The tough economy has Terry Lundgren rallying his troops. Striking back after Wall Street concluded a dismal week Friday as doubts about the economy, retailing in general and his firm in particular dropped the company's stock and dozens of other retail issues to new 52-week lows, the Macy'sInc. chairman, president and chief executive officer went on the offensive, writing a letter to his management reassuring them about the company's financial condition and competitiveness. His communiqué followed a week in which the Standard & Poor's Retail Index fell 5.6 percent despite better-than-expected same-store sales reports from many retailers on Thursday. However, European luxury issues suffered steep declines the same day as analysts began to question the ability of high-end firms to immunize themselves against global sluggishness. To help bolster his argument about Macy's essential well-being, Lundgren took the unusual step of revealing publicly that the firm's comparable-store sales for May and June fell 1.9 percent, a departure from policy as the company stopped reporting monthly comps in February. The letter, first reported on WWD.com on Friday, was later filed with the Securities and Exchange Commission. "While no one is happy when business declines, our sales trend has outperformed most of our major competitors in this challenging economic environment," wrote Lundgren, who didn't shy away from naming names. "On a quarter-to-date and year-to-date basis, our same-store sales trends are better than J.C. Penney, Kohl's, Dillard's, Nordstrom, Bon-Ton, the Gap and Limited Brands, to name a few." He went on to assert that Macy's is in fact taking market share from "many of our competitors" and, to support his optimistic outlook, cited upcoming initiatives and programs, including the store's 150th anniversary and the launch of its exclusive Tommy Hilfiger sportswear program in the fall. However, before the release of the letter, shares of Macy's closed down 81 cents, or 4.9 percent, to $15.58. Earlier in the day's nerve-racking session, they hit a 52-week nadir of $14.33, down 12.6 percent from Thursday's close. They've lost nearly two-thirds of their value after hitting a 52-week high of $45.50 last July 18. The steep double-digit midday contraction appeared to be partially the result of a trip through the rumor mill based on fears regarding the company's liquidity. Even before Lundgren made his assertions about Macy's fiscal well-being, Goldman Sachs Group analyst Adrianne Shapira issued a research note on Macy's that said, "Market speculation concerning potential liquidity issues at Macy's is pressuring the stock. Our review of the company's balance sheet and cash flow along with subsequent management discussions lead us to believe that there is no evident liquidity issue at the company." Shapira said that while the consumer economy is "challenged," Macy's is not "materially underperforming its peers from a top-line or margin perspective." In the letter, Lundgren said: "Our corporation is financially healthy. Our cash flow remains strong. We recently issued $650 million in new debt to retire existing debt that matures in the third quarter. And we have $2 billion in bank credit agreements in place, which we can tap when needed." Lundgren also acknowledged the impact of the downturn on morale. "I recognize how distracting the economy is for all of our people. The headlines and newscasts are overflowing with gloom and doom. In spite of it all, I am proud of how our organization has risen to the challenge in continuing to embrace change, serve our customers and innovate with unique new merchandise and marketing and selling programs." After the release of tepid June sales by other retailers Thursday and a constant drumbeat of bad economic news, Lundgren is surely not the only one trying to offer up reassurances. Last Thursday, in events that foreshadowed the difficulties in the U.S. markets on Friday, shares of European luxury issues took a beating after Deutsche Bank and Goldman Sachs lowered profit estimates and ratings, seemingly ending the continent's immunity to a high-end slowdown. While the severity of Macy's decline, and Lundgren's response to it, were exceptional, Macy's had more than its share of company among stores seeing their market capitalizations decline. In the face of falling consumer confidence, climbing gas and food prices and nervous housing and credit markets, and indications these trends won't abate anytime soon, the Standard & Poor's Retail Index closed at 327.80, down 2.1 percent, and hit a new 52-week low of 320.03 just after 1 p.m. The Dow Jones Industrial Average closed at 11,100.5, a 1.1 percent drop, after dipping as low as 10,977.68. With uncertainty about how the second quarter will play out, especially now that the last of tax rebate checks have been sent out, the aftermath of Thursday's relatively firm same-store sales reports appeared to be viewed as something of an anomaly, putting many apparel retailers at risk. Even though most recovered some ground in late afternoon trading Friday, the list of retail issues besides Macy's hitting new lows for the year, most of them before the midday point, included better department stores (Saks Inc. and Nordstrom Inc.), moderate department stores (Sears Holdings Corp., J.C. Penney Co. Inc. and Dillard's Inc.) and specialty stores catering to a variety of customers and lifestyles (Gap Inc., Abercrombie & Fitch Co., American Eagle Outfitters Inc., J. Crew Group Inc., Pacific Sunwear of California Inc., Chico's FAS Inc., Zumiez Inc. and Dick's Sporting Goods Inc.). Wal-Mart Stores Inc. didn't make the list, although its shares fell 1.6 percent, but Target Corp., with its shares down 0.3 percent to $44.74, did. Analysts and other retail observers offered nothing in the way of a silver lining as consumers cope with higher prices on essential products like gas and food, deal with uncertainties in the job and credit markets, and appear to have less interest or disposable income for back-to-school and fall fashion ideas. "What's going to help the consumer from this point on?" said Karen Ghaffari, managing director at Fitch Ratings. "It doesn't seem like there's anything that's going to take the pressure off the consumer at this point, certainly though the end of the year." Higher prices are also vexing jittery consumers. "So you have higher gasoline prices, higher food prices — that's eating up more of the consumer's available cash every month," said Ghaffari. Gasoline prices hit a new record last week, rising to $4.11 for a gallon of regular grade, according to the American Automobile Association, and the Labor Department said food prices in May rose 5.1 percent versus a year earlier. The stimulus to be had from tax rebate checks seems to be largely waning and dwindling home values and stock portfolios, as well as six consecutive months of job declines, are prompting shoppers to lay low. Now that the Internal Revenue Service has mailed out the remaining stimulus checks, Merrill Lynch & Co. analyst Sheryl King asked, "What will happen? The answer most likely is inventory slashing — and steeper layoffs." Looking ahead, Citigroup analyst Deborah Weinswig said she "expects earlier and deeper promotional activity to drive traffic and sales of apparel and seasonal items." Taking into account that the stimulus checks have now all been doled out, she said she is "more cautious" going into July and beyond, but that "retailers are doing a better job adjusting orders in light of the difficult environment." Not everyone is as optimistic. "It's a bit of a problem. Back-to-school is a risk," said Global Insight chief U.S. economist Brian Bethune. "There will be a problem for fall sales, no question about it. It's going to take a lot of clever marketing to keep the consumer engaged." Just how much even the best marketing can accomplish is debatable, but that doesn't excuse retailers from trying. Hoping to cash in a bit on nostalgia for earlier times, J.C. Penney is launching an aggressive b-t-s campaign tied to the Eighties teen movie, "The Breakfast Club," to highlight six new teen brands. Mass merchants and off-price retailers may have a bit of an advantage going into the season due to their emphasis on sharp pricing, and the former may have an extra boost from having a wide assortment of merchandise, making "one-stop shopping" a reality for shoppers trying to avoid an extra trip to the gas station. Wal-Mart, which had an impressive 5.8 comp sales increase in June, is also rolling out a series of promotions for b-t-s merchandise. "Customers like what they are seeing and they're shopping more of the store," Wal-Mart U.S. president and chief executive officer Eduardo Castro-Wright said. "Assortments and brands have improved, which bodes well for the upcoming seasons, including back-to-school." Rival Target, which posted a 0.4 percent increase in June comps compared to a 3.3 percent increase for the same period a year ago, is focusing more on promoting its discount prices, according to spokeswoman Hadley Burrows. Gap, which had a 7 percent decrease in June comps, prescribed a different remedy. The specialty store powerhouse tied together all its nameplates when it launched its Web site, Universality, two months ago. Designed to be a one-stop shop, consumers can purchase merchandise from all four of the company's brands, using the same online shopping cart, and paying one $7 shipping fee. Although the site was not launched specifically to combat economic woes, said spokeswoman Kris Marubio, it comes at an opportune time when families want to save money on gas.
To celebrate Pride 2018, @themarcjacobs released the #GratefulNotHateful campaign, a social media initiative aimed at extending Pride beyond the parade. Inspired by Jacobs’ everyday outlook, the campaign features Jacobs along with a group of models and social media stars who are members and supporters of the LGBT community, all seen wearing @marcbeauty’s Highliner Gel Eye Crayons in colors of the rainbow. Head to our Instagram stories to see close-ups of the liner. #wwdbeauty
Virgil Abloh’s dad Nee and Don Crawley, cofounder of RSVP Gallery, were some of the hometown crew at the Chicago-born designer’s debut show for Louis Vuitton. (📸: @jdiderich ) #wwdmens #louisvuitton #virgilabloh
About last night: @marycharteris and @adwoaaboah hit up Hyde Park for the Serpentine Galleries’ annual summer party held in partnership with @chanelofficial. Head to WWD.com to see more photos. #wwdfashion
“This is Paris, my first show. I’m all about democracy. If some kid shows up, flew from New Jersey to just be around, let’s get him a seat.” — @virgilabloh tells WWD’s @jdiderich ahead of his first show for @louisvuitton men’s. (📸: @alfredo_piola ) #wwdmens #virgilabloh #louisvuitton
“Kate Spade was a true fashion icon who brought joy to the lives of women around the world, and inspired women to live life to the fullest. We are dedicated to carrying on her legacy,” said Anna Bakst, brand president and chief executive officer of @katespadeny. The Kate Spade Foundation announced that it will be donating $1 million to suicide prevention and mental health awareness in tribute to the recent death of Kate Spade. Read more on WWD.com. #wwdnews (📷: @chinseephoto)
A first look at @virgilabloh’s sneakers for @louisvuitton. Abloh spoke to WWD about his debut collection for Louis Vuitton, creating @kendalljenner’s #metgala outfit and redefining the heritage brand. Read the full story on WWD.com. #wwdfashion 📷: @alfredo_piola)
The world’s largest producer of denim @iskodenim is sharing the strategy behind its product development process. Read our full interview with ISKO’s product development manager Baris Ozden on the company’s extensive research practices, upcoming denim trends and the latest material innovations on WWD.com. #iskodenim