Most Recent Articles In Fashion Features
Latest Fashion Features Articles
- Louis Vuitton Lands in Rio
- Syracuse Presents Fashion Without Limitations
- Edmundo Castillo Talks Life, Career at Cooper Hewitt
More Articles By
NEW YORK — Retail shares tumbled lower Wednesday as concerns about Sears, Roebuck & Co.’s credit operations and the industry’s September comparable-store sales results continued to fuel pessimism about the retail marketplace.
This story first appeared in the October 10, 2002 issue of WWD. Subscribe Today.
Sears’ shares dropped $3.33, or 10.5 percent, to close at $28.44 on the New York Stock Exchange.
Meanwhile, Nordstrom, Hot Topic and Cache were among retailers reporting advances in September comps while American Eagle Outfitters, Aeropostale and Factory 2-U Stores reported declines. The majority of retailers will report their September results today, and guidance from the companies and analysts covering them suggest a weak month, even in comparison to September 2001’s anemic performances.
As reported, Sears on Monday warned that its third-quarter profits would miss analysts’ expectations and revealed that Kevin Keleghan, who had been president of the credit and financial products division until Friday, was let go when chairman and chief executive Alan Lacy “lost confidence in his personal credibility.” His departure, according to the company, was not related to business performance.
Having traded as high as $59.90 over the last year, shares of Sears hit a new 52-week low of $28.20 in intra-day action Wednesday. So far this week, the firm’s stock has plummeted 24.4 percent.
Shares in the Standard & Poor’s retail index slid 4.3 percent to 254.25, outpacing the broader S&P 500, which was down 2.7 percent to 776.76. The Dow Jones Industrial Average was off 2.9 percent to 7,286.27.
Among the retailers digesting declines in the price of their shares were Aeropostale, down 12.3 percent to $5.35; Saks, 7.7 percent to $9.12; American Eagle, 7.3 percent to $10.29; Federated, 6.6 percent to $26.61; May Department Stores, 6 percent to $21.63; Target, 5.2 percent to $26.75, and Wal-Mart, 3.5 percent to $50.74.
Nordstrom Inc. reported a comp store increase of 1.7 percent and preliminary sales of $505.9 million for the five-week period ended Oct. 6, an increase of 6.6 percent over sales of $474.8 million reached in last year’s comparable period.
By merchandise categories, comps increased in the designer, contemporary and junior segments of women’s apparel, as well as cosmetics, accessories, women’s activewear, intimate apparel and women’s shoes. The Seattle-based firm said sales performance increased during the period immediately following Sept. 11 but declined later in the month, as it did not repeat the Fall Sale event that occurred in 2001 from Sept. 28 through Oct. 8.
Defying the lackluster trend prevalent throughout the retail environment this month, Cache Inc., a specialty chain of 227 women’s apparel stores, said Wednesday its September comps increased 14 percent. The New York-based firm said total sales for the month increased 18.1 percent to $18.3 million.
“We were particularly pleased with our results, as they were primarily driven by our regular price assortments,” Brian Woolf, Cache’s chairman, said in a statement, adding that he expects improved third-quarter results.
Referring to more focused assortments and a new marketing campaign, Thomas Reinckens, president and chief operating officer, said in a telephone interview, “We are clicking on all cylinders. While mall traffic is down, our merchandise is reaching a wider spectrum of people walking through the mall. We are not a teen or young kids’ store selling jeans or khakis. We are different and we have a niche in the marketplace, the ‘missier’ customer.”
An overabundance of competition for the teen dollar is among the factors cited for recent deterioration in the sales results of many teen retailers.
While those factors showed in Aeropostale and American Eagle’s comp declines, they weren’t apparent from Hot Topic, the City of Industry, Calif.-based music-oriented teen retailer that reported a 5.9 percent increase in September comps, at the high end of its expectations. Comps were positive each week and in each of its six geographic areas. Net sales for the month increased 32.6 percent to $37.4 million.
Betsy McLaughlin, president and chief executive, said in a statement, “We are setting our Halloween presentation this week and are optimistic about Halloween sales this year.”
On a conference call, HT said it remained comfortable with the high end of its revised guidance of 27 to 29 cents per share for the third quarter. While men’s tops and bottoms continued to produce negative comp results, the firm said it would continue to aggressively mark down the poor performing items in its men’s business through October to be clean in the category in time for the holiday.
Warning last week of a sharp slowdown in sales in mid-September, Aeropostale Inc., a mall-based specialty retailer of casual apparel and accessories for young men and women, said its comps declined 2.5 percent in September versus a 12.4 percent increase in September 2001. Overall sales increased 24.8 percent to $51.3 million from $41.1 million on a total sales basis.
As reported, Aeropostale, which currently operates 357 stores, saw strong sales momentum from August continue into early September, only to dissipate in the middle of the month because of a significant decrease in transactions and sales and increased promotional activity.
Michael?Cunningham, chief financial officer, said on a prerecorded call that the comp decline was driven by a midteen decrease in average dollars per unit sold, reflecting an increase in promotions, offset by a high-single-digit increase in units per transaction and a mid-single-digit increase in transactions.
Women’s comped down in the low-single digits; men’s were down mid-single digits and accessories were up mid-single digits.
The company warned Oct. 1 its third- and fourth-quarter earnings would fall well short of expectations, in ranges of 31 to 33 cents and 30 to 34 cents, respectively. At that time, the new guidance was significantly below what analysts had hoped for — 50 and 52 cents, respectively.
Another teen specialty store, Warrendale, Pa.-based American Eagle Outfitters, Inc., said comps for the AE stores declined 8.1 percent in September and 10.1 percent when including Bluenotes/Thriftys stores, which declined 30.2 percent.
The company said in a statement that it is pleased with the relative strength of its women’s division and believes that its holiday assortment is fashion-right in both men’s and women’s. However, if the soft retail environment prevails through October, third-quarter earnings per share could be 31 to 34 cents, versus analysts’ consensus estimates of 37 cents and last year’s 42 cents.