NEW YORK — The superior ability of North American stores to generate cash flow has put their shareholders in a better position to benefit from both an economic upturn and continuing consolidation than those of their overseas...
NEW YORK — The superior ability of North American stores to generate cash flow has put their shareholders in a better position to benefit from both an economic upturn and continuing consolidation than those of their overseas competitors.
That was the conclusion of the first segment of a study of 500 public retailers worldwide conducted by KPMG, the accounting and tax firm, in conjunction with Oxford University’s Templeton College. While the first part of the project focused on the relative market performance of stores, the second, expected to be concluded before the end of the year, will attempt to shed light on the reasons behind the differences in performance.
Mark Larson, KPMG’s partner for its retail practice in the Americas, said: "As retail continues to become more of a global industry, we wanted to look at what was driving the successful retailers versus the less successful retailers."
In a phrase, what appeared to be driving success was strong cash flow. Limiting the focus to two financial criteria — the effective use of capital rewarded by stock market valuations and the ability to generate cash flow returns — larger retailers that also were deemed to be solid cash flow generators did best, but smaller and medium-sized retailers with strong cash flow generation also pulled ahead of the pack, Larson said.
"Good cash flow was a more important factor than the market value of the firm. The stock market rewards you for good cash flow," Larson said.
The sheer size of the North American group contributed to its stellar performance. Stores in the U.S. and Canada represented 164 of the top 500 global retailers and have a combined market capitalization of $734 billion, nearly three times that of all the European representatives combined.
In comparison, retailers in mainland Europe and the U.K., separated in the study, have lower valuations and poorer cash returns than their North American cousins. In addition, the results indicated that the U.K. retail value model is actually closer to that of continental Europe, even though it is often thought to be different from that of both Europe and North America.
At the bottom of the totem pole was the valuation performance of Japanese retailers. The study said they are "most likely to find themselves in a continued valuation quagmire, unable either to raise funds in the depressed stock market or to improve performance internally."Looking ahead to the second part of the study, Larson speculated that issues overseas such as the costs of labor and regulations governing store hours and retail square footage have tended to work against the efficient use of capital by retailers outside of the North American region.
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)
The @cfda has shifted the dates of #NYFW, with Men’s showing on February 5 through February 7, and Women’s will directly follow, running from February 8 through 14. The preliminary schedule will be released on the CFDA’s web site in the next few days, but Mark Beckham, VP of marketing for the CFDA, revealed that @rafsimons will be back to close the men’s-specific part of the week with a show on February 7 #wwdfashion (📷: Kelly Taub)
@ferragamo is introducing a new space dedicated to the development of women’s and men’s leather good samples. The laboratory, which is created eco-friendly materials and designed to reduce the environmental impact of the manufacturing processes, will allow the company to expand its accessories offering through traditional artisanal approaches. #wwdfashion (📷: @aitorrosasphoto)
How does a “regular, degular, schmegular” girl from the Bronx, N.Y., become a Grammy-nominated artist with a certified platinum record in less than a year? Call it the @iamcardib come up. The 25-year-old has become a musical sensation, and the fashion world is taking note. “If I could describe her style I would say drama. She’s really into the dramatics,” says Cardi B’s stylist @kollincarter. See how Carter styles her bold and out there looks with the link in bio. #wwdfashion
“There is no formula. There is no guideline. I can watch Ted Talks all day, but there is no one who can advise me on exactly what it is I should be doing,” said @ronniefieg, CEO of @kith, in an interview with WWD’s @ariahughes at the brand’s new SoHo office in Manhattan. Head to WWD.com to see how Fieg went from hanging out in shoe stockrooms at 13 to building his own business. #wwdfashion (📷: @weston.wells)
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion