Retail Industry Trends

[HenryTo]

Retailiers already bracing for the worst. The $64 billion question is, as always, how bad will this get and how much of this has already been factored into retail stocks?
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Retail Holiday Season May Be Modest
Tuesday October 30, 5:15 pm ET
By Betsy Vereckey, AP Business Writer
Sluggish US Economy May Weigh on Holiday Sales for National Retailers

NEW YORK (AP) -- U.S. retailers are bracing for a difficult holiday season, some industry watchers say, as higher gas prices and a sluggish housing market are expected to continue crimping consumer spending.

At a conference on Tuesday hosted by the Retail Marketing Society, a membership-based organization focused on the retail industry, some industry executives said holiday sales may be sluggish.

"This holiday season will be somewhat Grinch-like," said Carl Steidtmann, chief economist at Deloitte Research.

Steidtmann said retailers are preparing for the worst, especially given tightening credit and problems in the housing market. Steidtmann said it will be at least 18 months to two years before the housing market bottoms.

Merrill Lynch analyst Jaime Sheinheit said higher energy costs will weigh on consumer spending, noting that retailers have had trouble getting customers in the door. However, it's hard to tell whether the sluggish traffic is related to softening consumer spending or warm weather, Sheinheit said.

"Cold weather may spark shopping," she said.

In the luxury sector, Sheinheit said handbag maker Coach Inc. has warned of sluggish traffic in its U.S. stores. The company recently issued a fiscal second-quarter same-store sales outlook it called "conservative." Same-store sales are sales at stores open at least a year, and the industry metric is considered a key barometer of a retailer's health.

David Wolfe, creative director at Doneger Group, a buying office, said Coach has reached its saturation point with aspirational customers, who may not have the money to spend on these handbags but still want quality at a price.

Meanwhile, wealthy customers may help other luxury retailers this season, like Tiffany & Co., as spending patterns among the affluent tend to stay the same, regardless of changes in the economy.

Sectors that might fare better include teen retailers, Sheinheit said, noting that the income of their main customer, teenagers, usually stays the same. Companies in this sector include American Eagle Outfitters Inc. and Abercrombie & Fitch Co.

One company that may emerge stronger, Sheinheit said, is AnnTaylor Stores Corp., which has leaner inventory and a new product assortment at its lower-priced Loft division. In August, the company said it increased markdowns to reduce inventory heading into fall seasons at both its Ann Taylor and Loft stores.

"There is a lot of opportunity for Loft to improve margins this holiday season," Sheinheit said. "As always, what it comes down to is having the right product."

[HenryTo]

Analysts (and customers) assert that many retailers have cut their costs to the bare minimum:
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U.S. retailers running out of room to cut costs
Fri May 22, 2009 1:36pm EDT

By Dhanya Skariachan - Analysis

NEW YORK (Reuters) - U.S. retailers, which have banked heavily on cost cuts to guard margins in the recession, may be running out of ways to trim expenses further -- putting future profits in jeopardy, unless consumers open their wallets soon.

"No company on the face of the earth can cost-cut its way to sustained success ... You need to have sales," Home Depot Inc (HD.N) Chief Financial Officer Carol Tome said in an interview this week.

From slashing jobs to shuttering stores, from maintaining leaner inventories to negotiating for lower rents, retailers seem to have done it all to preserve profits or mitigate losses in a dismal sales climate.

Some have outlined plans to postpone expansion, reduce advertising and wind down secondary brands, while a few others have gone a step further and found more creative ways to cut costs.

Home improvement chain Home Depot has made significant cost savings by using less energy in its stores. Some companies that deliver office products to retailers have started using new technology in their trucks to ensure higher fuel efficiency.

But the cost cuts can only go so far, as retailers see sales slammed by the recession.

"Retailers are very closely looking at costs now and I think today they are ahead of the curve ... I think that the costs will be out of companies ... I don't think revenues are going to come back as quickly," said William Susman, president and chief operating officer of retail investment bank Financo.

One way retailers are cutting costs is by streamlining their supply chains and purchasing.

Womens' apparel retailer AnnTaylor Stores Corp (ANN.N) said it has gone from about 100 apparel vendors at the end of 2008 to about 75 in the first quarter and will continue to try to cut down on vendors for its Ann Taylor and Ann Taylor LOFT stores.

Both analysts and investors laud the cost-cutting efforts, as they think retailers are facing the question of survival more than anything else right now.

"The retailers who haven't done this (cut costs) ... some of them who have not successfully been able to offset sales declines ... have not survived," Colin McGranahan, an analyst at Sanford C. Bernstein, said.

"We have seen Circuit City, Linens 'n' Things, Mervyns go out of business and many retailers that are going bankrupt."

The companies that have responded well -- those which have cut costs and have better consumer propositions -- will emerge winners at the other side of this economy, McGranahan said.

"Retailers need to adapt to the environment. They need to bring their costs down because the customer is not buying as much," Financo's Susman said, adding: "When the market rebounds, they should also be poised for much greater profitability."

So, how much more can they can slash and burn? Not much, most agree.

"You can only trim so much. If you go into one of the LOFT stores -- there's not that much clothing on the racks, there's not that many racks to begin with, and there's not that many associates working in the stores. You can tell they've cut back," Wall Street Strategies analyst Brian Sozzi said.

"So how much fat do you have left to cut? And the first round of store cuts for them -- that was low-hanging fruit ... But what about the rest of the stores?" Sozzi said.

"I'm very curious to see how the second half plays out for these guys (retailers), because at some point, you have to make a bet on inventory; and if demand's not there, we could be talking about earnings misses in the fourth quarter like we saw last year," he said.

Bernstein's McGranahan named Best Buy Co Inc (BBY.N), Staples Inc (SPLS.O) and Home Depot as good examples of companies which have cut costs in an aggressive but intelligent fashion.

Although most experts see sense in cost-cutting efforts at retailers, many warned the moves should be executed with caution.

"They have got to be careful how much they will cut of their staffing levels ... If people can't get help in stores, that is a recipe for retail disaster," said Britt Beemer, founder of America's Research Group, which polls consumers on spending behavior.

Beemer's concerns aren't unwarranted.

Denise C, a 27-year old from Queens shopping in midtown Manhattan, walked out of a couple of apparel stores because she was disappointed with the quality of in-store service.

"People just don't really seem to care anymore" she said.

[rffrydr]

Let's send a shout out to our "better half:"


"They make my butt look perky," said Morgan, 33, who owns five pairs of True Religion Brand jeans. "That is the Holy Grail of jeans."

http://www.latimes.com/business/la-fi-jeans22-2009may22,0,2251065.story
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Courtesy of RetailingToday:

[HenryTo]

With retail and restaurants having been near the top of the IBD industry rankings for the last few weeks, it is probably now time for these industries to take a breather:

http://news.morningstar.com/articlenet/article.aspx?id=289246

[rffrydr]

Plastic surgery trims down:


http://www.nytimes.com/2009/05/07/us/07plastic.html?_r=1&scp=2&sq=plastic%20surgery&st=cse

[rffrydr]

Necessities:


2006:

http://www.usatoday.com/news/nation/2006-12-14-americans-necessities_x.htm


2009:

http://www.usatoday.com/money/economy/2009-04-23-pew-luxuries-necessities_N.htm

There's a different story here....maybe the opposite story.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

ISCS said that sales were down 0.4% in the last week. Sales were off 0.1% y/y. After three weeks of sales increases, sales slowed. Books and jewelry were particularly weaker. Sales for April will increase 1% or more on a year over year basis.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

The rise of "experience spending?"

http://money.cnn.com/2009/04/20/pf/citigroup_kerschner_thrifty.fortune/index.htm?section=money_topstories
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

The retail ETF, XRT, hit a bottom in late November and this coincided with the bottom in the growth rate in department store sales.


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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Another liquidation in the retail industry, as Gottschalks fails to find a buyer willing to operate the company as a going concern:
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Department store chain Gottschalks to liquidate
Tue Mar 31, 2009 12:33am EDT

By Chelsea Emery

NEW YORK (Reuters) - U.S. regional department store chain Gottschalks will be liquidated after it failed to attract a buyer willing to operate the company as a going concern, the head of the company's creditors' committee said on Tuesday.

A joint venture of liquidators including SB Capital Group LLC, Tiger Capital Group LLC, Great American Group LLC and Hudson Capital Partners LLC won the auction for the assets of Gottschalks, according to Larry Gottlieb, chair of the bankruptcy and restructuring practice at law firm Cooley Godward Kronish LLP.

The results of the auction are subject to bankruptcy court approval. Going-out-of business sales at the chain are expected to begin on or around April 3, Gottlieb said.

Fresno, California-based Gottschalks filed for bankruptcy protection in January after a failed deal with investor Everbright Development Overseas Ltd to invest up to $30 million in exchange for a stake in the company.

As of March 3, the company had operated 58 department stores and three specialty apparel stores in six western states, including California and Washington.

The liquidator group has agreed to guarantee 98 percent of the cost of the company's inventory, Gottlieb said. The funds can eventually be used to repay the chain's creditors.

The liquidators had originally offered to pay 85 percent of the cost of inventory in their original "stalking horse" bid, but increased their bid during the auction, Gottlieb said.

A "stalking horse" makes the lead bid at a bankruptcy auction and creates a floor for the bidding, in exchange for certain protections that often include break-up fees.

The winning bid represented an increase worth about $14 million from the original bid, Gottlieb said.

The case is In re: Gottschalks Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-10157.

[rffrydr]

http://media.bloomberg.com/bb/avfile/News/First_Word/v3iOzMnkm1bQ.mp3
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

UPDATE: WalMart, Costco and....Tiffany. Is there sex discrimination in our retail analysts?

http://media.bloomberg.com/bb/avfile/News/First_Word/vacrTSqURQtY.mp3
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

"Our Love Affair With With Shopping Malls is on the Rocks"

http://www.nytimes.com/2009/02/01/business/01mall.html?em

[rffrydr]

_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

When it's all falling down you DON"T buy the best....nor is the corollary true.
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Today is the Tomorrow you worried about Yesterday!