Wall Street loves a growth story above all else and retail executives did their best to deliver Thursday as they hawked themselves and their companies’ stocks at the 14th Annual ICR XChange Conference in Miami Beach.
This story first appeared in the January 13, 2012 issue of WWD. Subscribe Today.
The third and final day of the retail conclave had tidbits to interest just about everyone, from commentary out of Urban Outfitters Inc. on Glen Senk’s departure to what companies Limited Brands Inc. wants to learn from and which Tommy Hilfiger flagships turn a profit.
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Aside from the interesting gossip, bullish expansion plans and ambitious turnaround strategies, the rhetoric was more guarded than earlier in the conference. The day played out against the backdrop of a tepid 0.1 percent gain in total December retail sales, versus November, and higher-than-expected first-time jobless claims, according to new government figures. The S&P Retail Index slipped 0.5 points to 532.59 as the Dow Jones Industrial Average gained just 21.57 points to 12,471.02.
Slower orders for spring, worries about the impact of currency changes and the hangover from high cotton prices also clouded the 2012 outlook and most of the good came with some bad.
“I’m more confident about North America today than I was 12 months ago, but it would be disingenuous of me not to say that, even though we are performing…the European economy is more uncertain,” said Emanuel Chirico, chairman and chief executive officer of PVH Corp.
Here’s a look at who said what at the conference.
Eric Artz, chief financial officer, Urban Outfitters Inc.
• “So an interesting week for Urban Outfitters. Glen Senk, our ceo, resigned on Monday evening.…We’re very fortunate to have a ceo stepping into the role who’s extremely familiar with the company. So those of you that do not know Dick Hayne, he is the founder of Urban Outfitters.…Other than Glen’s tenure as ceo over the past five years, Dick has been running the company for 36 years. What you may not know is that, while some people may use the word ‘retirement’ and ‘Dick is returning from retirement,’ those of you that know him well, Dick never retires from anything.”
• “Yes, we had an unfortunate situation this week but yesterday we gained a new era with Dick at the helm. And we are focused on moving the business forward. So I don’t anticipate a significant change in overall strategy at this time.”
• “We’re focused on our core business; that’s where the value in our company is and that’s where some of the value has been lost over the past 12 to 18 months.”
Emanuel Chirico, PVH Corp.
• “Retailers [in Europe] are very nervous about how they’re buying inventory and we’re being cautious how we plan the business.”
• “The nice thing about [the Tommy Hilfiger flagships in Europe] that doesn’t happen in the United States — with the exception of Paris, all of the stores break even to make a few dollars. Besides being great marketing halos for the brand, they also drive cash flow.”
• “Latin America for [Hilfiger] is about a $300 million business.…Brazil only represents 15 percent of that $300 million.…[We’re] significantly underdeveloped in Brazil.…It’s an industry that’s protected.…We would hope in the next to six to nine months, we would have a new partner.”
Stuart Burgdoerfer, cfo, Limited Brands Inc.
• “Inventory can make you sick. Real estate can kill you.…Ninety-nine-plus percent of our stores are cash-flow positive. It’s a very important situation, a great situation for us to be in. It comes from the quality of our brands on an overall basis, pretty good real estate decisions about location, size and store, et cetera.”
• “Inditex and H&M have earned margins in the high teens and we studied them pretty closely.…The reason that we are looking at them as a reference point is: a) we think we can learn from them, and b) we think they kind of set the bar in an appropriate way.”
• “The full assortment of Pink is only available in 100 of the 1,050 Victoria’s Secret stores. That feels like opportunity, doesn’t it? It feels like it’s us and we’re going to be expanding stores to do that.”
Wesley Card, ceo, The Jones Group Inc.
• “Department stores really stepped on the gas promotionally again in the middle of December. [Comparable-store sales] as you know came out pretty well as we look back on the quarter of that period. Retailers haven’t reported the quarter yet but it’s expected to come at the expense of margin.”
• “Over the fall period, retailers…started pulling back on spring orders. Spring is ordered very conservatively at this point, and I think we’re kind of thinking everybody is focused on stock turn, margin performance and really maintaining a clean inventory position as we go through the first half of the year.”
Anthony Romano, ceo, Charming Shoppes Inc.
• “We are not a plus-size retailer selling fashion, but a fashion retailer selling plus-size.”
• “Over the next few years, we see a 900-store opportunity.”
• “After the divestiture of Fashion Bug, the main building blocks include migrating Lane Bryant to power-strip and lifestyle centers.”
Helen McCluskey, chief operating officer and incoming ceo, The Warnaco Group Inc.
• “Calvin Klein is our growth engine. We said about five or six years ago we could double the business and we did. At just under $2 billion in revenue, it represents about 75 percent of our total company revenue and we believe the opportunity exists to do that again over the course of the next five or six years.”
• “Retail will be nearly 30 percent of our business this year, it’s over 50 percent of our international business and this is, part and parcel, a growth engine for us going forward. We will approach $1 billion in revenue next year and we expect over time we can become a $2 billion retailer.”
• “Currency headwinds and the overhang of product cost increases that we faced in 2011 will impact first-half results.”
Tom Chubb, president, Oxford Industries Inc.
• “We ended the holiday selling period with what we thought was a very strong performance.…We did that without trashing gross margins, which we think makes it much more of an accomplishment than just having strong sales.”
• “We expect our year-end inventories to be in extremely good shape.…Both Tommy [Bahama] and Lilly [Pulitzer] are very spring-oriented brands and we like to go into spring without inventory hangover.”