The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — How quickly can we cut.
That’s the mantra for US department stores these days after every major chain in the industry reported disappointing quarterly sales. The companies are adjusting to a new reality where customer traffic may be slow for years, adding urgency to efforts to slash expenses, close stores and improve product margins.
“These are structural issues that need to be addressed,” said Simeon Siegel, an analyst at Instinet LLC. “Once you acknowledge that sales are lighter, you need to address your profitability — that’s the do-more-with-less piece.”
In the past 24 hours, J.C. Penney Co. and Nordstrom Inc. brought a fresh wave of bad news: Like rivals Macy's Inc. and Kohl's Corp., sales were well below analysts' estimates last quarter. Dillard's Inc., a smaller regional chain, also reported weak sales on Thursday.
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The results dragged down department store shares on Friday, following another rout that was spurred by Macy’s the day before. J.C. Penney suffered its worst decline in 1 1/2 years, while Nordstrom was down the most in 12 months.
Apparel sellers also got hammered this week, with the S&P 1500 Apparel Retail Index declining the past two days.
With consumers increasingly fleeing department stores for Amazon.com Inc. and specialty shops, the former stewards of retail are scrambling to adapt.
Macy’s, the industry leader, is closing 100 underperforming stores — 68 of which are being shut down this year. This will eliminate about 4,000 jobs, on top of 6,200 cuts announced in January.
Sears Holdings Corp. has been shuttering 150 money-losing locations, including 108 Kmarts and 42 Sears.
Salon Services
And J.C. Penney is shutting down about 140 stores. (In a bittersweet twist, it delayed the closures for a month because so many nostalgia-seeking customers turned out to shop at the stores before they went away.) The cutbacks, which also include shutting two distribution centres, are meant to save about $200 million a year.
J.C. Penney Chief Executive Officer Marvin Ellison has been trying to set the retailer apart from peers by expanding the company’s partnership with Sephora and increasing its assortment of high-price items, like appliances.
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The retailer is also focusing on services — like salons — that require shoppers to come into stores. Those parts of the business did well, but weak apparel demand dragged down results, Ellison said.
The company said same-store sales slid 3.5 percent in the period ended April 29. Analysts had estimated an 0.7 percent drop, according to Consensus Metrix. Ellison blamed that result on a particularly slow February, with the retailer seeing a bit of a pickup in March and April.
“We know the upside for profit and revenue exist,” he said on a conference call. “We simply have to move faster.”
The British musician will collaborate with the Swiss brand on a collection of training apparel, and will serve as the face of their first collection to be released in August.
Designer brands including Gucci and Anya Hindmarch have been left millions of pounds out of pocket and some customers will not get refunds after the online fashion site collapsed owing more than £210m last month.
Antitrust enforcers said Tapestry’s acquisition of Capri would raise prices on handbags and accessories in the affordable luxury sector, harming consumers.
As a push to maximise sales of its popular Samba model starts to weigh on its desirability, the German sportswear giant is betting on other retro sneaker styles to tap surging demand for the 1980s ‘Terrace’ look. But fashion cycles come and go, cautions Andrea Felsted.