LUXE ITEMS LEAD WAY, BUT SHOPPERS STILL WAITING TO CUT LOOSE
Byline: Sharon Edelson — with contributions from Mark Tosh, New York; Michael Marlow, Los Angeles, and Rusty Williamson, Dallas
NEW YORK — Consumers continue to be reluctant to part with their money this holiday season, as retailers struggle to find the right mix of price, quality and value.
In otherwise dreary results this weekend, there were a few bright spots, including pricy status items, activewear, sleepwear, dresses and fine jewelry.
Key trends checking out of stores include the ubiquitous twinset, which is selling briskly at a variety of retailers and price points, from merino wool at Carson’s to cashmere at Bloomingdale’s.
CK Calvin Klein continues to be hot at Macy’s Herald Square and Gottschalks after a takeoff fueled by the hype of Klein’s controversial ad campaign.
“The bestsellers are anything luxe and status-oriented,” said Rose Marie Bravo, president of Saks Fifth Avenue. “That’s what’s really moving.”
Loro Piana was a hot resource at several upscale retailers, who reported the company’s expensive cashmere shawls and scarves as bestsellers. Other names topping bestseller lists included Gucci, Prada, Chanel and Ferragamo.
Many stores said they were lucky to make their plans last week and over the weekend, when a severe storm hit the Midwest and forced several chains to close on Monday. Other retailers characterized business as “soft.”
In the Northeast, two to four inches of snow fell on Wednesday — hardly a blizzard, but enough to prompt Macy’s to extend its one-day sale through Thursday. Despite the promotion, Macy’s said business was still “a little softer than we would have liked.”
Retailers are trying to put a brave face on what is shaping up to be a difficult holiday, still clinging to the hope that business will rally during the last days of the season.
According to the International Council of Shopping Centers, apparel fell 6.8 percent for the week ending Dec. 3.
In an uncertain world, one of the few things retailers historically counted on was Christmas, which provided up to 40 percent of yearly profits for many. But the rules are no longer the same.
“Everything about shopping has changed,” said Michael Gould, chairman and chief executive officer of Bloomingdale’s. “There’s more cross-shopping nowadays. The customer has a lot of choices for their discretionary income. People also shop closer to need now. That’s just the way it is.
“Christmas is not about Thanksgiving to Christmas, it’s about what you do all year long,” Gould said. “We’ve been doing the right things all year long. We had very good comparable-store sales in November and have very good programs in December.”
“Christmas is where the rubber meets the road,” said Neal Goldberg, senior vice president and general manager of Macy’s Herald Square. “The traffic is much greater in the month of December than in the month of July. But we have looked at strengthening our whole calendar throughout the year.”
Stanton Bluestone, chairman and ceo of Carson, Pirie, Scott in Wisconsin, noted the contrast between this year and 1992, when the country’s mood was “so euphoric after the presidential election that people started buying the day after the election. Today, job security, debt and a lot of other psychological factors are coming into play more than in the past.”
“Consumer confidence took a sharp uptick last week, but we are not translating that into a higher forecast,” said Isaac Lagnado, publisher of the Tactical Retail Monitor. “This is really the first year when there has been a decoupling between consumer confidence and retail spending. Job creation has been pretty good and unemployment is fairly steady, but there is not much enthusiasm for shopping.
“Basically, I don’t think anything has jump-started yet,” Lagnado said, referring to holiday sales thus far. “White-knuckle time really begins at the end of this week. The promotional intensity has already accelerated.”
According to Lagnado, the number-one losers will be specialty stores, which are paying higher occupancy costs in malls and cannot afford to do as much advertising as department stores. They are also the beneficiaries of decreased mall traffic and what Lagnado calls “clone looks.”
“On top of that, what we’re seeing in terms of liquidations sales, from Petrie down to mass merchants, is not helping,” he added. “There’s a lot of stuff in the pipeline.”
But there is a lot of stuff that’s striking the consumer’s fancy.
At Saks, the list is topped by Loro Piana wraps, Judith Leiber minaudiAres, David Yurman jewelry suites and “anything Chanel, Gucci, Prada and Ferragamo,” Bravo said. “Those lines are just on fire for us.”
Saks is also doing a brisk holiday business in fragrance. EsteA Lauder’s Pleasures will be the chain’s biggest launch ever, Bravo said. Classic scents are also strong. Angel by Thierry Mugler is 44 percent ahead for the month.
In general, business at Saks was “a little on the soft side last week, but Sunday was strong,” Bravo said. “We beat last year and beat our plan, although up until last weekend, it was soft. The next three weeks will tell all.”
Saks is seeing is strength in eveningwear, where sales are up in the double-digits, with designers like Badgley Mischka and Vera Wang leading the pack. Real Clothes, a private label, has been one of the chain’s star performers in cotton cashmere and silk.
Another good sign is early checking of resort wear, including Gucci, Chanel, Calvin Klein, Anne Klein, Donna Karan and Giorgio Armani. Last week, Saks held trunk shows for Bill Blass’ resort collection at the New York flagship and in the Bala Cynwyd, Pa., unit. Sales exceeded $1 million.
Stephen Elkin, chairman and ceo of Bergdorf Goodman, said business last week wasn’t as strong as the previous week, but the weekend “was extremely positive with tremendous numbers of people — and they were buying.”
Here’s what they bought: Shearling coats and jackets, Judith Leiber evening purses, Barry Kieselstein-Cord handbags and belts, leather goods from Prada and Gucci, jewelry from Angela Cummings and fragrance.
“There seems to be a lot of demand for noble or luxury fabrics, like cashmere throws,” Elkin said. “In the ready-to-wear area, it’s not really their time. The new arrivals of resort goods are beginning to hit the store, and those that have come in we’ve had a very positive response to. We’ve had strong selling with Liday Baday and Calvin Klein’s swimwear.”
At Neiman Marcus, Loro Piana’s shawls and scarves, St. John sportswear, eveningwear from a variety of resources and status leather goods from Gucci and Prada have been bestsellers.
On the Neiman Marcus Express train that’s touring several cities, bestsellers include precious jewelry, epicure items and logo merchandise from baseball caps to sweatshirts and furs — including a mink-lined denim jacket. “Knock on wood, business the last two weekends has been very, very strong,” said Massimo Ferragamo, president of Moda Imports, the importer of Ferragamo in the U.S. “We have had double-digit increases throughout the year.
“October was a softer month, but the increases are now bigger than those initial double digits, above 30 percent for the last two weeks.”
Handbags and scarves have been strong sellers for women, and for men, ties have been “exceptional,” Ferragamo said.
“A lot of the moderate price lines have been complaining or have not been satisfied with their sales,” Ferragamo noted. “There has been a strong trend in luxury products this year and we have been very happy with the performance of our company. I think it’s true that luxury products are in demand and people are looking for something really special.”
Lagnado is predicting that department stores like Macy’s, buoyed by full line assortments and heavy advertising budgets, will outperform many of their counterparts.
“The business was a little soft last week, but we had a very good November and with a later Christmas we anticipate Christmas coming strong,” said Macy’s Goldberg. “We saw some good signs on Saturday when the business was strong.”
A bright spot for Macy’s has been the young contemporary area.
“The business is pretty amazing,” Goldberg said. “From ABS to Max Studio, it’s almost across the board. We created this new floor, and it seems to be attracting customers as much as it did at the beginning of the season.
“The Calvin Klein business across the store is doing very well, and our own INC business is very good.”
At Macy’s West/Bullock’s, traffic was brisk on Friday and Saturday, but sales were “flat at best” compared to last year, said Michael Steinberg, chairman and ceo. Strong-performing areas included shoes, juniors, cosmetics, home and better sportswear. Soft spots included moderate apparel and cold weather merchandise, such as coats, sweaters and down comforters.
After a strong October, warm weather in California this month has affected sales, making it a “tougher” month, Steinberg said. Southern California, which in past years has lagged behind the northern part of the state because of economic problems, natural disasters and job layoffs, has rebounded and caught up to the rest of the state.
Steinberg said volume at the 82-unit Broadway/Emporium division was similarly hit by problems in cold-weather categories.
Sixty-degree temperatures in Seattle also affected buying patterns at Bon Marche. Instead of heavy sweaters and flannel sheets, customers opted for big-ticket items in furniture and electronics, said John Buller, senior vice president of marketing.
At Gottschalk’s, post-Thanksgiving volume was about even with last year, with Friday gains offset by Saturday losses. Joe Levy, chairman and ceo, said strong categories included cosmetics, moderate apparel, petites and large sizes. Dresses sold well in all areas, aided in part by a store promotion with Jazz, a Los Angeles dress label.
Warm weather cooled sales in many categories. In accessories, better jewelry showed an increase, but that gain was offset by little interest in gloves and scarves. Levy said he was hoping for an overall holiday increase aided by stronger sales closer to Christmas and during the extra Sunday-before-Christmas shopping day.
At Sears, Roebuck & Co., fine jewelry has been a hit, flannel sleepwear is picking up steam and women’s jogging suits in nylon, velour, fleece and silk, regularly priced at $49.99 and reduced to $39.99, are selling well.
Another outstanding category for Sears has been special occasion dresses, a spokeswoman said. “We have some very classy looking dresses with beads, sequins and lace for under $100,” she explained.
“Business was as expected last weekend: on track,” the spokeswoman said. “We had the best Thanksgiving we’ve ever had. We’re still in there believing we’re going to outperform the industry.”
“The weekend was good, but the beginning of the week was soft,” said Bluestone of Carson’s. “Traffic is down a little bit, but I think it’s going to come strong at the end of the holiday. We had 10 inches of snow in Wisconsin last week and that cost us a lot on Monday, Tuesday and Wednesday.”
Bluestone said promotions in the region were pretty much the same as last year, which is heavy.
“There are a lot of prices out there that are already inexpensive,” he said. “Last week, Penney’s ran a 33 1/3-percent-off coupon for anything in the store. Other department stores were selling merchandise for 20 to 60 percent off. The promotions are pretty aggressive, but that alone isn’t going to do it. We are looking at it from a profitability point of view, although we’re not going to have our heads in the sand.”
Fashion jewelry is one of the best-selling categories at Jacobson Stores Inc., Jackson, Mich., according to a spokeswoman. Younger shoppers are buying up Melrose Place-inspired necklaces with full crystals by Cheryl Reis and Seasonal Whispers, priced between $24 and $100.
Also, Ugg boots made from merino wool and lined with sheepskin are popular this season, the spokeswoman said.
Overall, Jacobson’s is running ahead of last year, and the specialty store’s Florida units have generated better increases than the stores in the Midwest.
Burdines, another Florida retailer, hasn’t been so lucky. Carey Watson, senior vice president of marketing for the chain, said, “We have been somewhat disappointed in sales. We did have some fairly aggressive plans, but we are under plan at this point. It’s kind of across the board — every area is a little soft.”
Nor is the outlook rosy for powerhouses like Wal-Mart.
Following a good Thanksgiving weekend, business at Wal-Mart Stores’ discount units and warehouse clubs was disappointing. According to one retail analyst, the company attributed the downturn to paycheck cycles.
Still, the nation’s largest retailer is projecting its same-store sales increase at 4 to 5 percent at its discount stores for December, the analyst said.
Wal-Mart units in the Northeast and Southeast did better than average last week, while the company’s Canadian, Mexican and South American stores also performed well. Bestsellers at U.S. Wal-Mart stores included merchandise in the trim-a-tree category, electronics, health and beauty aids and basics, according to the analyst.