The New York chapter of the Association for Corporate Growth held its 2011 retail update Wednesday, discussing topics such as holiday outlook, the future for J.C. Penney and private equity financing.
The event, split into two panel discussions, was held at the New York Athletic Club.
In the discussion on retail outlook, Jeff Edelman, director of retail and consumer adviser services at accounting firm McGladrey, said companies should be focusing on the 91 percent of consumers who still have jobs and discretionary income instead of the 9 percent who don’t. Edelman also wasn’t sure if the new J.C. Penney strategy of everyday low prices would work. “Dillard’s Inc. tried that to make it less promotional. No one walked into the store. You can’t change the consumer overnight,” he concluded.
David Schick, managing director at Stifel Financial, told attendees to “keep an eye on gas price inflation, which matters more than [consumer] sentiment.” He also thought Tiffany could do well during the holidays as some people now think that jewelry is an “alternative asset class,” and the “men’s accessories cycle is just starting to happen.”
Because of costs inflation, Todd Slater, former managing director at Lazard Capital Markets, said that many companies are facing intense margin pressure, and that this holiday season could be “one of the most promotional periods of a lifetime.”
On the financing side, Cheryl Carner, managing director at Crystal Financial, noted that lenders are starting to look at a retailer’s intellectual property asset and using that to create liquidity.
Kayvan Heravi, managing director at private equity firm LNK Partners, said that his firm isn’t sector specific when it comes to investing, preferring companies that have both strong management teams and brands.
Ed Siskin, executive vice president at Hilco Trading, said companies should stay away from products that really target Middle America, but have high price points, such as jewelry and furniture. That’s because when volatility flares up, appraisals on these products tend to reflect the conservative trends in the market place.
Michael Edwards, former chief executive officer of Borders, was the keynote speaker. He told attendees that the “majority of retail ceo’s don’t take digital seriously. Your digital officer should be on the same level as your cfo.”