Byline: David Moin / With contributions from Anamaria Wilson, New York / Holly Haber, Dallas / Georgia Lee, Atlanta / Kristin Young, Los Angeles

NEW YORK — It’s just past Easter and retailers are still walking on eggshells. Even with warmer weather and the country coming out of recession, they’re not getting the gains they want and admit business remains tough.
Still, spring ’02 is shaping up better than spring ’01 and, for the first time in almost a year, the mood has shifted. Many executives see a better picture emerging in the near future. Above all, they expect to swing from negative comps into the positives by fall selling, and with inventories as tight and conservative as could be, and expenses pared way down over the last six months, they’re poised for profits.
In the short term, though, profits remain tough. Retailers may be interpreting some healthy selling in such categories as jeans, contemporary sportswear, accessories and shoes as signs of firmer footing ahead, but tourism remains way down, hurting results at big city flagships, and the better feelings about jobs and business opportunities haven’t yet translated into robust shopping. Also, some of the economic indicators that retailers watch closely, like fuel costs and mortgage rates, are not moving in the direction they want.
“We’ve planned for a 1.5 percent [comp-store] gain for the year,” said James Zimmerman, chairman and chief executive of Federated Department Stores. “It’s not what we would all like it to be, but that’s the plan.”
Zimmerman said the company planned the first quarter down 2.5 percent, second quarter, flat, and the third and fourth quarters for fall “could look a lot better,” at up around 3.5 percent. Fall comparisons should be good, due to the sharp drop in business after Sept. 11, but next year, Zimmerman added, could be the real “bounce back” year.
The retail business, has been “OK,” said Carl Steidtmann, chief economist at Deloitte Research. “The good news is that most retailers have inventories in line and don’t need aggressive markdowns. They’ll make money on the stuff they are selling.” He predicted a “mild recovery” for retailers, since the economy is recovering. “The segment most hurt was manufacturing and that’s clearly shown a bounce back.”
However, Steidtmann warned “the fundamentals don’t look that great. There’s been a sharp rise in energy prices, partly tied to unrest in the Middle East, and after declines in unemployment claims in December, January and February, they’re back up a little.” He also cited a rise in mortgage rates, but noted tax refunds have been strong this year. All that creates “a mixed picture for consumer spending and a challenging environment for retail” hinging on Federal Reserve rate activity.
Across the board, retailers said the strong sellers so far this spring fit in to fashion’s new romantic mood: peasant tops, cropped pants and skirts with ruffle bottoms. In juniors, fashion denim, capri and flood pants, and crosshatched finishes in denims, as well as peasant blouses and items with lace-up details are selling.
At Federated’s Macy’s East division, “last week was particularly sluggish,” Hal Kahn, chairman and ceo, said Tuesday. “I’m not blaming it on the weather. The first three weeks of March were better than last week. As we get more into spring, we see a positive response to our assortments and an increase in store traffic. But we are cautious. Career is hurting. Juniors are sluggish. Dresses are weak. But coming up against a poor spring business a year ago and the Sept. 11 situation, we still feel positive. But now there is a little bit of concern based on eight or nine days of business,” since the onset of spring.
Kahn said that casual sportswear, moderate sportswear, jeans, white blouses and some knits are selling. However, “we haven’t seen a return of customer traffic for this spring. We’re at the point where value is all over the marketplace. What will get people into the stores is must-have fashion. We still need newness and we’re pressing our resources to be on top of the market. We do see some interesting and exciting things happening in the sportswear business, but we must get the proper balance of career and casual to see a return of customer traffic.”
From Christmas, said Ron Frasch, chairman and ceo of Bergdorf Goodman, “the trend every month has gotten better. When the products are right, the customer is buying them as strongly as I have seen in a long time. Clearly, whether it’s a trend or a designer collection, customers are shopping with a laser focus. They are either buying into a trend or a designer collection significantly, or not buying it at all.”
He said Bergdorf’s planned very conservatively for spring, and is beating the plan. “The strength is more in the accessory area than men’s or women’s apparel areas. My sense is business will be stronger in the second half. A lot of that will reflect the soft business environment of last fall. From a volume and profit perspective, every retailer is in the same situation. Inventories are tight, expenses have been adjusted. If there is an uptick in business, we are all in good shape. Our local customers are back and buying with a much more laser-like approach, but I clearly don’t see the European customer back like before.”
According to Bloomingdale’s chairman and ceo Michael Gould, “Contemporary sportswear is very good, bridge is much stronger, designer is up versus last year, shoes are outstanding in women’s, jewelry very good, men’s has come around. Furnishings and collections and young men’s are up for the season. I feel good. The one softness is still the home store.”
Henri Bendel fell flat in January, though February and March were up in the low-single digits. “We are actually performing a few points better than plan at this point,” said Ed Burstell, vice president and general manager. “There is every indication that if we can get into a good reorder position on certain goods for the second quarter, it will be even better than where we stand now. It’s going to be a matter of reacting quickly and editing.”
At Kirna Zabete in SoHo, co-owner Sarah Hailes said, “We are above plan for spring,” while Stefani Greenfield, co-owner of Scoop, said, “I just wanted to do at least what I did last year, and we’re exceeding that. Last weekend was one of the best we’ve had. We’re running at 15 to 20 percent above plan, usually weekly.”
Jaqui Lividini, senior vice president at Saks Fifth Avenue, said romantic looks, tailored two and three-piece suits, bridal, special occasion and formal dresses and Burberry accessories are all doing well.
Kohl’s said March was strong, helped by the early Easter, and singled out its Atlanta stores for a “phenomenal” Easter weekend, with volume equal to the week before Christmas. Sales were boosted by Georgia’s first-ever tax-free holiday Friday and Saturday.
At Knoxville, Tenn.-based Goody’s, business was “great” over the weekend, said Lana Cain Krauter, president and chief merchandise officer. Goody’s emphasis on casual apparel recently has paid off, said Krauter. In misses, color, capri pants, shorts in fashion colors, cut-and-sew knits and sweaters, career dressing with relaxed silhouettes and casual dresses, are all driving sales. Bestselling resources include Erica & Co., Norton McNaughton and Sag Harbor.
“Dresses in general have been disappointing for the industry, and as business got tough, prices got lower,” said Krauter. “We’d like to see a comeback in traditional, well-made dresses, because the consumer still wants them.”
At Stanley Korshak in Dallas, sales of accessories and home furnishings have been up, offsetting softness in apparel, especially evening wear. Crawford Brock, president, said, “Our business has been up the last two months. From a bottom line standpoint we are excited because margins are up and expenses are down. We will be a more profitable business.”
Lester Melnick, owner of three stores bearing his name in the Dallas-Fort Worth Metroplex, enjoyed a 6 percent gain in March, led by cocktail and mother-of-the-bride dresses and less-constructed bridge sportswear. Still, “it’s tough,” Melnick reflected. “Our traffic is fair, and we depend heavily on our sales ladies’ relationships with clients. I’m not looking for any great increases. We doubled jewelry sales because we had two trunk shows a week, so there was something fascinating for customers to see.”
Beall’s, a moderate department store based in Bradenton, Fla., had a slight dip in February sales but a double-digit increase in March generated mostly by misses sportswear. Top labels were Liz Wear, Liz Sport and Columbia. “We’ve had very warm weather, so they’ve been out buying tank tops, printed capri’s with solid knit tops and printed tops,” noted Conrad Szymanski, president. “We invested in additional advertising in March and that helped drive the business. We’re feeling pretty good about Mother’s Day.”
Retailers on the West Coast predict an uptick this spring thanks to softer, feminine looks. “There’s just such a newness right now in fashion,” said Steven Strickland, spokesman for Wet Seal Inc. “Anything in the peasant blouse category is terrific in all divisions whether it’s cotton, sheer fabrics or gauze.” Whatever pairs easily with peasant blouses — jeans with embroidery, laceup fronts or ticking, wooden bangles, turquoise and silver — is strong.
At Nordstrom, bohemian styles are selling in cottons, wovens and knits, said Bonnie Junell, better sportswear buyer. Nordstrom’s own Halogen brand is also showing strength.
Mark Goldstein, owner of four contemporary boutiques in Los Angeles under the Emma Gold and Madison banners, said, “March was strong and it would have been stronger if we had had more inventory. We didn’t have a strong spring assortment until early March and that’s when things took off. I think we’ll have a good year. We didn’t start off thinking that but it’s definitely coming back.”

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