Department stores showed some small sign of life in the second quarter.
There are few ills that are unfamiliar to the down and out department stores.They’ve been closing locations. Losing foot traffic. Warring with the relentless Amazon machine. And struggling for relevance as Millennials pack their phones full of selfies instead of their closets full of fashion.But even though some of the sector's stocks weathered sharp declines Thursday as investor doubts lingered and markets slipped with geopolitical jitters, there were small signs of hope in the latest round of department store earnings.Nordstrom Inc.’s comparable sales inched up 1.7 percent, Kohl’s Corp. saw the traffic momentum it gained in the spring accelerate as summer came and Macy’s Inc.'s new chief executive officer, Jeff Gennette, sounded quite an upbeat note.“We had a solid second quarter,” Gennette told WWD in an interview. “When you look at overall comp trend, it was two points better than the first quarter. So progress was made. The margin was a little better than expected and inventory is in a good position for the back half of year. We feel good about initiatives that we are carrying into the back half of year…fine jewelry, shoes, men’s tailored, big tickets [furniture], mattresses, fragrances — it’s all good news.”Perhaps. But that doesn’t mean it’s a straight path from here or that the department store business is indeed pointed in the right direction. So WWD reached out to retail experts for a quick straw poll on Thursday, asking: “Are department store turning the corner?”Here’s what they had to say.Mike Kim, a director in the retail practice of consultancy AArete“These are early glimmerings of a turnaround, but calling a celebration party is way too early. It’s a tough environment and department stores still struggle to maintain gross margins. They can’t take their eyes off of controlling costs. But to get back to profitability, what’ll count most is delivering on an array of strategic initiatives, whether its off-price retail, exciting new brand partnerships, doubling down on their most-profitable categories or getting the digital experience right.”Walter Loeb, former retail analyst and now consultant“I feel we have seen the worst of it. But you still have a problem, which is what will management determine are the innovations that department stores should be doing. Department stores are not going away and they have been through worse, but how they will evolve is the big question. There are too many right now focusing on the immediate moment and not thinking too much about the long term.”Craig Johnson, president of retail research firm Customer Growth Partners“Although it is a bit too soon to call a turn, we believe that the sector has bottomed, and the winners will be those that are most aggressive in matching supply and demand. The sector remains badly over capacitated, and since aggregate sales are down about 5 percent year-over-year — while the overall retail market is growing about 3.8 percent — department stores continue to bleed market share, now down to only 1.6 percent of the retail market excluding auto, gasoline and restaurants.”Natalie Kotlyar, partner at BDO USA and the national retail and consumer business industry leader“We are seeing retailers right-sizing [their store fleet] and they are now getting close to where they need to be….I think there is a little bit more positive feeling to back-to-school and holiday. Retailers have made improvements in in-store optimization, taken a good look at the real estate and what brands they carry.…The investments they’ve made in technology and digital will help them ramp out of rock bottom.”Bill Lewis, director in AlixPartners’ retail practice“There's not strong enough evidence yet to say the corner has necessarily been turned. These modest sales gains are more than likely the result of slightly higher average unit retails resulting from somewhat reduced discounting and leaner inventories. We likely need to see signs of better traffic in stores and sustained improvements in operating margin throughout the third and fourth quarters before we can say the tide is turning.”Christina Boni, Moody’s Investors Service analyst"Clearly, the first quarter was disappointment across the board, but [the second-quarter] showed some improvement on a general basis. It’s still very early days in terms of the actual initiatives in place at these companies to stabilize the business. The third and fourth quarters are more meaningful in terms of performance with back-to-school and holiday, so we’ll see. What is encouraging is each company has put in place initiatives to work on this issue and we’re seeing some traction. There's clearly much more work to be done."Greg Portell, lead partner in A.T. Kearney’s retail practice“Covering retail has become a blood sport with observers ready to overreact on either side of the ledger. Despite some positive early earnings releases, I’m skeptical that today’s earnings results will be a sign of a trend. It will take two to three quarters of positive momentum before anyone should be talking about a retail renaissance regardless of what was reported today. That said, it’s is never a bad thing to celebrate some good news."
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)