THE 2D-HALF QUESTION: CAN SPRING JOYS LAST THROUGH DECEMBER?

Byline: Sharon Edelson / With contributions from David Moin, New York / Rusty Williamson, Dallas

NEW YORK — A confluence of factors, among them new fashion trends, a record Dow, pent-up consumer demand and favorable weather, have contributed to a stronger than usual spring for the fashion industry.
Although the last quarter has been robust, particularly April, many in the industry feel it’s too soon to say whether the momentum will be sustained through the second half, which would mark a clear turnaround for the industry.
Still, positive signs are everywhere.
Last month, a host of retailers such as May Co., Wal-Mart, Kmart, Intimate Brands and Federated Department Stores reported healthy first-quarter gains. Gap had a blowout quarter, with a 61.4 percent earnings increase and a 17 percent surge in same-store sales.
Much of the strength appears to be concentrated at the luxury end of the market and in the discount sector. Department stores in the moderate to better zone continue to say business is tough; they’re not attaining sales gains as high as the discounters and upscale stores.
Among the successful fashion trends are capri pants, the ever-popular twinset, romantic dresses with embroidery or other embellishment and long skirts. All are available at a variety of prices.
“There’s just so much optimism,” said Ruth Meyers, owner of an eponymous store in Oklahoma City, Okla. “Consumers were holding back, but not anymore.” The women’s bridge and designer boutique had gains of 41 percent in April and was ringing up a strong May, Meyers said.
“I think we’re on the beginning of an upswing,” said Denis T. Lemire, vice president of merchandising at Aimes, a regional discounter based in Rocky Hill, Conn. “Apparel has been so soft for a number of years and nothing has been exciting. I don’t think we’re anywhere near the end of the bad cycle, but I think we’re starting a good trend.
“Our company has been running pretty strong in general, but apparel is slightly ahead of the rest of the company in terms of sales,” he said, adding that apparel is ahead by double digits.
An indication of consumer confidence, said Lemire, is that shoppers are sometimes buying “two and three pieces” instead of one.
“You get that when you have a stronger economy,” he said. “The shopper is a little more apt to put more in her basket. Last year’s poor spring and summer weather has had an impact this spring. That customer didn’t buy a lot last spring. This year she’s out there and she needs it.”
Kmart, which has been mired in merchandising difficulties for five years, began to see improvement in its women’s business in January and says it has been particularly encouraged by sales this spring.
“The momentum continues in our ladies’ department and we are expecting a strong May,” said Cindy Sapienza, divisional vice president of women’s ready-to-wear. “We are extremely pleased with how our Jaclyn Smith business is doing in career and knit related separates. We are also very pleased with our dress and maternity business.”
Bright spots include rayon skirts, short and long; camp shirts; shortalls; tank tops; sleeveless woven shirts, and Henley tops.
At J.C. Penney, casual fashions, including shorts and swimwear, are driving spring sales ahead by mid-single digits over a year ago, said Chuck Foughty, divisional vice president and director of merchandising for women’s sportswear.
“Customers are responding to our pricing and brand structure, and our spring results have been very positive,” added Foughty, citing top vendors such as Levi’s Dockers and private brands St. John’s Bay and Arizona.
“The stars are all aligned,” said Richard Jaffe, a retail analyst at PaineWebber. “We’ve seen over the last several years a remarkable consolidation and rationalization of the retail environment.
“TJX Corp. acquired Marshalls and has subsequently dominated the off-price sector,” Jaffe continued. “A lot of weak players in the teen specialty store business have disappeared. Also, we went from 80 regional players four or five years ago to four national players in the discount sector. The elements are all in place for apparel retailing to improve.”
“It’s much too soon to tell,” said Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates. “No one quarter makes a year.”
But Aronson noted that in April and May, it all seemed to come together.
“The weather was favorable around the country for the most part; consumers found holes in their wardrobes after several seasons of not buying much apparel; consumer confidence hit unprecedented highs and the fashion is understandable.
“The stock market is affecting more classes of people than ever, from 401Ks to mutual funds to those affluent people who have always played the stock market — and unemployment has dropped to historic lows,” he said. “There’s enough good news, with the exception of the Asian crisis.”
“While May appears to be a solid month, it certainly doesn’t have the roar that April had,” said Dana Telsey, a retail analyst at Bear Stearns. “Most specialty retailers are experiencing sales plans that are in line, with a few coming in behind plan. Our bet is that women’s apparel retailers will continue to post positive sales in May, although not reaching April’s magnitude.”
Thomas Tashjian, retail analyst at Nationsbanc Montgomery Securities, expects a few strong department stores to report better-than-plan May same-store sales on Thursday, while the sector as a whole is about on plan after three strong months.
Kohl’s comparable-store sales are expected to be up 7 to 8 percent, Proffitt’s up 4 percent and Bon Ton up 3 to 4 percent. May Co. should come in slightly above plan at 3 to 4 percent, with strength in the Midwest offsetting some softness in California.
The cold spring weather and heavier- than-normal rainfall in California in May has affected the swimwear, shorts and T-shirt business at Macy’s West, said Michael Steinberg, chairman and ceo. However, the home, cosmetics and accessories businesses “haven’t been bad,” he said.
For the luxury crowd, things still look good through May and heading into June and the summer period, when fall assortments make their way onto the selling floors.
May marks a transition to fall designer collections, generally with less rtw and sportswear activity and more business in accessories and jewelry, because of Mother’s Day. Yet the spring euphoria is contributing to high expectations for fall.
Mitchells of Westport, for example, said it got a big lift from a Giorgio Armani Le Collezioni fall trunk show, May 8-9, that posted $304,000 in sales and drew orders from more than 200 people. According to Connie Finell, Mitchells’ vice president and general merchandise manager for women’s, “It was our number one show.”
“New receipts are rolling in,” Finell said. “We are very lean after great sell-throughs on spring. April was very big in terms of rtw spring collections in Armani, St. John, Escada, Donna Karan and Ralph Lauren, and the selling action is continuing in Armani.
“It’s been a very good spring,” she said. “From the luxury point of view, clothes are more wearable. I think fall is going to be fabulous. There’s a lot of special pieces and special merchandise that gives someone a reason to buy.”
Finell is particularly bullish on long skirts, embellishments such as fur trims and beading, pearls, cashmere and day dresses in the sportswear market.
“There’s been a real return to a desire for the better things in life,” said Bob Benham, president and chief executive officer of Balliet’s in Oklahoma City. “People really want good things again.”
Benham said Balliet’s success has been fueled by strategies set in motion three years ago.
“We moved into high-end, updated, classic merchandise,” he said. “Before, like a lot of stores, we tried to put in a serious bridge component. It didn’t work. As economic conditions improved, our customer traded up.”
Balliet’s focuses on two key collections, Giorgio Armani Le Collezioni and St. John, as well as high-end accessories and cosmetics, and special occasion dressing.
“We’ve been on a terrific 2 1/2-year trend,” he said. “The Armani business is up 22 percent year to date and St. John is up 31 percent. The more we carry of St. John and Armani, the higher percentage our sell-throughs are.”
At Stanley Korshak, a designer store in Dallas, sales are up this spring by high double digits, said Kay Glatter, vice president.
“Women aren’t replacing things in their closets; they just want something new,” Glatter said. “It’s a true season of choices, and customers like the options.”
Many struggling women’s specialty retailers continue to struggle. Express showed signs of improvement when comp-store sales rose 20 percent in the first quarter. However, Jaffe noted, “I don’t see any signs of a turnaround at Limited. They put a little more inventory in, took a few markdowns and sold a few more units, but while they showed slight improvement, The Limited’s women’s businesses lost money.”
Ann Taylor “still has significant merchandising issues and they’re struggling,” Jaffe said. Talbots, another chain that missed the mark in the eyes of consumers, is “showing improvement,” Jaffe said. “The silhouettes are more traditional and classic, in line with the taste level of their consumer.”
Career wear has been a trouble spot for some department stores.
Sources said the better career business, including Lauren by Ralph Lauren and Jones New York, is running behind the season-to-date trend at Bloomingdale’s.
Frank Doroff, executive vice president of Bloomingdale’s, declined to comment on the career business, but said, “Business this month is pretty good. We think we’re going to be on our season-to-date plan. The casual sportswear business is very strong this month. We’ve tried a lot of new and different resources, smaller ones, and the business is performing well. Our contemporary business is getting much stronger. We’re selling lots of capri pants and long skirts. Our contemporary casual business has also been strong.”
The retailer’s dress business this month is running ahead of its season-to-date trend, Doroff noted, adding that petites also are doing well.
“Bridge is on its season-to-date trend,” he said. “Our swimwear business broke open once the weather got hot.”
Bloomingdale’s is expected to finish the month with single-digit gains.
Other retailers also noted signs of life in bridge this season. That’s a big improvement over spring 1997, when women rejected the tight suits, flare-leg pants and cropped tops that many bridge manufacturers delivered.
At Neiman Marcus, bridge is especially strong. The chain has been approaching the bridge customer much as it does designer shoppers.
“We’re emphasizing special bridge events and better presentation on those floors,” said Ann Stordahl, senior vice president and general merchandise manager. Neiman’s is also playing up bridge merchandise in The Book, its monthly fashion and lifestyle magazine.
“The Book also has been a driving force in targeting the designer customer,” said Stordahl, adding that designer sales are up by high double digits. Among the spring bestsellers at Neiman’s are capri pants, including those from Piazza Sempionne; knits, especially twinsets from vendors such as Lauro Piana and Laundry by Shelli Segal, and sheath dresses.
“The one disappointment this spring has been the soft, romantic trend, even though it looked strong on the runway,” said Stordahl.
That’s not the case at Burdines in Florida, where “feminine looks, anything soft or lacy, are doing well,” according to Carey Watson, senior vice president. Ditto capri pants and career essentials with a classic attitude.
All in all, May has been “good for us,” Watson said. “Swimwear has been doing well and women’s wear in general has been doing well. Our business has been good across the board. People are feeling good about their jobs. We’re caught up in this whole spirit of the stock market. And for a change, consumers are finding things in the market that stimulate them.”

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