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Monday News & Notes

Mon, Nov 14, 2:31 PM ET, by RetailSails.com


Expect quite a busy week on the retail calendar: The Dept. of Commerce will report October retail sales tomorrow morning and Q3 E-Commerce sales on Thursday, and nearly 40 American retailers are due to report quarterly earnings including Walmart, Target, Home Depot, The Gap and Abercrombie & Fitch to name a few.

Stuck in the Middle: JC Penney kicked things off this morning by reporting its 1st quarterly loss since Q2 ’09. Total sales fell 4.8% to $3.99 billion, online sales declined 5.4% to $341 million and same-store sales dropped 1.6% compared to the company’s estimate of a rise of 2-3%. The loss was largely due to restructuring charges amid early retirement packages, but adjusted operating income still fell 36% and adjusted EPS declined 47% compared to last year.

Executive Chairman Myron E. (Mike) Ullman, III, said, “While our more affluent customers continued to respond well to jcpenney's attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter,”

JCP continues to lose market share in the department store space to price-point leader Kohl’s and the more upscale and innovative Macy’s. This is particularly clear when looking at online sales: jcp.com sales increased just 1.2% to $1.043 billion through the first 3 quarters of FY 2011 and are on pace to be roughly flat for the 5th consecutive year.

Contrast that with Kohl's – e-commerce sales posted a 3-yr CAGR of 47.2% between 2007 and 2010, growing from $225 million to $717 million and are up 41.2% through the first 2 quarters of this year. Macy's saw online sales grow 25.7% annually over the last 3 years to over $1.6 billion and have increased 39.4% through 9 months of FY 2011.

Merchandise margins declined for the 5th straight quarter on weak demand and markdowns, and the fourth quarter outlook doesn’t look much better: total sales are expected to decline 2.5% to 3.0% on flat comps, and the company forecast adjusted EPS in the range of $1.00 to $1.15 vs $1.13 last year and analyst estimates of $1.14.

There are a few positive trends for Penney heading into the Holidays: the performance of its store-in-stores Sephora (now in 308 locations), MNG by Mango (500 locations) and Call it Spring by Aldo (505 locations), and the Wrapt co-branding taking place with Dylan's Candy Bar, Glamour & Maxim magazines and the MoMA Design Store, as well as must-have the style watch with People Magazine. We expect continued expansion of these concepts and new partner additions into next year.

And of course, former Apple retail chief Ron Johnson officially began his tenure earlier this month and has already started forming his dream team, recruiting former colleagues to ”re-imagine” the department store.

In meetings with staff, he told them, “I’m here to transform. I shared with them that as America’s first store, it is time to assert leadership, reclaim our birthright and become America’s favorite store,” Johnson said.



Monday’s Top Retail & Consumer Reads:

  • Apple on the hunt for next retail genius after departure of Ron Johnson (Bloomberg)
  • Fashion retailing catalogs turn a page as print gives way to digital (LA Times)
  • Retail Real Estate Continues Steady Recovery, but Some Pockets of Pain Persist (CoStar Group)
  • Mobile Sales Jack Up Margins For Apparel Merchants (Forbes)
  • The Victoria's Secret Fashion Show, Coming to a Store Near You (CNBC)
  • Online holiday spending to jump 15% to $60B as consumers are drawn by deals & promotions, free shipping and mobile (vator news)
  • Strong Gains in Specialty Sector and Online Shopping for Home Improvement Industry (NPD Group)
  • Walmart’s e-commerce focus means collision course with Amazon in what could be the retail battle of the decade (AdAge)
  • Consumers increasingly using smartphones while shopping in brick-and-mortar retail stores (MediaPost)
  • Gift buyers like local mom-and-pop shops’ unique choices (USA Today)
  • As retail spending shifts online, malls are looking more and more like Main Street (LA Times)
  • Radio Shack’s Holiday Marketing Stocking is Chock Full of Digital (ClickZ)
  • Online retail spending in China expected to surpass the U.S. by 2015 (Boston Consulting Group)


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This Article's Word Cloud:   America   Commerce   Fashion   Group   Home   Johnson   Kohl   Macy   Online   Penney   Retail   Store   adjusted   billion   commerce   company   continued   course   declined   department   first   flat   former   have   increased   into   last   like   locations   looking   million   more   next   online   over   quarter   quarterly   retail   said   sales   spending   store   stores   that   them   this   through   well   with   year

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