MEXICO CITY — Warren Flick, president and chief executive officer of Sears, Roebuck de Mexico, has been on the job for barely two months, but already has generated high expectations.

A month ago Goldman Sachs upgraded Sears de Mexico’s stock to its “priority” purchase list from its previous position as a moderate performer. Among the reasons for the boost: Flick’s 20-year track record at Sears, Roebuck & Co. in the U.S. as an ace merchandiser.

“Mr. Flick is probably going to focus on an area we thought was an Achilles heel at Sears de Mexico: merchandising,” elaborated Goldman Sachs analyst Jorge Mariscal. “We see him as a healthy injection of enthusiasm that might result in a little faster growth for the company.”

Citing Sears de Mexico’s positive outlook, Smith Barney last week issued a “buy” for the first time on the chain’s stock, noting it has “well-focused expansion plans” and “is well positioned as the only truly national department store chain.”

Sears has been operating stores in Mexico for 47 years. Flick assumed the reins there from Thurmon Williams, longtime chief of the Sears’ Mexican stores who took early retirement at the end of 1993.

While Flick, in an interview at Sears de Mexico’s corporate offices above its new Santa Fe Commercial Center store, wouldn’t comment on the prospect of store expansion beyond plans already announced for five new stores each year for the next five years, he says there are changes on tap in the merchandise arena.

Apparel, already constituting a healthy 40 percent of the chain’s $424 million in sales, will receive a “significant emphasis,” Flick says. Women’s currently represents 50 percent of apparel sales, men’s 25 percent and children’s 25 percent. Cosmetics sales, which generate 10 percent of nondurables, will also be developed.

“Our greatest emphasis will be in women’s. Our men’s business will also be emphasized. Probably third in importance will be children’s,” says Flick.

The 45 Sears de Mexico stores cover the length of the country, in markets that range from the gritty, working-class city of Merida in the parched and poor Yucatan peninsula, to the posh Pabellon Polanco Mall in Mexico City, the country’s most prestigious retail address and one of several commercial centers Sears de Mexico owns.

Like all of its merchandise categories, Sears de Mexico’s apparel projects an image that’s different from its U.S. counterpart by targeting the middle-to-upper-price market. For example, Jones New York, Evan-Picone, JH Collectibles and other better and bridge lines are among the women’s labels carried in Mexico. These labels are not carried in Sears’ American stores.

Half of all merchandise is made in Mexico, including local labels and designer labels, like Oscar de la Renta and Christian Dior, that are licensed.

Flick said apparel will be given more space in some cases, but the primary focus will be on the mix. He wants to give more emphasis to strong Mexican labels, like Julio, and improve on the presentation of U.S.-made apparel, like Jones. Levi’s, Guess and the Mexican denim label Revolucion 1910 will also be beefed up. “The space issue is just one of the components in apparel,” Flick says. “Frankly, the whole Quick Response issue of high turnover on bestsellers is a very important management tool to growing your apparel business.”

Such a merchandising mantra isn’t all talk, according to industry observers who have seen Flick at work.

“He took a very confused men’s and kids’ organization [in the U.S.] and within a short time set it in a specific direction,” said Stephen Ross, formerly Sears’ men’s fashion director and now president of Van Heusen. “The results are history.”

Also on Flick’s priority list is the addition of a third tier of stores to service rural areas.

Sears operates two tiers of stores: A-level units averaging 110,000 to 170,000 square feet in metropolitan areas, and mid-market stores of 50,000 to 75,000 square feet for populous, but smaller, communities. These B stores have the same upscale marble decor as the A stores and carry the same inventory, although quantities are trimmed.

The new basic stores, designed for rural communities, will also carry Sears’ core merchandise, but will have less of an upscale image. For example, carpeting will be used instead of marble.

The Santa Fe store is a prime location — the largest mall in Latin America. It is seen by analysts as further securing Sears’ image as a high-end retailer in Mexico, much in the way Bloomingdale’s is regarded in the U.S.

The four-story Santa Fe store provides an unhurried shopping experience. The overall image is that of a specialty store; one has to search for the hard goods. For example, Sears’ trademarked auto department is unobtrusively located through a doorway leading from women’s ready-to-wear.

The women’s sportswear department, located at the first-floor mall entrance next to a substantial cosmetics section, has an uncluttered look. During a recent visit, the inventory had a lot of variety. Displayed high on one wall was a spring line of Mexican-made linen pants and matching tops by Vanity.

A few end-of-winter, 50-percent-off sales were scattered among the new spring lines. An Evan-Picone navy wool blazer, made in the U.S., was sale-priced at $93 (300 pesos at current exchange rates), while a Jones tan check jacket was discounted to $119.

Among the spring merchandise was an Oscar de la Renta polyester and rayon black blazer, made under license in Mexico by Orignales Odessa, for $93, with a matching skirt for $52. JH Collectibles’ rayon casual shorts in a geometric pattern sold for $68, with matching tank top for $75.

Across the aisle stands an in-store boutique of cotton sweaters by Ivy, a line produced by the Kellwood Co. Colorful oversize cardigans were $93.

The Santa Fe mall’s other anchors are Palacio de Hierro, Sears’ most high-end competitor, with four stores in Mexico City, and Liverpool, a department store. A fourth anchor will be built, but it is not yet known what store it will be.

Among Sears’ specialty shop neighbors in the mall are Louis Feraud, Max Mara, Nicole Miller, Benetton and soon-to-open Yves St. Laurent and Frattina, which carries Escada. The opening dates for YSL and Frattina are not yet firm.

Sears de Mexico went public in 1992. It is 75 percent owned by its Chicago-based parent company, which analysts say is another plus, since the Mexico concern can avail itself of its parent’s merchandising technology. Most of its competitors are latecomers to the concept of Quick Response.

The Mexican operationkeeps a separate balance sheet and also merchandises apart from its American parent.

Last year, with the Mexican economy stalled in a recession — gross domestic product grew 0.4 percent in real terms, compared to growth of 3 percent in the U.S. — Sears de Mexico’s sales declined 3.7 percent to $424 million, or roughly $244 per square foot, while net income of $80.4 million, was up 4.2 percent against 1992.

Last year, Sears’ Mexican real estate unit added $14 million to its earnings, due largely to the expansion of the Mexico City Plaza Satelite mall, of which it owns 50 percent. In subsequent years, real estate is expected to add around $3 million a year to Sears’ business.

According to analysts’ estimates, as the chain expands and with GDP expected to grow 3.5 percent this year, Sears’ sales in 1994 should jump by 26 percent to $533.1 million, or $264 per square foot. Income is expected to hit $87.8 million, a jump of 17.5 percent against 1993.

Meanwhile, Flick is investigating how to promote the chain’s new image and plans to hire an advertising and marketing firm.

load comments
blog comments powered by Disqus