Shop Talk
Retailers, consumers and prices
Retailers eye some expansion in 2010
After their abysmal 2009, nearly half of all U.S. retail chains plan on at least maintaining their number of stores this year, according to a survey released on Thursday by consultancy KPMG and industry group the National Retail Federation.
Far more retailers were planning to open stores than close them, according to the survey of 310 retail industry executives, representing 138 companies, conducted late last year.
Anecdotally, those intentions seem to be playing out, based on what we’ve been hearing from CEOs on conference calls and webcasts.
Most companies have said they plan to open new stores this year, or were at least considering it. Tiffany, for example, is planning to open another 17 locations worldwide in 2010 (it now has 220). And Saks is opening more of its off price Off 5th stores but is closing its Portland store and could shut others.
Another sign of easing pressure on U.S. retailers: their plan to up spending on the technology which allows them to gather crucial information on their shoppers and their habits. More than 67 percent of respondents said customer database and data mining will be a priority this year. That may be just one small factor why investors are so bullish on the tech sector again.
(Reuters photo)
Check Out Line: Close doors, protect profits
Check out more retail doors closing. Jones Apparel, which owns Nine West, Jones New York and other brands, said it will close 240 retail stores this year and next.
The company said the move will save it $4 million this year, $15 million next year and $21 million in 2011. Saving money is the strategy many retailers have adopted over the past year as the recession clobbers sales.
Jones also sought refuge in cost cuts as it beat Wall Street estimates for second-quarter profits. Jeans sales were strong, which was good because sales of pretty much everything else fell. Jones is trying out a new retail concept, a shoe store called ShoeWoo, which could provide something the retail sector needs, if the ShoeWoo website is correct. “WOO is a FUN FUN FUN rush of HAPPY,” the web site proclaims. And what retailer couldn’t use a FUN FUN FUN rush of HAPPY right now? WOO!! Also in the basket: Coca-Cola Enterprises profit beats expectations Timberland Q2 loss wider than estimates KKR plans a Dollar General IPO (WSJ, subscription required)
(Photo: ShoeWoo website)
What is it that makes shoe stores so vulnerable to recession? Last half year I’ve seen three of them close shop, and that’s only in my neighbourhood. Even the budget ones can’t seem to make it.
Check Out Line: Buying basics buoys big chains
Check out the ten largest U.S. retailers.
The National Retail Federation’s STORES magazine is out with its annual ranking of the top 100 retailers.
The list shows that U.S. consumers have been focused on bargains and basic necessities, such as food and medicine. Wal-Mart tops the lineup, followed by Kroger and Costco. Home Depot fell from No. 2 in 2007 to the fourth spot in 2008 as many shoppers decided to cut back on costly home-improvement projects.
Home Depot, Lowe’s and Sears Holdings were the only members of the top 10 to see their revenue fall in 2008.
Some other rankings that may interest you: Amazon.com is the 19th largest retailer, ranking higher than well-known chains such as J.C. Penney, 7-Eleven and Gap. Apple’s stores and iTunes combined hold the 40th spot, topping chains such as Nordstrom, Whole Foods and Barnes & Noble.
The companies were listed by annual revenue, which may include estimates for private or closely-held companies. Revenue from major non-retail operations were excluded when possible.
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This is a worldwide trend, bargain and dollar stores are flourishing and businesses selling products with higher profit margins see their revenue fall sharply. Could it be that we’re in a recession?
Check Out Line: A(nn) big loss
Check Out Ann Taylor’s huge quarterly loss.
The clothing retailer, which operates its namesake stores and Ann Taylor Loft stores, posted a loss that was almost twice as big as Wall Street analysts had expected. The company is also shuttering 46 more stores as working women curb their shopping urges amid rising unemployment and the unabating financial crisis.
Ann Taylor’s loss came a day after top U.S. retailers posted February same-store sales numbers. While the overall result was boosted by Wal-Mart, several apparel chains and department stores are still bleeding sales as consumers continue to spend their money on basics such as food.
The retailer’s dismal results are just another sign that no quick turnaround is in sight for U.S. companies that cater to consumers’ shopping whims.
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Check Out Line: Circuit City in troubleville
Check Out Circuit City’s mounting troubles.
Citing severe liquidity issues and tighter credit conditions from its vendors, the electronics retailer said it would close 155 stores by election day. Store closing sales begin on Nov. 5, the company said. Circuit City, the No. 2 electronics retailer, also said it would exit 12 markets in the United States as part of its plan.
Circuit City has about 1,500 stores in the United States and Canada.
The announcement follows a prolonged earnings and sales slump for Circuit City, which had said earlier that it would consider all options including shutting some stores to reverse its fortunes. Last week, the company received a notice from the New York Stock Exchange that it does not comply with the exchange’s stock-price standard. Its shares were trading at less than 50 cents on Monday.
The store closures could present an opportunity to rival Best Buy, whose President and Chief Operating Officer Brian Dunn said last week that it would look to grab some stores closed by distressed competitors.
To be sure, however, Dunn had said “if Circuit City did go out, I would not be jumping up and down.”
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