Breaking up isn't that hard to do after all — according to Target Corp.
As the Minneapolis-based discounter posted an 8.2 percent drop in fourth-quarter profits Tuesday and conceded it would be a "challenging" first half, the company said it could do fine without Isaac Mizrahi.
Target's fourth-quarter earnings fell to $1.03 billion, or $1.23 a diluted share, from $1.12 billion, or $1.29, a year earlier. The results beat analysts' expectations by a penny. Gross margins were hurt by price promotions to move goods once sales shaped up to be slower than anticipated. Total revenues for the quarter ended Feb. 2 inched up 0.8 percent to $19.87 billion, versus $19.71 billion a year earlier.
Included in that was a 20.7 percent jump in credit card revenues to $532 million. The firm said it expects its credit operations, which are under strategic review and might be sold off, to continue to add to profits, before taxes, despite the general fallout of the credit markets.
On the fashion front, Target said Mizrahi's cheap-chic offerings will be replaced with fashions by emerging international names.
Analysts have seen Mizrahi's pending departure to take over the Liz Claiborne brand as a significant loss for Target, but president Gregg Steinhafel said the brand makes up only about 3 percent of its apparel and accessories business. Industry sources said the Mizrahi brand brought in about $125 million for Target.
"We really view his strength as a niche contemporary collection and any effort that we have had to move beyond that were unsuccessful," said Steinhafel.
After five years in which the designer not only put together collections for the store, but helped spruce up its fashion image, Mizrahi's contract expires this year.
"We took this as an opportunity to move beyond this partnership," said Steinhafel, who will replace Robert Ulrich as chief executive officer in May, on a conference call. "We did not want to pass on higher royalty rates to a small collection business within the store."
Steinhafel said the company could easily replace the four of five racks currently occupied by Mizrahi in Target's apparel department. "We [have] a terrific portfolio of new emerging designers coming on stream this year," he said.
Through its Go International program, Target has, for a time, sold looks from Behnaz Sarafpour, Proenza Schouler and Erin Fetherston.
Given sinking consumer confidence and the looming possibility of a recession, any new names entering the store might well get a trial by fire.
For the full year, Target's earnings rose 2.2 percent to $2.85 billion, or $3.33 a diluted share, on a 6.5 percent increase in revenues to $63.37 billion.
Target expects its comparable-stores sales to rise by 2 percent to 3 percent in 2008, with hopes for strength in the second half offsetting what seems to be a tough first half. Target said Wall Street's estimates, calling for earnings per share of 73 cents in the first quarter and $3.56 for the full year, were reasonable.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast