When it comes to valuing a retailer, taking a look at its inventories is crucial. The following publicly held specialty stores demonstrated the leanest inventory-to-sales ratios so far this year. Though many revealed a rise in inventory levels compared with last year, all 12 still fall below WWD’s industry average ratio of 50.1. WWD noted two weeks ago that rising inventories for some could most likely be due to bad weather for the first quarter this year. And just who is keeping these retailers so busy? Teenagers. Eight out of the top 12 have clothing or accessories lines or stores designed for teens.
- Chico’s FAS
First-Quarter Ratio of inventory as a percent of sales: 28.2
First-Quarter Inventory: $92.4 million;
Sales: $327.3 million
Spring was in the air for Chico’s FAS, as fashion hits like skirts, camisoles and denim helped bump revenues up 28 percent from the same quarter last year. Chico’s specializes in women’s clothing that ranges from everyday casualwear to eveningwear; the company also carries a trademarked wrinkleproof “Travelers Collection.”
- Deb Shops
First-Quarter Ratio of inventory as a percent of sales: 32.8
First-Quarter Inventory: $25.4 million;
Sales: $77.5 million
In a recent release from the Philadelphia-based retailer, president and chief executive officer Marvin Rounick stated, “Our first-quarter results were highlighted by a 6.9 percent same-store sales increase, fueled by strong customer reaction to our spring merchandise assortment.” Top sellers included jeans, tank tops, shrugs and capris.
- American Eagle Outfitters*
First-Quarter Ratio of inventory as a percent of sales: 33.9
First-Quarter Inventory: $153.7 million;
Sales: $454.0 million
The retailer of jeans, cargo pants, outerwear and graphic T-shirts is cruising into summertime with some big news: American Eagle is to become the exclusive apparel sponsor of MTV’s “The Real World: Austin” series, which begins airing this month. In its latest company conference call, American Eagle said for spring, denim, knits, footwear, accessories and shorts, among other categories, did well in men’s and women’s.
- Christopher & Banks*
First-Quarter Ratio of inventory as a percent of sales: 33.9
First-Quarter Inventory: $40.5 million;
Sales: $119.3 million
Woven tops and jackets proved to be a spring fashion hit for the retailer, whose chairman and ceo, Bill Prange, commented in the latest earnings release, “Our three brands … all have outstanding long-term growth potential and we believe our efforts to improve our merchandise assortment will help drive long-term shareholder value.”
- New York & Co.
First-Quarter Ratio of inventory as a percent of sales: 36.9
First-Quarter Inventory: $99.5 million;
Sales: $270.0 million
Two of New York & Co.’s big hits for spring were embellished Ts and cropped pants. In its May press release, Richard P. Crystal, chairman and ceo, noted that comparable-store sales were positive, though not as strong as last year, and while May had been a challenging month, “We experienced significant regional sales differences throughout the country and reacted quickly by adjusting pricing accordingly, to maintain our inventory targets.”
- Claire’s Stores
First-Quarter Ratio of inventory as a percent of sales: 38.7
First-Quarter Inventory: $117.1 million;
Sales: $302.7 million
Because its products cater primarily to the teen set, the Florida-based retailer relies on prom season for eager attendees to purchase fashion looks for less. All types of jewelry in clear rhinestone were popular for prom this year, while spring in general saw interest in drop earrings. Teen fave Jessica Simpson also sells her line of Dessert Treats — makeup and beauty products with actual taste — in select Icing by Claire’s stores.
- Abercrombie & Fitch
First-Quarter Ratio of inventory as a percent of sales: 41.6
First-Quarter Inventory: $227.2 million;
Sales: $546.8 million
Inventories may be up from a year ago, but the demand for Abercrombie & Fitch’s products has also risen, which is reflected in its 33 percent increase in sales. Pieces on the women’s wear side that are flying off the shelves include denim jeans and knit and woven tops. For men, jeans and polo shirts were big sellers this spring.
First-Quarter Ratio of inventory as a percent of sales: 42.3
First-Quarter Inventory: $89.6 million;
Sales: $211.7 million
Knits and denim were hot items this past quarter, according to the company. Aeropostale, which sells active and casualwear for the teen market, operates 601 stores in 47 states. The specialty retailer posted a 36.4 percent jump in profits for the first quarter of 2005 versus a year ago.
- Hot Topic
First-Quarter Ratio of inventory as a percent of sales: 46.3
First-Quarter Inventory: $69.3 million;
Sales: $149.8 million
Teenage punk and Gothic styles have struggled at Hot Topic, as they have collided with more colorful, preppy trends from last year, putting the California-based retailer on “a roller coaster of sales dips and rises,” WWD noted Wednesday. This spring, the retailer put its own spin on hot fashions like flirty skirts, camisole tops and cropped pants. Hot Topic’s “Torrid” chain of stores has gained popularity with young, plus-size female shoppers as well.
First-Quarter Ratio of inventory as a percent of sales: 46.8
First-Quarter Inventory: $95.6 million;
Sales: $215.6 million
Denim has been on a hot streak for Guess, along with clothing and accessories that contain color and ornamentation. Guess said in a recent conference call that the company was trying to do more with less inventory, in order to increase its turnover. Guess also said many IT systems have been replaced with newer ones, allowing the company to send less merchandise out, see where it is selling best, and then replenish effectively.
First-Quarter Ratio of inventory as a percent of sales: 48
First-Quarter Inventory: $105.1 million;
Sales: $218.9 million
Cato’s two operating segments, Cato and It’s Fashion, offer value-priced women’s fashion, such as handbags, casual and dressy sportswear and dresses. Cato’s clothing is geared toward women in junior, misses’ and plus sizes. John Cato, chairman, president and ceo, stated in the company’s first-quarter earnings release, “Gross margin was better than planned due to tight inventory management.” The company said it expects to open 90 stores in 2005.
- Urban Outfitters
First-Quarter Ratio of inventory as a percent of sales: 49.1
First-Quarter Inventory: $113.5 million;
Sales: $231.5 million
Bohemian styles spread across the young adult female population like wildfire this past spring. And Urban Outfitters was in on the action, providing consumers with flowy skirts, bold print dresses and chunky necklaces. Richard A. Hayne, chairman and president, stated in its first-quarter release, “Strong sales, improved initial merchandise margins and tight expense control combined to drive our operating margins above 19 percent.”
Source: Company reports of the specialty retailers tracked by WWD. *Indicates a tie.