Shop Talk
Retailers, consumers and prices
Check Out Line: Mixed financial bag at Talbots
Check out the mixed results at women’s clothing retailer Talbots.
The company posted a higher-than-expected quarterly profit as tighter inventory management boosted margins, but demand lagged analysts’ expectations.
Talbots’ second-quarter results echoed those of the prior three-month period, when sales suffered as the retailer did not stock enough merchandise.
“Our top-line sales performance reflects our decision to remain on plan with respect to our promotional event calendar within what proved to be an aggressively promotional environment,” Chief Executive Trudy Sullivan said.
U.S. retailers posted modestly higher-than-expected August sales as consumers sought out bargains during the key back-to-school shopping season. The reports suggested retailers were able to clear excess inventories ahead of the key selling season without having to resort to deep discounts.
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Check Out Line: More quarterly earnings to parse
Check out the latest raft of earnings for clues on the U.S. economy’s health.
LVMH, the world’s biggest luxury group, posted a forecast-beating 13 percent increase in same-store sales, helped by a strong rebound in the United States and Europe.
The Paris-based maker of Louis Vuitton handbags and Hennessy cognac said its wines, spirits, watches and jewelry businesses — all hard hit by the downturn — had benefited from improving consumer spending.
Echoing those thoughts, the Deloitte Consumer Spending Index moved upward in March following two consecutive months of decline. The improvement was driven by an improving job market, declining tax rates and slowing declines in home values.
“Improvements in home prices and employment could potentially fuel stronger consumer spending activity in the months to come,” Deloitte Research chief economist Carl Steidtmann said in a statement.
Meanwhile, women’s apparel retailer Talbots posted a narrow quarterly profit as leaner inventories boosted profit margins and full-price selling overshadowed a sales decline.
Spice maker McCormick said it expects earnings per share to rise 9 to 11 percent in 2011 and beyond, helped by cost cuts, as well as 4 to 6 percent growth in net sales.
Check Out Line: Power plays in the air
Check out the power plays going on in the consumer world.
Walgreen said it will buy Duane Reed for $618 million in cash, catapulting the largest U.S. drugstore operator into the top spot in the New York City area. The deal price also includes the assumption of $457 million in debt.
Duane Reed is owned by private equity firm Oak Hill Capital Partners and operates 257 drugstores in the New York metropolitan area. Duane Reade will continue to operate under its brand name, and Walgreen expects to retain the employees at its stores, pharmacies and distribution centers.
Walgreen operates 70 stores in the New York area, including a multi-floor outlet in the heart of Times Square across the street from a Duane Reade store.
Meanwhile, Barnes & Noble told Ronald Burkle to take a long walk off a short pier, saying it would not waive its “poison-pill” anti-takeover provision to allow the billionaire investor to nearly double his stake in the top brick-and-mortar U.S. bookstore chain.
Talbots, a retailer that caters to mature women, said it amended its merger agreement with BPW Acquisition Corp, a special purpose acquisition company, so as to give greater assurance to BPW shareholders regarding the value of their merger.
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Check Out Line: Quarterly loss and job cuts at Talbots
Check out the quarterly loss and job cuts at women’s apparel retailer Talbots.
Talbots, whose clientele consists mainly of women above 35 years old, reported a first-quarter loss of 23 cents a share, less than half the 49-cent loss analysts had expected.
The company, majority owned by Japan’s Aeon Co Ltd, also said it would cut corporate headcount by about 20 percent in a move to save $150 million annually.
The loss came a day after Talbots agreed to sell its J.Jill division to Golden Gate Capital for $75 million just three years after buying it for $517 million. That sale is part of Talbots efforts to focus on turning around its core business and newly launched upscale outlet.
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Check Out Line: Weakness at Talbots
Check out the deeper-than-expected quarterly loss at Talbots.
The women’s apparel retailer posted a fourth-quarter loss of $1.17 a share, excluding one-time items. That was far worse than what analysts polled by Reuters Estimates had expected. Sales fell 16 percent, while sales at stores open at least a year tumbled 25 percent.
Talbots is working to revamp its classic styles to boost sales in a slow market for women’s apparel. It has cut jobs, closed some units, suspended its dividend and frozen its pension plan to preserve cash. It also is looking to sell its J. Jill chain.
Stifel Nicolaus analyst Richard Jaffe, who has a “hold” rating on Talbots’ stock, called out the same-store sales decline as well as the 26-percent decrease in direct sales.
“Although we see a small improvement in product, the assortment clearly is not yet resonating with the baby boomer woman, who has become more discerning with her disposable income,” he wrote in a research note.
Independent analyst Jennifer Black, however, said she still expects Talbots to turn around and its shares were a smart investment for those with an investment horizon of at least a year. She also said Talbots’ new $150 million loan facility will carry it through the most difficult period.
“The company is still in the early stages of transforming the Talbots brand,” she wrote in a note. “The stock looks cheap to us and we believe that long-term investors should add or build new positions at current prices.”
Check Out Line-Retail sector racks up more bad news
Check out the not-so-chipper news in the retail world.
Restaurant chain Burger King reported lower profits and cut its full-year forecast due to the currency fluctuations, while cosmetics and perfume companies Estee Lauder and Elizabeth Arden rang up lower, albeit better-than-expected, profits and said they would cut jobs.
Indeed, retailers overall posted the second weakest monthly same-store sales performance since Thomson Reuters began tracking the data in 2000 as heavy job losses, weakness in the U.S. housing sector and the still-tight credit markets have many consumers closing their wallets.
In the mixed-bag camp, apparel retailer Gap saw same-store sales fall more than expected, but raised its full-year profit outlook.
There is some good news out there, however.
Discount giant Wal-Mart posted a better-than-expected increase in sales at U.S. stores open at least a year, almost double what analysts had expected. Meanwhile, Kellogg’s quarterly profit rose and the cereal maker stood by its 2009 profit outlook, and department store operator Macy’s saw a smaller-than-expected decline in same-store sales and raised its fourth-quarter profit forecast.
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Overall scenario is Not positive at Present. Though some stores are doing well, But that may be due to their Own Image and clientage.
This Junbo stimulus package may hopefully help revive the economy. However,it may be too soon to think that Bad days are over.
Still,we need to remain positive in such odd times.
Check Out Line: Apparel sales shrinking with economy
Check Out what the shrinking U.S. economy is doing to apparel sales.
The Paris-based Organization for Economic Cooperation and Development says the U.S. economy has probably slipped into a recession that will last through the middle of 2009.
But forget Paris, you don’t need to look any further than today’s results from apparel retailers for proof that the U.S. economy is in a slide.
Two retailers that cater to women over the age of 35, Talbots Inc and Chico’s FAS, each saw sales at established stores fall more than 13 percent in the latest quarter.
Third-quarter net profit at Chico’s, which also operates White House Black Market stores, withered to $2 million from $23.6 million a year earlier as mark-downs also pounded profits.
Talbots, which specializes in classic looks, saw its loss from continuing operations expand to $14.8 million from less than a million in the year-earlier third-quarter.
Elsewhere, Charming Shoppes, which sells plus-size clothing for women, had a bit of good news. It reported a smaller-than-expected loss, but said it expects a wider loss for the holiday quarter.
Check Out Line: Talbots leveling off
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)
(Photo: Reuters)
Check Out Line: Talbots’ makeover includes board
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.”
Check Out Line: Consumers seek basics; retailers seek mergers
Check out a busy day for retailers as earnings — or losses – poured in from BJ’s Wholesale, Talbots, Charming Shoppes and Brown Shoe.
The “flight to necessities” by the U.S. consumer was on display as BJ’s — which sells food and fuel — posted a 26 percent jump in quarterly profit.
But for businesses steeped in discrection, the quarter was no cakewalk. Talbots posted sharply lower quarterly net profit; Charming Shoppes reported a quarterly loss and Brown Shoe posted a lower first-quarter profit.
With the U.S. environment a tough one to navigate, retailers are looking to add or subtract businesses to put themselves in a better position.
Spectrum Brands announced plans to sell its global pet supply business to a subsidiary of Salton Inc; the Wall Street Journal reported that Barnes and Noble Inc is looking into a possible bid for competitor Borders Group; and Dutch office supplier Corporate Express is seeking to buy French rival Lyreco for 1.4 billion euros ($2.2 billion), as it fends off a hostile bid from U.S. rival Staples.
(Photos: Reuters)
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