After a long-hard slog through 2017, some retailers and fashion brands are starting to see signs of hope with the holidays — while to others, consumers are still simply saying “nope.”
The dividing line is fuzzy with some companies winning with one division and losing with another — take J. Crew Group, where the smaller Madewell’s sales jumped 22.2 percent to $107.5 million in the third quarter, while the flagship brand slipped 11.8 percent to $430.4 million.
And shoppers remain fickle creatures, prone to fall in and out of love quickly.
The holidays always provide a little lift and momentum to retail, but today’s winners seem to be benefiting from a little luck and a concerted effort over months and years to change the way they manage their businesses and court consumers.
Emanuel Chirico, chairman and chief executive officer of Tommy Hilfiger and Calvin Klein parent PVH, had multiple points of strength to point to when he spoke with analysts about the third quarter last month.
“I’m quite pleased with our results,” he said. “Overall we saw third-quarter revenues grow 5 percent and [earnings per share] increase 16 percent. We saw a tremendous strength across all of our businesses, with our international businesses demonstrating outsized performance. Europe, China and Japan continue to be our healthiest markets in the third quarter. We saw improvements in our North America business, which performed in line with our plan despite multiple natural disasters, particularly in Puerto Rico, that impacted our retail businesses.”
And Chirico said the trends continued to “significantly improve” headed into the all-important fourth quarter.
On the flip side, Ascena Retail Group Inc. said comparable sales fell 5 percent in the fiscal first quarter, ended Oct. 28, as profits also declined.
David Jaffe, ceo of the 4,800-door retailer, which owns Ann Taylor, Loft, Lane Bryant and more, acknowledged: “We were unable to capitalize on the improving macro traffic environment due to fashion missteps that we cannot afford in today’s environment. We continue to deliver double-digit transaction growth in our direct channel, but must improve our overall level of merchandising execution.”
Jaffe said the company was deploying the first phase of its new merchandising planning system and would continue to roll out new capabilities over the next year and a half.
But even at companies that are picking up steam today, it still is a big question just how they will stand up amid the whirlwind of e-commerce, Amazon, influencers, continued foot traffic declines, the mall’s evolution and more.
The companies already on the move are the most likely to keep their balance — and are seen as the most likely to continue to see some lift even after the holiday shopping impulse fades.
“There are definitely signs of hope and they are for real,” said Sonia Lapinsky, managing director in AlixPartners’ retail practice. “A few of the ones that are doing a good job are figuring out exactly what the customer wants.”
Lapinsky said some players are doing a better job of using data from both the web and loyalty programs to know what customers are looking for and then targeting them individually in direct e-mails or though banner ads as they surf the web.
Companies are also seeking to take a page from the fast-fashion playbook and sync up with customers by being ready to make quick turns on styles that are clicking.
“If they did the work to get their development cycles much shorter…and make sure they’re betting on trend, they’re going to have the right styles and the right inventory in the stores,” Lapinsky said.
While there has been a lot of talk about cutting production times and meeting the needs of consumers for a decade or more, not all of the rhetoric has translated into behind the scenes action.
“So many retailers are caught in the cycle of the promotion-trained consumer and just constantly trying to win one, just throwing so much out there, discounting like crazy,” Lapinsky said. “They’re not focused on standing behind the assortment that’s going to fit for the right reason.”
That retailers have had such a tough year shows just how badly out of sync they’ve become with shoppers, who have been buoyed by job gains as well as a stock market that’s charged repeatedly to new highs. Consumers have been spending more on social media-ready experiences and less on stuff to clutter their closets.
After shuttering hundreds of stores through a long and painful spring and summer, the industry appears to have stabilized headed into the holidays, even if it’s only a temporary respite.
Retailers — excluding automobile dealers, gas stations and restaurants — hired 12,900 workers in November after losing 10,300 positions in October, compared with the preceding month.
The overall economy added 472,000 jobs over the past two months, according to the Labor Department.
“This was one of the strongest gains we’ve seen all year,” said Jack Kleinhenz, National Retail Federation’s chief economist, referring to the November retail employment boost. “You expect employment to be up during the holiday season and retailers are expecting strong holiday sales with related job growth, but overall growth in the economy has to be recognized here as well. We’re also seeing new jobs in other sectors of the economy, particularly industrial, and that means more demand for retail goods and a need for more retail workers.”
Holiday remains crucial for all retailers, but the real test will be to see which companies and brands are able to keep up the pace in early 2018 and can draw shoppers when they aren’t being nudged by St. Nick.