FINANCE

Gap acquires Intermix for $130 million

BY Katherine Boccaccio

San Francisco — In a development that will take it into the growing global luxury market, Gap Inc. announced Thursday it has acquired women’s apparel retailer Intermix Holdco for approximately $130 million in cash. The transaction was completed Dec. 31.

Intermix, which operates 32 stores and an e-commerce site, offers a mix of luxury brands including merchandise from up-and-coming designers. The featured brands range from Rag & Bone and Stella McCartney to Proenza Schouler and Helmut Lang. Gap said it sees opportunity to expand the chain and lift the website’s visibility.

“Intermix has a distinctive position in this growing market with clear competitive advantage,” said Glenn Murphy, chairman and CEO of Gap Inc. “Their record of merchandising with a keen eye towards mixing multiple designer labels, complemented with exclusive product, is appealing to their loyal customers.”

According to Gap, Intermix’s senior team, including co-founder and CEO Khajak Keledjian and president Adrienne Lazarus, will continue to operate the business from New York, with Keledjian as chief creative officer. They will report to Art Peck, president of Gap Inc.’s Growth, Innovation & Digital division.

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FINANCE

Macy’s and Nordstrom top estimates in December; Kohl’s misses

BY Katherine Boccaccio

New York — As cash-strapped consumers curtailed holiday spending, department store retailers felt the pinch and some performed better than others in an uncertain environment. The strongest performances were turned in by Macy’s and Nordstrom, both topping estimates.

Overall, analysts looked for 3.3% same-store sales growth for December across 17 chains, down from 4.2% growth in December 2011, according to Thomson Reuters.

Macy’s reported a rise in December same-store sales of 4.1%, edging Wall Street’s expected 4% rise, and a total monthly sales gain of 3.6% to $5.102 billion. But the department store heavy-hitter cuts its guidance for the fourth quarter and detailed a series of “normal-course adjustments” to its store portfolio that include closing six underperforming stores. The chain will open nine other Macy’s and Bloomingdale’s around the country to rebuild its total store count.

CEO Terry Lundgren said the rate of comp growth was less than the retailer expected, but that was due partly to uncertain economic news and the lingering effects of Superstorm Sandy.

“Last month was our fourth consecutive December with same-store sales growth, which is indicative of the sustainability of our key business strategies,” said Lundgren. “While the rate of growth was somewhat less than we had expected in the first two months of the fourth quarter, it came amid some significant headwinds from uncertain economic news and the lingering effects of Hurricane Sandy.”

Kohl’s Corp. saw same-store sales rise 3.4% in December, along with a total sales increase of 4%, falling below company expectations. “December sales were lower than planned,” said CEO Kevin Mansell. “Additionally, sales came late in the holiday shopping season and, as a result, were at deeper discounts than planned. We are taking the necessary markdowns in the fourth quarter to manage our inventory as we transition into the spring season.”

Among other department stores reporting:

• Nordstrom recorded an 8.6% rise in December same-store sales, beating the 3.6% estimate; and
• Bon-Ton Stores grew 2.4%.

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Last-minute surge helps fuel December sales; Gap shines in apparel sector

BY Katherine Boccaccio

New York — An apparel last-minute surge in holiday shopping helped many key retailers report better-than-expected sales in December. Twenty retailers reported sales in December rose an average of 4.5%, compared with the year-ago period, according to the International Council of Shopping Centers. Costco, Gap, Nordstrom and TJX Cos. were among the best performers.

Overall, Wall Street expected 3.3% overall same-store sales growth for December across the 17 chains that still report monthly comps, down from 4.2% growth in the year-ago period, according to Thomson Reuters. Same-store sales rose a disappointing 1.6% in November.

The holiday season was never expected to be a barn-burner, but “fiscal cliff” headlines, Superstorm Sandy damages and the Sandy Hook tragedy created additional pressure as consumers reacted to the onslaught of bad news.

"The consumers’ confidence is off a bit, and I don’t think you can point to a single individual thing,” Madison Riley, managing director of retail consulting firm Kurt Salmon, told Reuters. “It’s a culmination of things that hit their psyche."

In the specialty apparel category, Limited Brands missed Wall Street’s 4.5% forecasted increase by reporting a 3% rise in December same-store sales. The parent of Victoria’s Secret, Bath & Body Works and namesake stores reported net sales of $1.947 billion for the five weeks ended Dec. 29, 2012, compared with net sales of $1.868 billion last year.

Gap Inc. beat estimates with a 5% rise in December same-store sales, ahead of the 3.5% expected rise. Total sales for the five-week period ended Dec. 29 rose to $2.08 billion from $1.98 billion.

“Customers responded favorably to our product offerings and promotions during the holiday season overall,” said Glenn Murphy, chairman and CEO.

By brand, Gap North America delivered a positive 2% vs. negative 4% last year; Banana Republic North America delivered positive 1% vs. negative 2% last year; and Old Navy North America delivered positive 13% versus negative 4% last year.

One of the weakest performances in the apparel category was turned by the struggling The Wet Seal, whose same-store sales plummeted 9.7%. Analysts forecast the chain would have the weakest sales of any of the 17 chains reporting, but only expected a 5% decline.

In a statement, the retailer said: “December sales were below our expectations, driven mainly by lower than expected transactions throughout the month.”

Among other reporting specialty apparel retailers:

• Zumiez same-store sales in December surged 15%;
• The Buckle edged up 1%;
• Stage Stores rose 2.7%;
• Hot Topic gained 4%; and
• Cato dropped 7% and lowered its fourth quarter guidance.

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Feb-07-2013 05:28 pm

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