WWD FRIDAY, AUGUST 9, 2013 5 WWD.COM
July Retail Sales Miss Estimates By JEAN E. PALMIERI LOWER TRAFFIC and a heightened promotional environment led most reporting retailers to fall short of analysts’ estimates in July. Same-store sales projections for the month had been expected to come in at a 4.4 percent gain, according to Thomson Reuters. Most stores failed to meet that number, with the average coming in at 3.9 percent, leading some to reduce earnings estimates for the second quarter. The results shouldn’t lead to panic, however, since July is “a transitional month,” said Barbara Kahn, director of the Baker Retailing Center and a professor at the Wharton School of the University of Pennsylvania, and the “hope is for a pickup in August and that back-toschool will spur people to go to the malls. June was a strong month and the hope is that July would be as well,” she said. Instead, Kahn said that business in July seemed to be “more promotional than anticipated,” and the economic picture continues to be spotty. “Everybody is looking for a clean indicator that things are ﬁne, but the recovery is just sluggish,” she said. Michael Brown, a partner in the consumer retail group of management consultancy A.T. Kearney, characterized July as “lackluster,” with most retailers reporting “conservative small gains.” But he cautioned July is a “less important month” with many people taking vacations and the Fourth of July holiday, and he’s “conservatively optimistic” about August sales for the b-t-s selling period. “There’s enough positive consumer sentiment that I think we’ll see slightly positive numbers,” he said, pointing to good consumer conﬁdence, modest economic growth and the small gains posted by most retailers. “There’s nothing in the market to say the consumer won’t be out there shopping,” he said. The quest for promotions is expected to continue as consum-
ers seek value when they do hit the stores. In July, American Apparel Inc. was seemingly the only retailer to buck the lackluster trend with a comparable-store sales jump of 8 percent, which encompassed a 6 percent increase in retail-store sales and a 23 percent spike in online sales. “July represents our 26th consecutive month of positive comparable store sales growth,” said Dov Charney, chairman and chief executive ofﬁcer, noting it came on top of a 19 percent increase in July of last year. “As we enter August, we anticipate continued strength in our sales channels and we are looking forward to the back-to-school, Halloween and holiday selling season,” he said. Among the other stores still reporting, Gap Inc. said comparable-store sales for July rose 1 percent overall, compared with a 10 percent gain in July 2012. Comps for the second quarter overall rose 5 percent versus 4 percent last year. By division, the Gap stores posted a 7 percent increase on top of a 10 percent gain last year, while Banana Republic’s comps fell 1 percent and Old Navy dropped 5 percent. In the quarter, Gap and Old Navy were both up 6 percent while Banana fell 1 percent. In a conference call, the company called the second quarter “somewhat uneven,” with May and June outperforming the “small, largely clearance month” of July. Customer response to summer product at both Gap and Old Navy was strong in the period, it added. Within the teen sector, The Buckle Inc. outperformed most of its competitors by posting a 2.1 percent comp increase in July and 3.2 percent in the second quarter. Zumiez Inc. had a 0.8 percent comp gain in the four weeks ended Aug. 3, driven by an increase in dollars per transaction. Hard goods, juniors and footwear had a positive performance, the company said, while men’s, boys’ and accessories were down. July will be the ﬁnal month that the Washingtonbased retailer will report same-store sales. Aéropostale Inc., while not disclosing sales
for the month of July, said comp-store sales in the second quarter dropped 15 percent. It now expects losses in the second quarter to be in the range of 42 to 44 cents a diluted share, which includes charges of 19 cents a share not included in the company’s original estimates. It blamed the poor showing on increased promotional activity and weak trafﬁc in the period, particularly July. Thomas P. Johnson, ceo, said he is hopeful that the company’s move to “reposition the Aéropostale brand” to make it “more fashionable and relevant,” will connect with customers and help the New York-based chain regain market share. L Brands Inc. weighed in with a 3 percent gain in the four weeks and a 2 percent increase for the second quarter, prompting the parent of Victoria’s Secret and Bath & Body Works to raise guidance for secondquarter earnings to 60 cents a share, from 50 to 55 cents a share. By division, Victoria’s Secret stores had a 2 percent comp-store sales gain in the month and a 1 percent increase in the second quarter driven by strong sales of lingerie and the Pink collection and the introduction of the Body by Victoria bra and the Victoria fragrance. Victoria’s Secret Direct posted an 11 percent decline in comps in July and a 6 percent decrease for the second quarter due to a double-digit decline in apparel sales. Bath & Body Works posted a 6 percent comp-store gain in July and 3 percent in the second quarter with the brand’s signature collection, home collection and soap and sanitizer offerings spurring sales. The La Senza division posted a 9 percent comp gain in July and 2 percent in the second quarter. The company said it is expecting lowsingle-digit comp increases in August. Cato Corp. reported comps declined 5 percent in July and 2 percent in the second quarter, prompting the Charlotte, N.C.based retailer to bring down estimates for earnings per share in the second quarter to 42 to 48 cents, a decline of 19 to 29 percent from the 59 cents posted last year. “July same-store sales reﬂect the continuing eco-
Comparable Sales for July % Change
Bath & Body Works
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............................................. SOURCE: COMPANY REPORTS * Excludes fuel sales.
nomic uncertainty and the related volatility we have seen throughout much of the year,” said John Cato, chairman, president and ceo of the 1,306-unit chain. Stein Mart Inc. reported comps rose 3.7 percent in July and 6.4 percent in the second quarter with dresses and intimate apparel performing best. Women’s special sizes and casual sportswear, jewelry and men’s sportswear “were more challenged,” the company said. Geographically, July sales were strongest in Florida, the Southeast and Virginia, while sales in the West were slightly lower. Jay Stein, ceo, said: “Our customers responded well to our merchandise assortment during the ﬁrst half of the year and we are looking forward to introducing her to our great fall assortment.”
By LISA LOCKWOOD
By ALEXANDRA STEIGRAD
ALTHOUGH EARLY reports indicated back-toschool spending would lag behind 2012, 88 percent of shoppers surveyed by WSL Strategic Retail said they planned to spend at least the same or more as last year during the 2013 b-t-s season. “Back-to-school has always been an important indicator of consumer sentiment and spending,” said Wendy Leibmann, chief executive ofﬁcer of WSL Strategic Retail. “This year, 60 percent of shoppers tell us that they plan to spend the same as they did in 2012, and 28 percent say they will spend more. This is encouraging news for retailers who saw strong back-toschool numbers last year.” One-third of those parents who plan to spend more said they will pass on the big sales in stores and are willing to pay a premium for the convenience of getting all of their b-t-s shopping done online. Among the top categories they’re shopping for are school supplies (86 percent); clothing and fashion accessories (69 percent); health-care items (56 percent); food and beverage (48 percent); beauty and personal care (44 percent), and electronics (21 percent.). As to where they’re shopping, mass merchandisers (Target, Wal-Mart, Kmart, etc.) topped the list at 76 percent, followed by department stores (Macy’s, Kohl’s, J.C. Penney, Nordstrom, Saks, etc.) at 40 percent; online sites (Amazon, etc.) at 36 percent; dollar stores (Dollar General, Family Dollar, etc.) at 34 percent; drug stores (such as CVS, Walgreens and Rite Aid) at 32 percent; warehouse clubs (such as Costco and Sam’s Club) at 29 percent; malls (such as outlet malls and strip malls) at 25 percent, and specialty clothing stores at 22 percent. The How America Shops Back-to-School 2013 trend study was conducted nationwide online, polling 320 b-t-s shoppers age 18 and over in July.
NEW YORK — The worlds of media and fashion are converging. Nine West, The Jones Group Inc.-owned footwear ﬁrm, has partnered with InStyle magazine to create a capsule collection of fall shoes, which will be available for purchase in August. The move signals a new frontier for both parties, and potentially another revenue stream for InStyle — which also just signed a deal to do a line of women’s shirts. “We’ve done collaborations before, primarily with designers and inﬂuencers, but this is the ﬁrst time we’ve ever collaborated with a magazine,” Richard Dickson, The Jones Group’s president and chief executive ofﬁcer of branded businesses, told WWD from Nine West’s bright ofﬁces in Midtown here. “Out of all of them [magazines] that would have been possible, InStyle certainly was the best magazine we could have ever hoped to do it with — particularly because their reach, their skill set, their understanding of the consumer and their point of view ﬁts in particularly well with Nine West’s positioning.” The idea for the shoe collection, which ranges from $79 to $149, materialized — as many things do in the fashion industry — over dinner during at Paris Fashion Week. Dickson said he and the InStyle editorial team began talking about trends in footwear, and soon realized that a marriage of the minds would be “innovative” for not only Nine West but also for the fashion publication. The teams then came up with 10 styles in 26 colors and materials, including single sole cutout pumps, polished deep-V wedge ankle booties and men’s wear-inspired ﬂats. The limitededition collection makes use of materials ranging from suede and calf hair to patent leather, and it is branded in the shoe as a “9W InStyle” collaboration. “We thought this would be a great opportunity for us to translate our brand values into these chic wardrobe statements,’” said InStyle editor Ariel Foxman. “Honestly, it’s really a wonderful way for us to develop this brand new revenue stream that’s well within our core brand values.” Collaborations with brands might be new for InStyle, but they aren’t a novel concept in the magazine world. In recent years, Bon Appétit introduced kitchenware that it sells through HSN, while Elle magazine has clothing and beauty
PHOTO BY ROBERT MITRA
Bright Spot for BTS Nine West, InStyle to Create Fall Line
Richard Dickson and Ariel Foxman
lines. But overall, deals with major fashion brands are rare, which is why InStyle’s Nine West agreement stands out. To market the collection, InStyle will devote a 12-page editorial booklet in its September issue. Consumers are invited to post an Instagram photo of themselves wearing their shoes with the hashtag #9WInstyle, and the editors will select the most stylish look and feature it in the magazine. Nine West added that it would offer the line for presale on its Web site from today and at select Nine West stores in the U.S. and Canada on Aug. 16. “For us it [the collaboration] brought the credibility that InStyle has, as well as their point of view to our brand,” Dickson said. “Ultimately, to have Nine West break ground with a publication like InStyle is a great milestone in the brand’s history. I think also it is representative of the new way of marketing the brand to be more culturally relevant and more appreciative of the right style at the right price at the right time....It’s been easy, fun and informative. We’ll see where it goes from here.” As for the new shirt line from InStyle, it will be sold by bra size. Called InStyle Essentials Perfect White Shirt Collection, it will feature three different white button-front styles: classic button front, weekend tunic and blow blouse. The shirts are available for $59.99 at shopinstyleessentials.com. They will be featured in the September issue that goes on sale Aug. 16 and will be available for an indeﬁnite period. The shirts use a patented sizing system by TrioFit. InStyle declined to disclose sales projections. — WITH CONTRIBUTIONS FROM L.L.
Although early reports indicated back-to-school spending would lag behind 2012, 88 percent of shoppers surveyed by WSL Strategic Retail said...