After a tough close to 2013, retailers are licking their wounds, starting to feel some of their old life return and — once again — talking up their future expansion to Wall Street.
“Just to recap 2013, it was a good year for us and — actually it was a good 11 months,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s Inc., at the Bank of America Merrill Lynch Consumer & Retail Conference Tuesday. Inclement weather in January forced 244 of the company’s stores to close temporarily.
“January was one of the most difficult months I’ve ever had in my career, and it had more of the negative impact on sales in the fourth quarter than any that I can remember,” Lundgren said. “It was just awful. And February started off like, Here we go again. It’s like, what’s going on here, and it’s like, did we get stupid all of a sudden?”
But Valentine’s Day brought a turn in the business, freeing Lundgren and others at the conference to turn to the future.
For instance, Hudson’s Bay Co. — operator of Hudson’s Bay, Lord & Taylor and Saks Fifth Avenue — has targeted $10 billion in sales in five years, from the current $7.2 billion.
The growth charge will be led by HBC’s digital operations, off-price expansion, bringing Saks to Canada and the top 10 doors at each retail banner. The company sees an opportunity for up to seven full-line Saks Fifth Avenue stores and 25 Off 5th outlets in Canada.
E-commerce and something of a rebound in apparel were recurring themes at the conference. Here’s a look at what retail and beauty executives at the conference are focusing on as they charge into 2014.
Terry J. Lundgren, chairman, president and chief executive officer, Macy’s Inc.
“We’re one of the largest Internet companies in America, and so that alone is an important part of our strategy, but for us it’s more the integration of how that consumer is shopping today,” Lundgren said.
The ceo said Macy’s has 500 doors that can fulfill Internet orders, and successfully tested a program in Washington that lets shoppers buy online and pick up in stores.
Macy’s is also making a big push in the athletic business and seeing apparel pick up.
“The apparel business has really not participated in the last few years in any significant way in terms of the overall growth of our company, and we’ve had fairly significant growth, and so that means to us that it’s not in her closet,” Lundgren said. “So, the customer needs new apparel.…I definitely believe there’s pent-up demand for apparel.”
Charles Holley, chief financial officer, Wal-Mart Stores Inc.
Wal-Mart’s e-commerce businesses grew at more than 30 percent to $10 billion last year, and the company plans to keep focusing on the area. “I would expect us to make acquisitions that would help e-commerce add additional sales,” the cfo said.
Wal-Mart gave a bearish outlook for this year when it reported a 21 percent drop in fourth-quarter profits.
But the retailer’s number-one priority is to drive comparable-store sales growth, the cfo said.
“We haven’t stopped our growth, we’ve only slowed it to make sure that we can get our operating cost model more in line with the economic environment,” Holley said, adding that Wal-Mart will open 270 to 300 smaller units this year.
Michael Koppel, cfo, executive vice president, Nordstrom Inc.
“We have over the last 12 to 18 months seen stability and then a turnaround in the women’s apparel business,” Koppel said. “And a lot of that was around the fact that we recognize that we needed to have a more modern, relevant offering but one that had accessible price points.…The one area of that segment that continues to struggle is our young women’s, our Brass Plum or junior’s area.…I think more and more of those customers are shopping pure online. Our actual online business there shows a different trend than it does in-store, but we continue to look for ways to make that in-store experience more relevant for that customer and having the right product.”
Koppel also noted that HauteLook grew 30 percent last year and has been making good use of Rack’s relationships with brands. The online business, which started as a flash sales site, now has what the cfo described as a “persistent offering” with product that’s available all the time instead of for 24- or 48-hour windows.
Michele Scannavini, ceo, Coty Inc.
Coty sees growth ahead, despite challenging market conditions in Europe and North America, where a slowdown in nail-care sales and poor weather conditions put a crimp in retail sales. “We are committed to come back to growth in the second part of the year,” said Scannavini, who expects Coty to grow in line with or better than the beauty market.
The ceo outlined four drivers of organic growth, namely expanding its 10 “power brands,” growing its presence in emerging markets, expanding its skin-care and body-care business and leveraging its multichannel distribution. He said Philosophy, a skin-care brand acquired in 2011, was in a “turnaround situation” and had delivered three consecutive quarters of growth.
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