News

On and Off Message

BY Robert Gordman

The industry is very fortunate that most consumers don’t watch CNBC. The media mavens have spent the month of August painting a picture of doom and gloom based upon the sub-prime crisis, the mortgage melt-down and the global credit crunch. All major issues if you’re a banker, but not too important for most consumers. The comp-store sales numbers for the month generally indicate that the growing job market and the related increased household income have provided retailers with consumers ready to shop and spend.

Recently, I had the opportunity to spend a day walking stores and studying a number of retail concepts. As my tour ended, the old song “Looking For Love In All The Wrong Places” popped into my mind. It was obvious that J.C. Penney, Kohl’s, Chico’s, Gap and Wal-Mart have lost sight of their core customers’ taste level. They are now chasing the fashion point of view of other retailers, rather than trying to better serve the customers they have. By contrast, Target, American Eagle, Jos. A. Bank, Saks, Nordstrom and Zumiez are crystal clear about the customers they are trying to serve and are executing extremely well. We are once again reminded the price retailers pay for straying from serving their core customers.

If you don’t agree with my assessment, take a look at August’s comp-store results and the 90-day trend for each of these retailers in the tables. Consumers are voting at the cash register. To view the entire Retail Trending Report, go to www.gordmangroup.com.

For September, it is very likely that few retailers will have strong comps. September 2006 was the strongest month of the year and those results will be tough to beat.

Focused Retailers

Comp-Store Sales Trend
Retailer August 2007 Previous 90 Days
American Eagle 9.0% 2.5%
Jos. A. Bank 7.7% 2.5%
Target 6.1% 4.9%
Saks 18.2% 13.1%
Nordstrom 6.6% 5.9%
Zumiez 17.4% 11.7%

Unfocused Retailers

Note: The information contained in this report has been obtained or developed from sources which we believe to be reliable, including but not limited to information published by the companies named in this report; but we disclaim responsibility for the accuracy of such information or for any use of such information by a reader of this report.Source: The Gordman Group
Comp-Store Sales Trend
Retailer August 2007 Previous 90 Days
Chico’s –9.3% –5.6%
Gap –1.0% –4.9%
Kohl’s –0.6% 1.2%
Macy’s 2.4% –2.6%
J.C. Penney –4.0% 1.9%
Wal-Mart 2.8% 1.1%

For a full listing of monthly sales performance, visit www.chainstoreage. com, and click on Monthly Sales under “Industry Data” on the left column.

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Winn-Dixie team honored for turnaround

BY CSA STAFF

JACKSONVILLE, Fla. The team that lead Winn-Dixie Stores’ successful turnaround initiative is being honored by the Turnaround Management Association for the best ‘Mega Company Turnaround’ for 2007. Comprised of financial experts from The Blackstone Group, Skadden, Arps, Slate, Meagher & Flom and Smith Hulsey & Busey, the team helped Winn-Dixie regain the market share and profits it started to lose in the mid 1990s and early 2000s to competitors Publix and Wal-Mart.

Winn-Dixie filed for Chapter 11 bankruptcy in early 2005 after reporting  year-to-date losses of $552.8 million or $3.93 per share of common stock and a decline of 4.9% in identical-store sales in its second fiscal quarter over the same period in 2004.

 

Despite the difficulty of achieving a succesful turnaround, Winn-Dixie began its reorganization effort, while still continuing to operate its core business and preserving jobs. According to the Turnaround Management Association, it created new common stock for five classes of unsecured creditors, with recoveries ranging from about 96% to 53%. The company emerged from bankruptcy on Nov. 21, 2006.

For its fiscal year ended June 27, Winn-Dixie reported adjusted EBITDA of  $85.9 million compared to a loss of $27.8 million last year and an identical-store sales increase of 1.6% 

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Sears ends deal with maternity retailer

BY CSA STAFF

PHILADELPHIA Sears and Mothers Work, the world’s leading maternity apparel retailer, will not be renewing their agreement, Mothers Work announced today. Under their current agreement, Mothers Works operates the maternity apparel department in 502 Sears stores through the sale of its Two Hearts Maternity branded merchandise.

Mothers Work said it expects its partnership with Sears to end on June 20, 2008, when it current deal with the company is expected to expire.

Rebecca Matthias, president and ceo of Mothers Work, noted, “While we are disappointed about the end of our relationship with Sears, we feel the decision not to proceed with a renewal is in the best interest of our stockholders since we were unable to reach terms on a renewal which would be favorable for Mothers Work and our stockholders. “

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