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Success Strategy

BY Robert Gordman

The results of the past few months remind me of the old Wall Street axiom, “It’s a market of stocks, not a stock market.” This also appears to be true in the retail industry. In spite of the financial media’s efforts to overlay the entire industry with a “gloom blanket,” the reality is many retailers are thriving. Even government data indicates only a modestly declining positive trend in general merchandise sales.

The primary trends are company-specific and nominally a reflection of global factors. During my recent visits to dozens of retail stores, it was quite evident that some retailers planned for success with exciting and timely merchandise assortments.

Unfortunately, a large number of retailers are presenting a weak assortment of ordinary-looking, poor-quality merchandise, supported by over-promotion to simulate value. This group incorrectly believes the consumer cannot recognize the difference. To further prove the point, look at the disparity in the 90-day comp-store-sales performance of these retailers, who serve similar consumers in a similar way.

What is clear is that there is no consistent trend that applies to all retailers as an industry. Whether the economy is good or bad, it’s the individual retailer’s customer-relevant strategy and the quality of the execution that appears to determine the trends.

Starting next month, we will be adding an exciting new feature to the Retail Trending Report called the Retail Trend Tracker. This new report will utilize Internet-based consumer research to track the shopping behavior of consumers at 14 national retailers. In addition to tracking the changes in behavior, we will also report on the factors causing the consumer’s behavior to change.

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Michaels comps down for the quarter

BY CSA STAFF

IRVING, Texas Michaels Stores reported that total sales for the quarter were $847 million, a 1% increase from fiscal 2007 first quarter sales of $839 million. Same-store sales for the comparable 13-week period decreased 2.9%.

Ceo, Brian Cornell, said, “While our overall comps for the first quarter declined 2.9%, we were very encouraged with the sales of our kids and specialty craft categories, scrapbooking and frame and art supplies. Sales in April showed a reversal of trend with same-store sales up 3.1% on a strong increase in transactions. This positive sales and transaction performance gives us confidence that our new marketing and merchandising programs are connecting with our Michaels customers.”

For fiscal 2008, the company expects same-store sales growth  to be approximately flat given the current economic environment.

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Kirkland’s 1Q sales up 2.1%

BY CSA STAFF

JACKSON, Tenn. Kirkland’s reported that net sales for the first quarter ended May 3 increased 2.1% to $84.1 million from $82.3 million for the first quarter ended May 5, 2007. Comparable-store sales for the first quarter of fiscal 2008 increased 4.3% compared with an 18.8% comparable-stores sales decrease in the first quarter of fiscal 2007.

The company reported a net loss of $2.6 million, or 13 cents per diluted share, for the 13-week period ended May 3, 2008, compared with a net loss of $7.5 million, or 38 cents per diluted share, in the 13-week period ended May 5, 2007.

Robert Alderson, Kirkland’s president and ceo, said, “The first quarter results reflect strong merchandising execution and the benefits of aggressive financial initiatives that have reduced our operating costs, improved cash flow and strengthened our liquidity. During the quarter, we experienced improved customer conversions as shoppers have reacted very favorably to our merchandise mix. The positive comparable-store sales and trimming of unproductive stores led to leveraging of occupancy and distribution costs. Combined with an improvement in merchandise margin and a year-over-year reduction in operating costs of almost $5 million, we were able to post a significant improvement in our pre-tax results.

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