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Men’s wear is a surprising holiday performer — relatively speaking, at least.
This story first appeared in the December 16, 2008 issue of WWD. Subscribe Today.
While men’s may not be the savior retailers need to salvage the dismal season, it’s managing to outperform other merchandise categories for most large stores. “It’s less worse by half,” noted David Fisher, executive vice president and general merchandise manager of men’s wear for Bloomingdale’s.
Aside from men’s, retailers say outlets are faring relatively well, and several executives said the sky-high discounting is drawing traffic, but well below the levels normally expected with Christmas just eight days away. Business could still pick up, with presumably the year’s biggest weekend ahead. The Saturday before Christmas is typically the largest volume of the year. Much of the merchandise that is moving, even in the highest priced designer sector, is being sold at a loss; home and hard goods, particularly big ticket items, are performing most poorly, while women’s appears to be in the middle of the spectrum.
“Traffic continues to be way down, much more so at retail stores than at outlets,” said one chief executive of a national specialty chain, who requested anonymity. He characterized the season as “horrendous” and added, “No one is making money. The most important thing is movement of inventory, balance sheet health and to get ready for the new year. The real question is how bad January will be. It’s not an important month, but it’s when you better clear out your stale inventory.”
The relative strength of men’s apparel is an aberration that has come as a surprise to most merchants. In past economic downturns, men’s has traditionally been the first purchase consumers delay. And with the recession decimating the male-oriented financial sector — through October, 130,000 financial jobs had been eliminated this year, according to CNNMoney.com — it would be logical to assume men’s wear would take a major hit.
But instead, stores report that men’s is holding its own, although the sector, like most this season, has been highly promotional.
Britt Beamer, founder and chairman of America’s Research Group, said men’s wear “essentials,” such as dress shirts, are doing well this season. “Consumers are in survival mode,” he said.
Daniel Butler, vice president of retail operations for the National Retail Federation, said that during the holiday season, the reluctant male shopper finally hits the stores, giving men’s wear categories a boost. With business as sluggish as it has been this year, the uptick is more evident this time around, he believes.
In reporting November sales, retailers as diverse as Dillard’s Inc. and Aéropostale Inc. pointed to men’s as an area of strength. Although Dillard’s comps were down 9 percent in the month, sales were “significantly above the average company trend in men’s apparel and accessories,” the company noted. Men’s contemporary apparel was among the strongest categories for Saks Fifth Avenue last month and Aéropostale said men’s comps rose in the low-double digits (outpacing women’s, which was up in the midsingle digits). At American Eagle Outfitters Inc., men’s comps fell in the midsingle digits while women’s dropped in the teens. At Abercrombie & Fitch Co., men’s outpaced women’s in all three divisions — A&F, Hollister and Ruehl — although each of the chains reported negative sales results for the month.
This past weekend reinforced the dismal holiday results. “While malls were busy, we didn’t see a commensurate acceleration expected with Christmas less than two weeks away,” wrote Todd Slater, managing director and specialty retail, apparel and footwear analyst at Lazard Capital Markets. He listed Aéropostale, J. Crew Group and Urban Outfitters Inc. as among the better performers, with aggressive pricing, daily deals and trend-right merchandise.
With Thanksgiving falling five days later this year compared with 2007, the calendar shift was expected to move 4 percent of November’s business into December, Slater noted: “While unit sales have held up, dollar revenue numbers appear significantly eroded by steep markdowns. Unless there is a sharp turnaround, December is likely to be weaker than expected.” The calendar has worked against retailers, with Thanksgiving and Hanukkah both falling late this year.
“Obviously, the customer is very value oriented,” said Michael Gould, chairman and chief executive of Bloomingdale’s. But he added that “Friday, Saturday and Sunday were really good. There was a lot of good value on the floor. We took some appropriate markdowns and felt good about the tone of the business. The whole soft goods part was very good. Hard goods is a little tough. Business with gift cards is very soft. Why buy a gift card when you can buy something on the floor and get greater value? These are difficult times. We are being prudently aggressive on the floor.”
ComScore, which tracks selling online, said for the first 42 days of the holiday season through Dec. 12, $19.44 billion has been spent online, essentially the same level compared with the corresponding days last year. However, the Dec. 8 to 12 period saw e-commerce sales decline by 1 percent, although Dec. 9 emerged as the highest online spending day on record.
“Shoppers are putting off shopping to the last minute. It happens every year, but it’s probably worse this year,” said Roz Wells, the chief economist for the National Retail Federation. “They know retailers are desperate.” However, “Eight days is a long way off to Christmas. No one is expecting any great shakes. I think there is probably some pent up demand. People are still going to be getting Christmas gifts.”
At Forever 21, Larry Meyer, senior vice president, said, “Consumers like our store because of our fashion and value” with most of the store — sweaters, camis, fashion tops and accessories, selling well, he noted. Forever 21 is promoting gift-giving items with shine such as a hot pink Clara satin camisole for $14.80, red Alysha satin dress for $24.80 and purple Evita satin clutch, $15.80. The chain advertises “daily 21 specials,” 20 percent of 21 items, such as a butterfly sweater top, $19.84 and Charisma sequin top, $12.24.
At Neiman Marcus, where business is challenging across the board, men’s merchandise that has limited or exclusive distribution, including Stefano Ricci and Tom Ford, has recently been a bright spot, according to Russ Patrick, senior vice president and general merchandise manager of men’s.
Events are driving business at eight Tod’s boutiques in the U.S., said Marco Giacometti, ceo of Tod’s USA, “We had boutiques that performed well and some that were underperforming — it depends on what’s happening in the store,” he said. “We are really focusing on how we can promote specific things and making marketing plans and activities that give them a reason to come every week — a charity, a special product, something to make you feel special.”
Tender in Birmingham, Mich., has also gotten more aggressive, increasing advertising and sales calls to customers, said Karen Daskas, co-owner. Though business is down about 20 percent, inventory is in good shape. She put out spring goods this week — about a month earlier than usual — to test the waters.
“Men’s is not going to save the holiday, but it’s not down as much as women’s,” Bloomingdale’s Fisher said. “We had a very difficult November, but since Thanksgiving weekend I’ve seen double-digit increases.”
Although Fisher acknowledged the store has been running aggressive promotions to fuel sales, customers are responding. “We went into our private sale in the first week of December and we’re significantly ahead of last year,” he said.
Fisher believes men are buying for themselves and are savvy about the value they’re getting. “They know Canali at 30-40 percent off is a great value and will last a long time,” he said.
He called the relative strength of men’s wear “anti-logic, especially when you think that tailored clothing is one of the strongest businesses. And the traditional gift businesses — shirts, ties — are more sluggish.” Sportswear and kids were also performing well in addition to clothing, he said, although outerwear is “not as good as I’d hoped it would be.”
Specifically, he said Hugo Boss, Theory, Canali, Z Zegna, Zegna Sport, Tahari and Michael Kors were getting the most attention from customers.
“The promotional climate is going to continue to prevail,” he continued, “but it will entice customers. If they’re going to buy something, it will be now.”
Fisher expects sales to continue to be difficult for the first quarter of next year, and he’s keeping a close eye on inventories. “We don’t want to start spring with an overabundance of merchandise,” he said.
Margaret Spaniolo, senior vice president and gmm of men’s for Bergdorf Goodman, said the economy this year prompted the store to break sale before Christmas this year, with discounts of up to 40 percent. The Bergdorf women’s store offered select designer ready-to-wear at 75 percent off original prices. “The competition dictated it,” she said. “We just hope it’s a one-season thing for us.”
Among the items that are doing best for the store this year are shoes and gifts. “We did a gift outpost on the third floor for the first time and pulled gifts from the seventh floor of the women’s store and mixed them with men’s. We have candles, CDs, scarves, gloves, and it’s doing very nicely. It’s a pleasant surprise when you walk off the elevator,” Spaniolo said.
Spaniolo believes that in this climate, people are “looking for small, pick-up items.” And they’re also “shopping for themselves. We’re seeing some nice selling on spring sportswear receipts at regular price.” Regular-price swimwear is also selling at about the same level as last year, she said.
“So there are a few bright spots, although the majority of the store is on sale,” she said. “But one thing we’ve tried to do is maintain our presentation. We didn’t turn this into a sale store. When you walk in, yes, you’ll see sale signs, but the environment is still Bergdorf Goodman.”
Nordstrom Inc. declined to say whether men’s is outperforming women’s, but cited The North Face as a top seller in men’s.
Tom Ott, senior vice president and gmm of men’s for Saks Fifth Avenue, said that although men’s sales “are not at the level we’d like,” there are pockets of strength. “There’s no question it’s a rough road, but we’re trying to figure it out.”
Among the top performers is accessories — a category that Saks is putting more emphasis on this season — especially jewelry, cuff links and watches. “Apparel is a mixed bag,” he said. “If anything is working, it’s our modern and contemporary looks. The customer is looking for value, not necessarily promotions, just value. We introduced Kiton this season and it’s not promotional and it’s making our original plan.”
Additionally, private label sweaters are on target to make plan as well, he added, with particular strength in cashmere.
“And in tailored clothing, we’re selling superluxe or young-modern, and outerwear is a good performer,” he said.
Ott admitted Saks has been affected by the downturn in the financial industry and is doing the best it can to adjust. “With our business, you can draw a straight line to the stock market,” he said, noting he is “being smart and controlling inventory.”
However, the store has been teeming with customers in the past couple of weeks, many of whom have been lured in by the store’s 70 percent off sales on designer merchandise. “The New York traffic is like I’ve never seen before and the business there is quite brisk,” Ott said.
Tom Kalenderian, executive vice president and gmm of men’s for Barneys New York, said men’s is lagging women’s slightly at the chain. He believes that’s due to the more promotional cadence of the women’s business. “We [men’s] did a one-day sale on Nov. 3 that gave us a huge bump. Then, women’s apparel, shoes and handbags broke price so they got the bump,” he said.
Kalenderian said men’s actually performed well in November and that trend has continued this month, boosted in large part by sales that have been as deep as 50 percent off. “We would not have planned our business this way, but there’s no doubt that this has been an unprecedented difficult season,” he said. “Our sales and margins will be below plan, but we’re controlling our inventory and will enter the first quarter on plan. Our goal for spring and fall ’09 is to get back to our regular cadence.”
Best performing items at Barneys include casualwear, notably the store’s contemporary Co-op business, as well as footwear. Tailored clothing and dress furnishings are not performing as well, Kalenderian reported. Dolce & Gabbana, Etro, Hugo Boss and RRL are among the best-selling brands, along with emerging lines including Rag & Bone and Philip Lim.
Because Barneys traditionally has a strong gift business, Kalenderian is expecting a pickup in that area as the Christmas holiday approaches.
Lou Amendola, chief merchandising officer for Brooks Brothers, said that, like Barneys, the company’s women’s business is performing better than men’s, but due primarily to the steeper discounts in that area. However, in men’s wear, tailored clothing and dress shirts are among the bestsellers while sweaters and sport shirts — the more-traditional gift-giving items — are “challenging.” Amendola attributed this to men shopping for themselves.
“The majority of our inventory is in staples and replenishment items,” he said, “and we won’t get into a situation where we discount those.” More fashion-forward items, however, are being offered at 25 percent off in men’s. “The consumer psychology today expects discounts,” he said.
Amendola expects sales to continue to pick up in the final days before Christmas. Even before the recession, shoppers were procrastinating more and more each season. “They always wait until the last minute and there’s a surge at the end,” he said.
Claudio Del Vecchio, Brooks Bros. ceo, admitted business overall has been a struggle, with the New York City stores getting a “double-whammy. The tourists stopped coming and the customer stopped working, or they think they’re going to be on the unemployment line,” he said. “And we’re not planning for business to get any better for another 12 months.
Scott Collins, vice president of merchandising for the young men’s and juniors’ specialty chain DTLR, said the company is bucking the trend and managed to post a 9.2 percent comp increase in November. Same-store sales for the year are up 8.8 percent, he added. Although footwear is the main driver, Collins said apparel comps have been up in the low-single digits for three consecutive months, with lightweight outerwear the top performer. Track jackets have experienced “a nice bounce back,” he added, and Levi’s jeans are also doing well.