Aeropostale swings to Q2 loss; increases store closings
New York — Aeropostale posted a loss of $33.7 million for the fiscal second quarter that ended Aug. 3, compared to a profit of $71 million a year ago. The teen retailer issued a weak outlook, and upped the number of stores that it plans to close.
Sales decreased 6% to $454.0 million from $485.3 million a year ago. Same-store sales, including the e-commerce channel, fell 15%.
The retailer said it now plans to shut down 30 to 40 Aeropostale locations this fiscal year. Previously, it had stated its plans to close 15 to 20 stores.
In a statement, Thomas P. Johnson, CEO, commented: “Our business was pressured by a challenging teen retail environment with weak traffic trends and high levels of promotional activity. Our results were particularly disappointing given the level of change we have registered with the Aeropostale brand in recent periods.”
Ann Inc. Q2 tops estimates as Ann Taylor, Loft fuel sales
New York — Ann Inc. reported that its second quarter net income rose a better-than-expected 16% to $35.6 million, with strong performances from both its Ann Taylor and Loft banners. Similar to many other retailers in recent weeks, the chain trimmed its full-year revenue forecast.
Revenue for the period ended Aug. 3 increased 7% to $638.2 million.
Same-store sales rose 2.8%, with a 3.1% rise at Ann Taylor and a 2.5% lift at Loft.
The company’s board also approved a new $250 million buyback following the completion of a $600 million repurchase program.
Wal-Mart pushes ‘made in America’ at first-ever domestic sourcing summit
Bentonville, Ark. — Wal-Mart Stores on Thursday brought together retailers, suppliers and government officials to figure out how they could work together to drive more manufacturing in the United States.
Not only was the event a first for Walmart, it was also unlike anything the retail industry has ever seen. Roughly 1,500 supplier company representatives, government and economic development officials, Walmart’s top executives and dozens of senior merchants participated in the three hour summit held at the Orange County Convention Center in Orlando, Fla.
“It sounds dramatic, but nothing less than the future of our country is a stake,” Walmart U.S. president and CEO Bill Simon said. “We can’t be just a service economy. We have to make stuff.”
The summit was held Thursday afternoon and on Friday a day of meeting was planned between supplier company attendees and economic development representatives from 30 states. Walmart and the National Retail Federation served as matchmakers.
Simon emerged as a champion for domestic sourcing earlier this year when he was a featured speaker at the National Retail Federation’s annual convention in January. At the meeting, he unveiled Walmart’s plan to spend an additional $50 billion on domestic sourcing during the next 10 years. It sounded like an audacious goal at the time, but Simon now contends that figure will be a “lay up,” because of the momentum that is quickly gathering and was evident at the summit. Combined with the growing recognition of the benefits of making products closer to the point of consumption, Simon said he now expects Walmart to blow by that $50 billion figure.
Rising wage rates in previously low wage rate countries such as China, energy costs and other supply chain considerations are just a few of the reasons why Simon contends the global economy is entering a transition where a strong business case can be made for manufacturing to be located closer to the end consumer.
Taking that assertion a step further, U.S. Secretary of Commerce Penny Pritzker pointed to the stabilized banking and housing sectors, abundant and affordable energy, great universities, a vibrant culture of entrepreneurship and strong intellectual property protections as reason why companies should increase their domestic manufacturing.
“We are entering a new era of opportunity to boost American manufacturing,” Pritzker said. “The time to build and hire in America is now.” To help make that case, Walmart enlisted the aid of governors from nine different states who participated in panel presentations or made individual remarks. Governors have a strong interest in promoting economic development within their states and each used their participation in the event to tout their state’s key benefits and engage in some good natured ribbing of their peers.
For example, South Carolina governor Nikki Haley described her state’s dislike of unions. Mississippi governor Phil Bryant said his state doesn’t over-regulate or over tax and makes sure it gets out of the way of entrepreneurs. West Virginia governor Earl Ray Tomblin touted his state’s abundant natural gas. Maine governor Paul LePage said his state got rid of red tape.
While the governors cited the ease of doing business in their states, Richard Fisher, president and CEO of the Federal Reserve Bank of Dallas, suggested regulations and uncertainty are major impediments holding back the creation of domestic manufacturing jobs that could help restore the middle class.
The fiscal and regulatory policies in Washington are what is holding the country back, according to Fisher. He derided lawmakers for their cavalier approach to fiscal matters and spending and regulating with abandon, but stopped short of singling out the beleaguered Affordable Care Act, also known as Obamacare.
“Businesses cannot operate in a fog of uncertainty about how they will be regulated and taxed,” Fisher said.
Walmart can’t fix Washington gridlock or ill-conceived mandates, but as Wal-Mart Stores, Inc., president and CEO Mike Duke noted, the intent of the summit was to begin a journey.
“Sometimes getting started can be the hardest part,” Duke said. “We wanted to help ignite and create the desire to get momentum going.”