BOSTON — Despite attempts to bring a more fashionable, better-edited assortment to women’s wear, the category is “a tough situation,” Wal-Mart chief financial officer Tom Schoewe told analysts Tuesday at the company’s annual conference in New York. Markdowns year-to-date have been “significantly more than we expected,” he added.
Company top management was not specific about what caused the hiccup, referring generally to deflation and the category’s struggle market-wide.
“I think anyone who is in the apparel business knows this has been a challenging year,” Wal-Mart stores president and chief executive Mike Duke dryly responded to an analyst’s query.
After a “tough first half,” men’s wear, girls’ wear and intimate apparel rebounded in the past few months, said Don Harris, executive vice president of general merchandise for Wal-Mart stores. He’s expecting to clear women’s apparel inventory by the end of the third quarter.
(For more on Wal-Mart’s apparel branding, see story on opposite page.)
There were hints Wal-Mart management has realized that with more complex fashion comes a corresponding need for apparel-specific distribution and tracking.
Chairman and ceo Lee Scott said the company is looking at ways to “flow design globally,” and has assigned chief information officer Linda Dillman to the task. The initiative to swap design worldwide seems particularly suited to the George brand, the fast-moving fashion label that’s been a wild success in the U.K., but has a minor presence in U.S. stores to date.
Although getting the proper apparel mix remains tricky, the world’s largest company keeps plowing ahead.
Scott seemed bullish on Wal-Mart’s prospects for recruiting talent, citing the boom in Northwest Arkansas that’s brought new restaurants, retail and development to the area. In the past, when the company tried to recruit “artsy” apparel executives, he said, “they might think they couldn’t live in Northwest Arkansas.” Times have changed, he added, listing several executives who have traded in posts at major retailers for a ticket to Bentonville, Ark. Among them, Lucy Cindric, a Kaufmann’s executive who is now vice president of intimate apparel, and Margaret McCarthy Hildreth, Sam’s Club vice president and divisional merchandise manager of apparel, who is a former Stein Mart executive.During three hours of presentations, executives also outlined what growth looks like for a $250 billion company.
They touted density strategies to fill in urban areas and ease pressures on overperforming stores, as defined when a door is pulling in well above $100 million annually.
The company recently opened a second discount store 1.5 miles away from a booming store in Chula Vista, Calif., a suburb of San Diego.
The cannibalization of the initial store — which was doing significantly more in sales than the average supercenter, even without grocery — has been “half what we thought it would be,” said vice chairman of U.S. operations Tom Coughlin, while the new store opened “above expectations.”
The case illustrates the explosive potential of the California market, which is slated to get its first supercenter sometime next year.
Management is watching California’s recall drama “with great interest,” Scott said. A new political agenda in the Golden State will perhaps thaw the chilly reception the company has had there thus far.
As for holiday, Scott said he anticipates a season “improved over last year, but not significantly.”
If customers have to drop $10 more at the pumps each week, that’s a bill that’s “not going to Wal-Mart, McDonald’s or the movies,” he said. “I think gas prices are the most regressive tax there is.”
The soft demand for women’s apparel that has plagued much of the industry this year also remains a concern, even though apparel sales have shown signs of improvement.
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