By  on July 14, 2008

BOSTON — A group of misses' specialty retailers outlined plans for more discipline in their operations during the current retail slowdown, but none proposed stepping away from an ambitious approach to compelling fashion.

In the opening speech on Tuesday at the three-day Oppenheimer Consumer Growth Conference, The NPD Group chief industry analyst Marshal Cohen urged retailers not to use cost-cutting as their only strategy to deal with the next 12 months.

"I hear more often than not from [retail] management that it's a perfect time to get conservative. I can't tell you how much I disagree," Cohen said. "Getting conservative is exactly what you must not do. You must entice the consumer, compel them to go out and spend some of their hard-earned dollars."

As if to prove just how high the stakes are for struggling executives, plus-size apparel retailer Charming Shoppes Inc. announced the resignation of embattled chief executive officer Dorrit Bern on Wednesday, hours before she was scheduled to present at the conference, held at the Four Seasons hotel here.

The misses' sector has been particularly hard-hit, with fashion staleness coinciding painfully with a period when older Baby Boomers are most concerned about shrinking home equity and retirement accounts. Competitors The Talbots Inc., Coldwater Creek Inc. and Chico's FAS Inc. outlined similar turnaround plans driven by inventory reduction, refreshed merchandise and a renewed focus on the core customer as they scramble to regain their footing.

The company that gets its act together first stands to gain enormous advantage over its competitors, said Oppenheimer specialty retail analyst Roxanne Meyers. She picked Talbots as potentially having the clearest path to a turnaround as it has the most clearly defined brand.

Meyers had previewed the company's new fall catalogue, representing the work of a new Talbots merchandising and marketing team, and praised the refreshed look as a "more grown-up J. Crew."

"I'm very encouraged," she said. "The wild card is how it ends up looking in the store and how it fits."

After turning off core customers with dowdy fashion and fumbling the J. Jill acquisition, Talbots, the $2.2 billion Hingham, Mass.-based retailer, "hit a low-water mark" with 2007's $176 million net loss, according to chief financial officer Ed Larsen. Trudy F. Sullivan, ceo, has set a three-year turnaround plan that resulted in the closure of its men's and kids' concepts, cut costs through layoffs and consolidations, and aims to grow through focus on J. Jill and the Talbots women's classics business.

"Our core Talbots customer spends 40 percent of her wallet with us," said Sullivan. "In our recent past we've disappointed her by failing to deliver the assortment she desired....She is turned off and we intend to turn her on."

Among the tools to do this is newly designed product from J. Jill, set to hit floors this month and backed by the tag line, "Easy sophistication for every day." Talbots will be updating its classic assortment in August.

The firm remains determined to increase operating income by $100 million in the next two years through cost-saving and revenue initiatives.

Talbots also will launch an outlet concept stocked with new iterations of past season bestsellers. Larsen said the company ultimately could open five to 10 more units a year.

Sullivan said Nordstrom Inc., which recently expanded into Talbots' home turf, is the company's biggest competitor.

Hobbled by product missteps, an inventory glut and aggressive discounting, Coldwater Creek lost $9.2 million in the first quarter. "A combination of those [factors] creates an environment that's not sustainable," said Dan Griesemer, president and ceo.

Among the corrective measures being taken are the discontinuation of the Spirit line, a reduction in store size (to 6,000 square feet from 8,000 square feet) and even a fine-tuning of the fit of its jackets and pants, which represent half of its total business.

The company will reduce the numbers of sku's per store, based on a successful test with leaner assortments in 40 stores last holiday.

Following a 73 percent drop in first-quarter earnings, Chico's FAS is looking to reduce its full-time workforce through compensation and schedule restructuring, build up cash on its balance sheet, reduce store expansion and hunker down for continuing tough times. "We're not seeing anything in the tea leaves that business is going to get better in the second half," said cfo Kent Kleenberger. "We're planning for transactions to be down and being more conservative."

The firm plans to realign its merchandise and standardize its Chico's pants fit, reinvent the travel apparel business that once accounted for 40 percent of its revenues, and move the White House|Black Market concept slightly upmarket with a boutique feel.

As for its Soma misses' lingerie concept, Kleenberger remarked, "It's not a question of if we roll it out, it's a question of when."

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