The retail landscape shook mightily this year, with a number of deals cracking the billion-dollar mark. But the biggest was a deal shrouded in mystery. In a surprise move, Kmart Holding Co. said it would pay $11 billion...
The retail landscape shook mightily this year, with a number of deals cracking the billion-dollar mark. But the biggest was a deal shrouded in mystery. In a surprise move, Kmart Holding Co. said it would pay $11 billion to buy Sears, Roebuck & Co., creating the nation’s third largest retailer with $55 billion in sales. Edward Lampert, the financier behind it, said the best of both chains will be blended to create a strong retail entity, but he’s kept specific plans secret so far. Cynics said putting two struggling companies together is a formula for failure, and Lampert really intends to sell off the real estate, brands and other assets from the chains, in what could ultimately become one big liquidation.
In another high-profile, controversial but far smaller deal, Jones Apparel Group decided to spend $400 million for Barneys New York. It seemed like a stretch with few, if any, apparent synergies, but Jones said it could build Barneys into a $1 billion business and get a head start learning about luxury looks that could be interpreted to its more moderate business.
On the mall front clear across the country, major properties changed hands like there was no tomorrow, through single- and multiproperty deals. The biggest saw General Growth Properties Inc. purchase The Rouse Co. for $12.6 billion and pick up 40 million square feet of space.
Besides GGP’s big acquisition of Rouse, Simon Property Group, still the nation’s largest developer, bought Chelsea Properties, the largest outlet mall operator, for $4.8 billion; Mills Corp. decided to spend more than $1 billion for a 50 percent stake in nine shopping centers, and GGP also paid $766 million for the Grand Canal Shoppes at The Venetian in Las Vegas.
There was plenty of retail m&a activity, too. Some of the more dramatic deals were Target Corp. selling its Marshall Field’s division to May Co. for $3.24 billion and its Mervyn’s stores to an investment group for $1.2 billion, enabling the corporation to focus on its core Target discount division.
J.C. Penney Co. Inc. sold off its lagging Eckerd drugstore chain to CVS Corp. and the Jean Coutu Group for $4.5 billion, enabling the Dallas-based chain to shore up its balance sheet.Some other venerable retail names were also put on the block, including the Casual Corner division of Retail Brand Alliance, while Eddie Bauer and Wet Seal Inc. were shedding weak locations.
“Consolidation, involving financial buyers as well as strategic players, has really been the theme of the year,” said William S. Susman, president and chief operating officer of Financo Inc. “We’ve also been seeing new growth formats seeking capital.”
He’s referring to the year’s unprecedented level of creativity and flexibility in rolling out prototype store concepts and product categories demonstrated by a host of established retailers. Bloomingdale’s, for example, opened its highly focused SoHo branch skewed to contemporary sportswear, advanced denims, accessories and cosmetics. Limited Brands Inc. decided to recast Henri Bendel on Fifth Avenue as a cosmetics and lingerie specialty retailer and began testing a Bendel’s branch. Limited also unveiled a new concept, C.O. Bigelow, modernizing the old-fashioned apothecary and inspired by the 166-year-old Greenwich Village institution filled with everything from homeopathic remedies to niche beauty products.
One of the most watched retail experiments was Abercrombie & Fitch’s new Ruehl division for the 22- to 30-year-old set — a new demographic for the specialty retailer — while Gap Inc. also decided it was time to appeal to an even older crowd by targeting women aged 35 and up with a yet-to-be-named division that will bow with up to 10 stores next fall in two regions.
As General Growth chief executive John Bucksbaum said, “That’s the beauty of the business: Retailers are creating more concepts today than they ever have, and it’s wonderful that established retailers are doing it. It means there’s an ability to roll out the new concepts faster. Some are showing real creativity.”
The year was also marked by sustained strength in same-store sales and inventory control, but even more significantly, long-standing perceptions about various retail sectors seemed to fade. The giant discounters, thought to be invincible, started showing a few cracks in their armor, and department stores, for decades considered a dying breed, showed new life. The rate of sales gains at Wal-Mart, Kohl’s and Target slipped, while Federated Department Stores Inc. and Saks Inc. showed that they are trying to attract younger customers with urban brands, private label and exclusive merchandise.In one big consolidation, Federated announced it’s getting rid of all its remaining regional nameplates — Burdine’s, Bon Marche, Rich’s, Lazarus, and Goldsmith’s — and replacing them with the Macy’s logo, thereby truly establishing Macy’s as a national chain and beginning to market the brand as “America’s department store.”
Among the newsiest developments on the personnel front, Allen Questrom, one of the giants in the industry, made his retirement official and named Myron Ullman 3rd, a former executive at LVMH Moët Hennessy Louis Vuitton and Macy’s, as his successor at J.C. Penney.
Also, Hal Kahn decided to call it quits at Macy’s East, and Ron Klein succeeded him as chairman and ceo. But the revolving door kept swinging with Louis Padilla, the merchant star who made his name at Target Corp., defecting to Sears, where his help is sorely needed, as president of merchandising.
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye