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Luxury retailers take hit in February

BY CSA STAFF

New York City Luxury stores remained among the retail industry’s worst performers in February, as consumers continued to cut back on discretionary purchases. Saks suffered a 26% decline, deeper than the 20.5% drop expected by Wall Street.

The company said it saw continued weakness in all categories, especially in women’s apparel. Saks said categories with relative strength in February were fragrances, men’s and women’s accessories, eveningwear and OFF 5TH, the company’s outlet store.

At Neiman Marcus Group, same-store sales fell 24.2%.

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Costco sees sharp decline in 2Q profits

BY CSA STAFF

A combination of weak consumer demand and a strong dollar led to a significant decline in Costco’s second quarter profits, the company announced.

Sales dropped 1% to $16.5 billion from $16.6 billion, while net income declined 27% to $240 million, or 55 cents a share, from $328 million, or 74 cents a share. Total company same-store sales for the second quarter declined 3%, but increased 5% if the negative effects of foreign exchange rates and gasoline prices are excluded.

“Second quarter 2009 earnings results were negatively impacted by a variety of factors, primarily centered around overall weak economic conditions,” said Costco CFO Richard Galanti. “In particular, our quarterly results were hurt by the continued weakness in non-foods sales and related margins. Margins in foods and non-foods were also negatively affected by increased pre-holiday seasonal markdowns and other selective price reductions to drive sales and increase market share. In addition, results were hurt by lower year-over-year gasoline profits and lower reported international profits, the latter a result of the significant strengthening of the U.S. dollar when compared to the currencies of Canada, the United Kingdom, Korea and Mexico.”

Membership income did grow however, increasing to $355.6 million from $342.9 million.

The company also announced February sales results for the period ended March 1 that declined 1% to slightly more than $5 billion. February same-store sales declined 3%, consisting of flat sales domestically and a 15% decline internationally. Excluding the effect of gasoline deflation on domestic results, same-store sales at U.S. units increased 4%. Same-store sales internationally increased 8%, excluding the negative effect of exchange rates.

Costco operates 553 clubs, 406 of which are located in the United States and Puerto Rico. Internationally, the company operates 76 clubs in Canada, 31 in Mexico, eight in Japan, six in Korea and five in Taiwan. An additional 10 to 11 new clubs are expected to open by the end of the company’s fiscal year on Aug. 30.

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Kmart launches multi-channel campaign partnership with WWE

BY CSA STAFF

HOFFMAN ESTATES, Ill. Kmart has partnered with World Wrestling Entertainment for a multi-channel entertainment marketing promotion supporting the 25th Anniversary of WrestleMania. The exclusive “WrestleMania Madness” is only at Kmart.

Kmart stores across the country will feature a front-end product boutique from March 8 to March 21 showcasing the best in WWE licensed products including apparel, toys, bedding, entertainment and gaming accessories. In addition, consumers who purchase $50 or more in WWE merchandise available in Kmart stores will receive $10 off their 25th Anniversary of WrestleMania pay-per-view buy.

Kmart’s promotion also includes a microsite,  www.kmart.com/wwe ,Web banners and e-mail blasts. And, for the first time ever, Kmart will host Live Chats on March 9 and March 16 at 8:30 p.m. EDT with WWE Superstars. In addition, Kmart is supporting the promotion with a designated 25th Anniversary of WrestleMania circular spread, in-store radio and TV broadcasts, extensive in-store point-of-sale, including WWE Superstar hanging signs, security shrouds and shelf talkers.

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