WWD.com/business-news/department-stores/barneys-optimistic-after-sales-gain-2371160/
government-trade
government-trade

Barneys Optimistic After Sales Gain

Barneys New York said business is picking up and so is the outlook, at least for the near term.

There’s still an uncertain future, no chief executive in sight and no cause to be bullish. Yet Barneys New York said business is picking up and so is the outlook, at least for the near term.

This story first appeared in the November 16, 2009 issue of WWD.  Subscribe Today.

Sales rose 7 percent on a comparable-store basis in October after being down 9 percent in September, executives told WWD last week. Increased regular-price selling and new marketing and merchandising approaches are also lifting spirits for the fourth quarter.

“We feel we have some traction. It’s hard to predict the future. But October results gives us some cause for some optimism,” said Michael Celestino, executive vice president of store operations. “Inventories are in line. The response to regular-priced merchandise has been good. For the last two months, we feel that we are tracking slightly better than our competitors.”

“We are holding to full-price selling,” added Vince Phelan, executive vice president and chief financial officer. “The public sale happens right after Thanksgiving, Black Friday. Last year, it was the 19th. We are trying to shift the promotional cadence back to normal.”

“We haven’t sent a single sale e-mail yet,” said Karl Hermanns, executive vice president of merchandise planning, marketing, e-commerce and operations. “We are very encouraged by this positive momentum. We have never done a friends and family sale. This season, we did not have a one-day sale.” And none are planned, though for the past two years, one-day events were held primarily for men’s wear.

Hermanns believes consumers are experiencing “frugal fatigue,” meaning they’re tired of not spending, and he sees Wall Street bonuses working their way to Barneys. “Bonuses are going to be the biggest ever,” he said.

The executives, all members of the senior operating committee overseeing the store in the absence of a ceo, did acknowledge a month or two of improved sales aren’t enough to suggest shoppers are back to old times, and that the October gain came off a low base from a year ago. “But you look at the change, the modification,” Celestino noted. “A move towards the positive or less negative is a good sign.”

Barneys’ flagships open for more than a year have been experiencing positive comps, Celestino said, citing women’s and men’s designer, women’s and men’s casual sportswear, women’s accessories and men’s contemporary sportswear as best-selling categories. But tailored clothing and furnishings have been weak, and certain other areas are on the flat side.

Barneys’ flagships in Manhattan on Madison Avenue, Beverly Hills and Chicago do the most volume. There are also flagships in Dallas, Boston, Seattle and San Francisco, which are generally said to be slow. Last month, a flagship opened in Scottsdale, Ariz. Celestino said it’s performing “above expectations,” but did not specify.

Among the tactics Barneys has in the works:

• A 10 percent increase in the trunk show schedule to about 170 this year in total at the flagships. Among the most successful so far: Celine, Givenchy, Lanvin, Alexander Wang and Rag & Bone.

• A redesigned holiday catalogue to save Barneys some money and give “an appropriate level of communication, being a little more compact and focused,” said Hermanns. It’s 60 pages versus 90 a year ago, and 7-by-7 inches, instead of 8-by-8. Extracts will be in December issues of WSJ., the Wall Street Journal magazine, T Magazine and Vanity Fair for the first time.

• Handouts of images of select items will be distributed in the stores to promote a range of “affordable pickup” gifts, such as a Jonathan Adler candle set for $78, and Proenza Schouler messenger handbags, priced at $1,595.

• A blog for Barneys’ merchants and fashion directors launches this week.

• In December, a 2,000-square-foot men’s Prada shop will open on the second floor of the Madison Avenue flagship. It’s a new concept, now only seen at Harrods, that will replace Barneys’ existing Prada space.

Among the recent tactics employed to sustain sales and traffic:

• An expanded online assortment, with Lanvin, Commes des Garçons and Rick Owens, among others, recently added to the three-year-old e-commerce site. There’s a new section on the Web site called The Look, with catalogues, shoppable mailers, videos, and creative director Simon Doonan’s “babbles” on any subject and his holiday video entitled “The Cranky Elf.”

• Mobile commerce, launched last month, to shop the Web site via smartphone or BlackBerry.

• An intensified customer rewards program.

• Targeting tourists at the W Hotel with mailers in the rooms.

• To keep business running as smoothly as possible through the tough economy, Barneys has stepped up talks with landlords and factors. “Our payables are in very good shape; receipts are flowing as expected,” Phelan said. “We are talking to the credit community more often than previously. CIT has never wavered. The majority of factors are supporting us.”

Barneys could close certain flagships with relatively little penalty if they fall below certain volumes, as there are kickout clauses attached to lease agreements. “We will continue to evaluate our real estate,” Celestino said. “At this point, we have no intentions of closing any stores. I don’t think any of us can predict the business going forward. We see some optimism. Currently, there are no intentions of closing stores — no Barneys, no Co-Ops.”

Asked about Barneys possibly being sold, “To our knowledge, it’s business as usual. We are not up for sale,” Celestino said.

“The company has no intention of filing for bankruptcy,” said Phelan. “We are not preparing for one. We are not analyzing it. It is not in the cards.”