The fourth-quarter outlook isn’t getting any prettier.
Tiffany & Co., Aéropostale Inc. and Ascena Retail Group Inc. all cut profit projections Thursday, weighing on retail stocks and reconfirming the generally blah reading of the holiday season. Tiffany said its comparable-store sales were flat for November and December and that comps at its New York flagship fell 2 percent.
Michael Kowalski, chairman and chief executive officer of the luxe jeweler, said, “Holiday period sales growth was at the low end of our expectations, and we now expect that net earnings for the year ending Jan. 31 will be at the lower end of the forecast that we issued on Nov. 29 of $3.20 to $3.40 per diluted share.”
Investors took the day to reassess and retail stocks rallied into positive territory late in the day. The sector is still near its all-time high.
The S&P 500 Retailing Industry Group rose 0.4 percent, or 2.41 points, to 666.52. The sector is up 1.9 percent so far this year.
The Dow Jones Industrial Average rose 0.6 percent, or 80.71 points, to 13,471.22 for the day. Shares of Ascena dropped 7 percent to $16.86, as Tiffany declined 4.5 percent to $60.40 and Aéropostale slipped 1 percent to $13.24. American Eagle Outfitters Inc. said its fourth-quarter comps through Jan. 8 increased 5 percent and reiterated its profit guidance, but saw its stock drop 3.3 percent to $19.94.
The holiday season has come with some silver linings. Urban Outfitters Inc.’s comparable sales for November and December rose 9 percent. Ceo Richard Hayne said the company delivered better product and was more disciplined with its inventory, which led to “improvement in regular priced sales.”
Overall, retailers faced lackluster consumption last month and cut prices to clear inventory. Of the companies that reported December comps last week, the winners generally were in the discount channel, such as Gap Inc.’s Old Navy division, The TJX Cos. Inc. and Ross Stores Inc. Nordstrom Inc. also excelled on the high end.
Urban Outfitters’ stock gained 4.6 percent to $42.64 Thursday and Zale Corp., which said it continues to expect to post a profit for the fiscal year, increased 11.7 percent to $4.68.
Zale’s comps inched up 2.3 percent over the past two months and the company kept a laser focus on the bottom line. Theo Killion, ceo, said, “Our comp performance, combined with an expected 100 basis point operating margin improvement, brings us closer to our goal of achieving positive net income for the fiscal year.”
Economists expect that while consumer spending will continue to ebb and flow in 2013, the general trend will be modestly upward.
The consumer came to life early in 2011 and 2012 only to deflate later in the year. Frank Badillo, economist at Retail Forward, said that could happen again this year, in part because the housing market is strengthening some.
“With some of the uncertainty disappearing, we are going to see pockets of growth and momentum start to build as more businesses and consumers gain a little more confidence,” Badillo said.
And the economist said U.S. consumers held up “fairly well” over the holiday season given the uncertainty around the fiscal cliff tax hikes and spending cuts, which were narrowly averted.
But the issue of government spending cuts still needs to be addressed and the global economy is fraught with troubles that could flare up and derail the U.S. consumer, from the debt troubles in Europe to slower growth in China. Brazil and Canada have also begun to show up on the economic warning screen.
“There are still new surprises that could cause any spring [spending] spurt to suddenly fall apart,” Badillo said. “As a result it is going to be a lot of the same pattern, where we should see some…momentum in the economy, but in the end it will be slow to modest growth.”
Ascena Retail Group Inc. said its November and December comps inched up a less-than-planned 1 percent.
David Jaffe, president and ceo, said, “The holiday selling season proved to be challenging and we increased promotional activity in order to ensure appropriate inventory levels going forward. We are taking the necessary markdowns in the second quarter to effectively transition into the spring season.”
Ascena now expects adjusted diluted earnings per share of $1.20 to $1.30 this year, instead of the $1.45 to $1.55 previously projected.
Aéropostale’s comps for the nine weeks ended Dec. 29 fell 8 percent on top of a 9 percent drop a year earlier.
“Following a strong Black Friday weekend, sales and traffic trends deteriorated significantly in December,” said Thomas Johnson, ceo. “From a merchandise perspective, our core basics businesses, particularly graphics and fleece, remained challenged. We continue to manage our inventories carefully, and we will enter the spring season with fresh and updated assortments.”
The specialty store cut its fourth-quarter earnings projection to a range of 20 cents to 24 cents a diluted share, down from the 36 cents to 41 cents previously projected.
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