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Study: Q2 will improve for brick-and-mortar retailers

BY Dan Berthiaume

San Jose, Calif. – Second quarter 2014 will be less of a hardship for retailers than the first quarter, which started off the spring season on a negative trend across the metrics of traffic, conversion rate and sales per store (SPS). Data from store analytics technology provider RetailNext indicates that compared to the second quarter of 2013, traffic at brick-and-mortar stores nationwide will be down 6%, SPS flat and sales down 4%.

Retailers that have seen more positive results coming out of the first quarter share two common characteristics: Retailers who have focused on differentiated products are showing more positive results from the first quarter, and retailers that have been able to close the gap between traffic decline and conversion are showing significant positive variances in same-store sales as compared to retailers that are struggling to bridge the gap.

“Higher performance in converting shoppers can overcome the decline in traffic,” said Shelley E. Kohan, head of retail consulting, RetailNext. “Meanwhile, marketing teams continue to focus on getting online customers to shop in store and vice versa. Buy on line, pick up in store increases customer spend significantly according to industry veterans who have rolled out these programs.

The rolling seven-week forecast up through May week one for sales per shopper show good signs for retailers. The second quarter will be about executing at a high level to maximize each and every shopper in the store. With consumer confidence 13 points higher in April than last year and May starting stronger this year than last year, the second quarter looks promising.”

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Demand for luxury, new stores drive strong Q4 for Michael Kors

BY Dan Berthiaume

Hong Kong – Michael Kors Holdings attributed impressive growth in net income, total revenues and same-store sales during fourth quarter 2014 to strong global demand for luxury items. Net income for the three months ended March 29 rose 59% to $161 million, from $101.1 million last year.

Total revenue increased 53.6% to $917.5 million. from $597.2 million. Same-store sales grew 26%. The addition of 101 corporate stores and 150 licensed stores, including concessions, also helped fuel results.

During fiscal 2014, net income rose 66% to $661.5 million from $397.6 million in fiscal 2013. Total revenue for the year increased 51.8% to $3.3 billion from $2.2 billion, and same-store sales increased 26.2%.

“We believe that our expanding global brand awareness is driving continued strong demand for our luxury product and fueling our growth as a global luxury lifestyle brand,” said John D. Idol, chairman and CEO of Michael Kors. “In addition, Michael Kors and our talented design team continue to deliver exceptional products while the distinctive jet-set in-store experience that we offer in both our retail stores and our shop-in-shops continues to resonate well with our consumers. Overall, we have great momentum as we head into fiscal 2015 and remain very excited about our growth prospects for next year and beyond.”

For the first quarter of fiscal 2015, Michael Kors expects total revenue to be in the range of $840 million to $850 million. This assumes a same-store sales increase of approximately 20%. Total revenue for the full fiscal year is expected to be in the range of $4 billion to $4.1 billion. This assumes a same-store sales increase in the high teens.

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Abercrombie settles overtime suit with more assistant managers

BY Dan Berthiaume

New Albany, Ohio – Abercrombie & Fitch Co. and Abercrombie & Fitch Stores Inc. have offered to pay $96,000 to 13 assistant managers for failing to pay proper overtime wages, in connection with a lawsuit filed in the Eastern District of New York. This is in addition to prior offers from Abercrombie & Fitch to pay other assistant managers who had joined the lawsuit.

Abercrombie also agreed to pay the assistant managers’ attorney’s fees and court costs. The claims arose under the Fair Labor Standards Act ("FLSA") and asserted that Abercrombie violated the FLSA by failing to pay Assistant Managers all wages due and owing to them for working more than 40 hours a week. Abercrombie did not pay overtime to the assistant managers at time and one-half, and plaintiffs alleged that its practice violated the law.

Abercrombie claimed that the amounts offered to the assistant managers include all overtime wages owed plus liquidated (double) damages, and interest. The full number of Abercrombie assistant managers who were subject to Abercrombie’s pay practice is not known. Assistant managers are continuing to join the lawsuit.

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