Weak comparable-store sales gains in April dumped a bucket of cold water on what had been budding enthusiasm in retail.
With an Easter calendar shift that pulled sales out of April and into March, unfavorable weather and a still-troubled economy, shoppers opted to stay home last month.
April sales rose just 0.6 percent according to the International Council of Shopping Centers — a much weaker showing than the 3 to 4 percent increase the group forecast a week ago. And retail stocks felt the pinch. The S&P Retail Index, which is still near its all-time high, fell 0.9 percent, or 5.94 points, to 649.78, as the Dow Jones Industrial Average slipped a milder 0.5 percent, or 61.98 points, to 13,206.59.
“We had pretty muted results.That being said, when there’s such a dramatic calendar shift, we look at March and April together,” said Joel Bines, managing director at AlixPartners’ global retail practice.
“We’re going to see steady but not spectacular comp increases in 2012 because there’s still a significant amount of pent-up demand from 2008,” he said, adding that there seems to be a “real separation” between the winners and the losers.
When viewed together, March and April’s total comp increase was 2.5 percent compared with a 5.4 percent climb last year.
In the midtier channel, Macy’s Inc., which posted a 1.2 percent comp rise, appears to be snatching up market share. Kohl’s Corp. logged a 3.5 percent decline and J.C. Penney Co. Inc. is in the midst of a major reset that is disrupting sales.
Barbara Kahn, director of the Jay H. Baker Retailing Center at the Wharton School of the University of Pennsylvania, said Macy’s has been innovative and is benefiting from its “omni-channel selling philosophy.”
Kahn said Nordstrom Inc., with a 7.1 percent comp gain, and Limited Brands Inc.’s Victoria’s Secret unit, with an 8 percent rise, have been standouts.
“They have been surprisingly great,” she said. “They have the right product and they are doing the right thing at the right time.”
But retailers posting big numbers are few and far between.
“It’s going to be a slow recovery,” Kahn said. “There are things on the horizon that can still throw a monkey wrench in the recovery.”
High gas prices, rising retail prices and housing and employment markets that are showing little signs of improvement are just a few of the headwinds, she said. With the U.S. presidential election looming and Europe tilting toward recession, consumers may decide to coast through the rest of the year.
“There’s still a sizable population living under postrecession conditions,” said Arnold Aronson, managing director of retail strategy at Kurt Salmon. “Gas prices are not fictitious. You can’t manufacture money.”
Aronson described the economy as “stabilizing” but “not flying.”
“April brought things back to Earth” after “unjustified enthusiasm” from February and March, he said.
Even though the luxury market has slowed somewhat from last year, it is still moving forward.
Case in point: Saks reported a 2 percent gain versus last April’s 5.8 percent increase.
The tea leaves are harder to read with far fewer retailers reporting monthly sales.
Big names such as Neiman Marcus Inc., Wal-Mart Stores Inc., Penney’s and a slew of teen retailers, from Abercrombie & Fitch Co. to American Eagle Outfitters Inc., have all dropped out of the monthly ritual.
“There’s a lot hidden under the covers,” Aronson said. “Value and luxury are going to be OK. But it’s going to be a zero-sum game for midtier retailers. Value retailers are benefiting from consumers who traded down [from the middle], and many of them stayed there.”
That’s just fine for value-centric players such asThe TJX Cos. Inc., Ross Stores Inc. and Zumiez Inc., which turned in respective increases of 6 percent, 7 percent and 10.1 percent.
“The new normal that we’re seeing includes 8 percent-plus unemployment, it includes people who are underemployed and not making as much money,” said Michael Brown, a partner in the retail practice at A.T. Kearney.
That potentially sets the scene for more store closures as retailers rightsize their fleets or consolidate with other brands.
“I don’t think we’re seeing anything that’s making people want to spend more money than they have in the last couple of years,” Brown said. “People have migrated to new levels of consumption.”
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)