy right now.
 
Guess who else is staying home this summer? 
“As a family — my wife, my kids and I — are making sure we’re doing more in the way of ’staycations’ as opposed to traveling as much,” Stephen Sadove, chief executive of upscale retailer Saks, said at the Reuters Global Luxury Summit in New York on Tuesday.
 
The retailer’s top executive said he was paring back expenses and planning to forgo his annual ritual of getting himself a new watch in the light of the economy. 
 
Sadove, who has personally paid to take his wife along in the past on a few of his European buying trips, said, “I didn’t think that sent the right signal … We decided that wasn’t the right thing to be doing.”
 
One can only hope the struggling retailer’s sales figures start sending the right signals soon.

(Reuters photo)

Check Out better-than-expected quarterly results from Home Depot and Saks, as retailers across the spectrum succeed in cutting costs. 

Home Depot, the top specialty home improvement retailer, said its quarterly profit was 35 cents per share in the first quarter, excluding items, topping Wall Street estimates for profit of 28 cents.

Aggressive cost cuts - such as closing its Expo Design Center chain and laying off about 7,000 workers - helped offset a 9.7 percent decline in sales.

The same phenomenon occurred at high-end retailer Saks, whose 3 cent-per-share loss, excluding items, blew away analysts’ average expectation for a loss of 26 cents per share.

Saks shares jumped nearly 13 percent in premarket trade, while Home Depot shares slumped 1.7 percent as the results, while still better than expectations, were not as good as those from rival Lowe’s, which reported better-than-expected profit on Monday due to strong sales of outdoor goods.

Saks raised its target for cost cuts, even as it expects sales to decline throughout the rest of the year.

Also in the basket:

American Apparel posts Q1 loss; may restate results

Dick’s Sporting Q1 beats Street

TIMELINE-Marks & Spencer’s profit decline

(Photo: Reuters)

Premium jeans are a chic — and profitable — addition to department stores when consumers flush with cash are willing to shell out over $200 per pair. But when the economy goes south, stores and shoppers start to balk.
    
On Tuesday, VF Corp, maker of 7 For All Mankind jeans, said that brand’s total business was down about 10 percent in the quarter, thanks to the weak U.S. wholesale environment.
    
“It is absolutely a piece of the market that has been most challenged in this economy and that is the more premium luxury sector,” Chief Executive Eric Wiseman told analysts in a call following the release of first-quarter results, which were lower than the year-ago quarter.
    
7 For All Mankind competes with a small group of premium brands including True Religion, which announces quarterly results in early May.
    
The brand is sold in specialty shops, some of which are shuttering their doors in the recession, and upper-tier department stores, including Nordstrom, Bloomingdale’s and Saks Fifth Avenue.
 
“You see their comps so you see how they’re struggling right now to get traffic into the store,” Wiseman said.
    
VF’s international jeans business, too, is struggling for a good fit with the global economy. 
    
The company, which makes Wrangler and Lee jeans sold around the world, said it was lowering its full-year earnings guidance in large part due to “a severe contraction” in the economies of Scandinavia and Eastern European countries, where jeans are apparently not at the top of the shopping list.

Just how “wonderful” consumers think your brand is can help your stock price, especially in a recession, according to a study by market research agencies Kadence, Brand Care and So What Research.

The study looked at consumer perceptions of 650 leading U.S. brands and found there is a link between the affection consumers hold for a brand — or the “wonderfulness” of the brand – and its stock performance.  

According to the study, the ten most wonderful brands in the eyes of U.S. consumers are (in descending order) Hershey’s, Google, Sony, Kraft, Crayola, Kellogg’s, Scotch Tape, Wii, Rolls Royce and Johnson & Johnson.

The ten least wonderful brands are (from bottom up) National Enquirer, AIG, Botox, Kia, alli, Hummer, O The Oprah Magazine, Dress Barn, ChemLawn and Direct Buy.

In terms of value, brands that were seen as offering the best ratio of wonderfulness to cost were Wal-Mart, Google, Amazon, Hershey’s, Target, Cheerios, Campbell, PBS, Yahoo and eBay.

Brands that were seen as offering the worst ratio of wonderfulness to cost were Hummer, Botox, Prada, Land Rover, Gucci, AIG, Saks Fifth Avenue, Louis Vuitton, Maserati and Ferrari.

“Detailed analysis of responses shows a strong correlation between the level of consumer affection and stock performance in 2008,” said Owen Jenkins, CEO of Boston-based Kadence Business Research, in a statement. 

“For example, corporations owning brands with a mediocre affection score of 4.5 out of 7 lost nearly 50 percent more stock equity last year than corporations owning brands with an affection score of 5.5.

In other words, a small difference in how much a brand is loved makes a big difference in how it performs on the stock market.”

The study was conducted online among 5,500 educated, affluent consumers aged 18-54 during the pre-holiday shopping period in December of 2008.

(Photos: Reuters)

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.

Saks grabbed headlines this holiday for slashing prices on designer merchandise after it realized its stores were stocked with too much inventory. The aggressive price cutting may have long-term consequences if shoppers, accustomed to discounts, balk at paying full price once again.

Saks said it expects the environment will be “extremely challenging” throughout 2009 so it is cutting its capital spending plans and said it is targeting a 20 percent decrease in inventory receipts for the year.

Meanwhile, Zale also posted a quarterly net loss after it cut prices in the face of lower consumer spending during the holiday shopping season. The jewelry retailer said it was taking additional actions to cut costs that include reducing inventory and closing about 115 stores with weak sales when their leases mature. The company said it cut 245 jobs this month.

But it did say that sales trends improved from January through Valentine’s Day.

Also in the basket:

TJX profit tops view; no full-year view given

Del Monte posts higher profit, raises forecast

Dollar Tree quarterly profit rises 11 pct

Crocs taps former Reebok exec as new CEO

Tween Brands posts surprise Q4 loss, to cut more jobs

(Photo: Reuters; the Saks store on Manhattan’s Fifth Avenue)

Check out job cuts in retail spreading across the globe.

Last week, Neiman Marcus and Saks outlined plans to cut jobs. On Monday, it was Europe’s turn to join the fray.

Metro AG,  Germany’s top listed retailer, plans to cut 15,000 jobs or about 5 percent of its global workforce by 2012 amid a broader restructuring program, a source close to the company told Reuters on Tuesday. The company, which owns supermarkets and department stores, employs about 300,000 people in 2,200 stores across 32 countries.

Meanwhile, British luxury goods firm Burberry announced up to $49 million of savings, including 540 job losses in the UK and Spain.

Burberry beat forecasts with a 9 percent rise in third-quarter revenue, helped by deep discounting. But the 153-year-old maker of upmarket raincoats and handbags said double-digit percentage growth in Asia and most of Europe was offset by a double-digit decline in the United States and a fall of over 20 percent in Spain.

“It’s extremely challenging, volatile and difficult,” said Chief Financial Officer Stacey Cartwright. ”It’s not about consumers trading down. It’s more about there being less footfall around and when consumers come in, they’re buying less.”

Also in the basket:

More peanut products recalled as probe continues

Crunched fashionistas still want novelty-experts

Australia’s wine industry at a crisis crossroad

TomTom cuts guidance, still within bank covenants

Centralizing at Hudson’s Bay Trading Co. (WWD, subscription required)

(Photo: Reuters)

Outlet malls are known for their low prices, but the discounts being offered this weekend at Woodbury Common Premium Outlets in Central Valley NY, roughly 45 miles north of Manhattan, were truly eye-popping.

From Geoffrey Beene to Izod to Van Heusen, store windows were plastered with signs offering 40 to 60 to 75 percent off:

The discounts were not limited to mid-tier stores. While upscale retailers may not have covered their windows with clearance signs, the extent of the markdowns were evident after walking in the doors. Kenneth Cole was offering 30 percent off everything in its store, while Saks was offering similar deals. Here is a glimpse inside the Saks Fifth Avenue OFF 5TH store.

And here is a look inside the Neiman Marcus Last Call:

By the end of the day, I felt like I was getting ripped off if a retailer was only offering me 20 percent off.

And pay full (outlet) prices? You’ve got to be kidding.

(Photos: Taken by Nicole Maestri at Woodbury Common Dec 13)

Retailers say it can be difficult to measure their monthly sales results accurately on a year-over-year basis because of calendar shifts — sometimes a holiday falls in one month, boosting results, while the next year the holiday shifts into a different month, hurting results.

The most drastic case of this is usually seen in March and April, when the timing of the Easter holiday can help March sales and hurt April, or vice versa.

As monthly sales results came in today, numerous retailers, including Target, Saks, and Pacific Sunwear, said the timing of Thanksgiving (Nov 27 this year vs. Nov 22 last year) hurt their November results. The later Thanksgiving meant fewer busy post-Thanksgiving holiday shopping days in this year’s November period, they said, making sales figures look especially weak.

For instance, Target’s same-store sales fell more than 10 percent. It had warned that the calendar shift eliminated 7 holiday shopping days from November and pushed them into December, which would drag down November’s results. Saks and Pacific Sunwear also reported lower November same-store sales.

But the Thanksgiving shift was apparently not a big deal for industry leader Wal-Mart. While most retailers reported a drop in November same-store sales, Wal-Mart posted a stronger-than-expected 3.4 percent rise.

And in contrast to many others, Wal-Mart’s November monthly reporting period ended on Nov. 28 — Black Friday. That meant the discount behemoth had just one post-Thanksgiving day in November compared with most retailers whose November reporting periods ended on Nov 29 — giving them two supposedly busy post-Thanksgiving shopping days in the month.

Looks like low prices on food and toiletries are one way to trump a shifting calendar.

(Photo: Reuters/Nicole Maestri taken in a Wal-Mart store in Secaucus, NJ the week of Thanksgiving)

Luxury lives! At least when it’s on sale.

Today’s Manolo Blahnik sample sale brought out New York fashionistas looking for fabulous shoes on the cheap, and given the woeful state of the economy this year, they need it more than ever. The sale is typically held twice a year and is not widely publicized. 

Shoes that typically priced from $545 to over $1150 for tall suede boots were on sale from $100 for a simple pair of pumps to $400 for over-the-knee boots. Manolo Blahnik sends out an e-mail to their best customers and press friends, such as Vogue editors, who then tell their friends, and thus the word gets out.

Most shoppers at the sale told us they will still buy luxury items like expensive shoes. But they are being more cautious and buying less these days.

Cynthia Tabet of New York City said she buys new Manolos “every year,” but this year bought fewer pairs. “You’re tempted, but not as much” since the stock market tanked, she said.  Tabet’s still on the fence about holiday purchases and is waiting to see if the economy picks up before buying.

Picking through the piles of Manolos, Maria Jaqez of NYC also said she was “more cautious than usual,” but expected her holiday shopping to be “the same as last year.”

Throwing caution to the wind was Tina Rich, also of NYC. The Cartier employee said she didn’t care about the ups and down of the stock market. “I’m just a little person, it doesn’t effect me!” she said cheerily, as she scooped up several pairs of pumps. “I wear Manolo’s and Dolce, that’s it.”

(Photo/Reuters)