Shoppers walk on two levels of the newly opened Westfield World Trade Center mall in New York. Fifteen years after the Sept. 11th attacks, downtown New York has been reborn, not just with the construction of One World Trade, but with a host of attractions both somber and vibrant, including the 9/11 Memorial and Museum, two retail malls, new hotels and restaurantsTravel Trip Sept. 11 New Downtown, New York, USA - 16 Aug 2016

The rubber’s about to meet the road with fourth-quarter results — and the rush of financial reports, starting with Walmart Inc. today, should give some hint about who’s getting traction and who isn’t.

This year, the divide between the winners and losers is expected to only grow wider.

To separate the two, the quarterly public company ritual will unleash a rush of information, including financial statements, canned and cautiously optimistic quotes from chief executives officers and acronym-laden conference calls with analysts.

Wall Street traders will instantly boil all that down to a single metric — stock price — and buy or sell. But a more complex and dynamic understanding of retail, fashion and the consumer will emerge as the results continue to roll out. The main rush will come next week when Macy’s Inc., TJX Cos. Inc., Kohl’s Corp., Gap Inc., L Brands Inc., J.C. Penney Co. Inc. and others weigh in.

“We would expect to see some success stories come out of the fourth quarter, but where they’re going to pop is going to be the interesting, telling point,” said Greg Portell, lead partner in A.T. Kearney’s retail practice.

“This is a good scorecard on how well management teams execute day-to-day operations, as opposed to how well they execute on price,” Portell said, referring to the holiday season when retailers didn’t rely as much on price cuts to drive sales. “There’s nowhere to hide.”

Competitively, there seems to be nowhere to hide from e-commerce titan Amazon.

“The underlying theme here is fundamentally how are you going to compete with Amazon,” said Murali Gokki, managing director in AlixPartners’ retail practice. “How are other retailers and brands going to take on the Amazon challenge? And your competition is not just coming from Amazon – you also continue to see increased adoption of off-price retailers, fast fashion and the rise of the digital natives. Different companies are capturing market share in a different manner and it’s putting tremendous pressure on the traditional brick-and-mortar retailer.”

Here are five key questions for retail and fashion that will be addressed as the major players take stock of fiscal 2017 and read the tea leaves for the year ahead.

Sales, yes, but profits?

Last year was generally a miserable one for retail, until the holidays, when the consumer came back with the cold weather and sales perked up.

Craig Johnson, president of forecasting firm Customer Growth Partners, said apparel specialty retailers saw total 2017 sales growth of 0.9 percent, with help from a 1.8 percent rise in the holiday season. (He’s looking for the rebound to continue this year with a 2.9 percent gain.)

The question after the holiday, though, is always whether all those sales dollars fall to the bottom line and produce profits.

In many cases, the answer is expected to be a solid “yes,” since retailers managed to not be overly promotional. There will be exceptions, particularly where there were fewer dollars on the top line to trickle down to the bottom line.

And for hard-hit categories the pain is expected to continue into this year with only minor improvement.

“Misses’ apparel is still weak,” Johnson said. “There’s kind of no way of getting around that, but the financials, whether it be sales or profits for women’s wear, will be less worse. They’ll still be soft, but not as bad as last year.”

More store closures?

More than 1,875 fashion-focused stores were shuttered last year as the industry moved en masse to resize. While the pace of closures has slowed, experts predict that retailers will continue to trim.

“You’re looking at closures pretty much across the board,” said consultant Sean Maharaj, a director in AArete’s retail practice.

Already, the now-bankrupt Bon-Ton Stores Inc. started off 2018 with word of 42 new store closures and J.C. Penney Co. said it would close another eight stores last week. Fossil Inc. said it was shuttering 60 doors, giving up $60 million in sales, but also $10 million in losses.

“The idea is that shrinking the footprint is kind of the way to become more profitable,” Maharaj said. “But as you shrink away from some of those old school consumers [you have] to get them to migrate to that digital platform.”

Smaller can be more efficient, but it can also just be smaller and companies trying to do more with less need a plan for doing more.

“Every quality retailer is going to prune their fleet again this year,” said Antony Karabus, ceo of HRC Advisory. “I’m not suggesting it’s going to be wholesale closures because a lot of that happened.

“On the flip side, you’re going to continue to see retailers enhancing their best properties so their best properties reflect the brand they want to portray, but also become better experiences,” he said.

Impact of the tax change?

Many retailers are coming into fiscal 2018 with not just some much-needed momentum, but also a windfall that came with President Trump’s $1.5 trillion overhaul of the U.S. tax system. While the bill remains controversial — in part for its projected boost to the deficit over the long run — no one disputes that the change-up was good for most retailers’ tax bills.

The tax cut, signed into law just before Christmas, reduced the corporate rate to 21 percent from 35 percent.

The industry’s accountants now have a month of the new system under their belts, giving corporate bigwigs more confidence as they project into the future and figure out how to spend their gains.

Spending plans?

If accountants do come away from the tax man with a few more dollars, retailers have plenty of places to spending.

Walmart cited its tax savings as it boosted the starting hourly rate for its associates to $11 and served up a one-time cash bonus of up to $1,000 to eligible associates.

Retailers up and down the spectrum are expected to devote more resources to sales associates as they seek to use the human touch to compete with the online crowd.

Year-end powwows with Wall Street could also yield updates on how stores plan to continue to develop their e-commerce capabilities — an area where enough seems to never be enough.

“What retailers are seeing now is that their supply chain costs are a lot higher and because the e-com sales are growing so rapidly, it’s putting a lot of strain on infrastructure,” HRC’s Karabus said.

“The continued shift to e-com is incredibly expensive between the free shipping and the free returns and the bar is being raised,” Karabus said. “Everyone thought Amazon a few years ago had built out their network and now they’re continuing to build out their [distribution centers].”

AArete’s Maharaj is looking for retailers to spend more on laying out their stores to approach customers in new ways while investing in predictive data analytics.

But many fear retailers will succumb to the temptation of a quick boost and use the money to buy back their own stock or fatten dividends.

Economic outlook?

Just when the economy will turn is nearly impossible to call, but for now, the consumer seems strong, giving retailers some breathing room.

“The single biggest determination of retail spending is not consumer confidence or gasoline prices or the employment rate — it’s growth in real disposable income and we’re actually getting that now,” Johnson said.

He’s looking for a retail sales gain of 4.6 percent this year, excluding automobiles, gasoline and restaurants. “This is the best prospect for the year in a long time, probably since 2006,” he said, pointing to the tax changes, the wealth effect, the housing market and the return of tourists.

But it’s worth remembering that the boom days of 2006 didn’t last and were followed by harder days when the use of cash became paramount.

And some companies might have set themselves up for trouble even in recent years as they sought to move to a smaller base.

“During the times of cheap cash, a lot of these companies took on debt and some of them used it wisely while many of them ended up repurchasing their own shares,” Gokki said. “And as sales go down, the ability to service that debt is reduced and it’s putting another set of pressures on the retailer.”

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