Retail sales in July continued to be a mixture of disappointment and mediocrity.
Retailers catering to teens saw a mixed bag of results as teens decided to spend more money at Aeropostale (same store sales up 6%) and Buckle (same store sales up 2.8%), but both retailers missed analysts projections. American Eagle saw an 11% drop in same store sales, on top of the 7% drop they saw this time last year. Abercrombie & Fitch continued their terminal velocity fall with a 28% drop in same store sales. No good.
Macy’s saw a 10.7% drop in same store sales, JCPenney reported a 12.3% drop in same store sales, while Kohl’s managed to eek out a nearly flat month (0.4% increase in same store sales). I guess shoppers are really going nuts over that new line by Avirl Lavigne.
Besides the general state of the economy and unemployment through the course of the year, some analysts suggest that the, recently enacted and more recently refueled, Cash for Clunkers program is diverting money from the retail industry:
“One of the unintended negative side effects of the cash for clunkers program was that it’s going to remove money that probably would have been spent in retail stores and restaurants and is now going to go toward a car payment,” said Purdue Consumer Sciences Professor Dr. Richard Feinberg.
And not just “spare change.”
Feinberg estimates the nation’s retailers could lose up to $300 million a month as consumers spend their disposable income on loans instead of lunch. By the end of what’s expected to be another tough holiday shopping season, losses could add up to between $1.5 billion and $2.5 billion, Feinberg says.
More information on retail sales from the New York Times and Los Angeles Times.
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Thursday
January 29, 2009
As speculated last week, Starbucks has announced layoffs and another round of store closings. For the quarter ending December 28, the coffee retailer announced a 69% drop in net income and a 10% drop in same store sales.
These store closings are on top of the 600 company-owned stores the chain closed in 2008. 200 of the closings will be in the United States with 100 closing oversees.
CEO Howard Schultz also announced that he is reducing his base pay to $10,000 from $1.2 milllion.
Follow reaction to the announcement in the comments posted over at Starbucks Gossip.
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With the disappointing Holiday season behind us, the layoffs and retail store closings are continuing to mount:
Today, Home Depot has announced that they are closing their line of Expo home design centers and trimming support staff, resulting in 7,000 reduction in staff. With both home sales and the economy down, shoppers aren’t looking for high end home design solutions right now. The retailer is quick to note that the layoffs will not impact any customer service positions at the Home Depot proper chain.
It appears that their Expo stores weren’t performing well during the housing boom, so it’s no surprise that they would be doing even worse during the current economic conditions.
Another victim of the housing slump is Williams-Sonoma. On Friday, the retailer announced an 18% reduction in their workforce. In addition to stores being effected by the layoffs, the retailer will also close a call center in Pennsylvania and a distribution center in Memphis. I think the high end housewares stores have been hurt badly by both the economic downturn and mid-market retailers like JCPenney and Kohl’s.
Starbucks, who closed 600 stores in 2008, is expected to eliminate 1,000 jobs at their corporate headquarters and reducing district managers and field employees. The published report, prepared by investment firm McAdams Wright Ragen, speculates that these layoffs will happen in early February and won’t effect store-level barista positions.
And don’t forget that last week Circuit City announced that they are closing all US operations with job losses effecting up to 35,000 people.
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It is now reported the Circuit City has failed to find a buyer willing to take over their store operations and instead has reached a deal with a liquidator. The electronics retailer filed for Chapter 11 bankruptcy protection in November and closed 155 stores in Q4 of 2008. They will now close the remaining 567 stores in the United States. Adding to the growing US job loss numbers, up to 35,000 people will be affected by these store closings.
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December wasn’t kind to Macy’s as they saw a 4.0% drop in same store sales and have now announced that they are closing 11 stores. Combining November and December, same store sales dropped 7.5% over last year for the retailer.
Close to 1,000 employees are affected by these store closings – unknown how many fo them will be able to transfer to positions in other stores.
From their press release, the closing stores are:
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Ernst & Young Plaza (Citicorp Plaza), Los Angeles, CA (135,000 square feet; 136 employees; opened in 1986)
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The Citadel, Colorado Springs, CO (195,000 square feet; 105 employees; opened in 1984)
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Westminster Mall, Westminster, CO (156,000 square feet; 110 employees; opened in 1986)
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Palm Beach Mall, West Palm Beach, FL (190,000 square feet; 71 employees; opened in 1979)
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Mauna Lani Bay Hotel, Island of Hawaii, HI (3,000 square feet; 3 employees; opened in 1983)
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Lafayette Square, Indianapolis, IN (160,000 square feet; 84 employees; opened in 1974)
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Brookdale Center, Brooklyn Center, MN (195,000 square feet; 72 employees; opened in 1966)
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Crestwood Mall, St. Louis, MO (166,000 square feet; 176 employees; opened in 1969)
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Natrona Heights Plaza, Natrona Heights, PA (73,000 square feet; 124 employees; opened in 1956)
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Century III Furniture and Clearance, West Mifflin, PA (83,000 square feet; 3 employees; opened in 2000)
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Bellevue Center, Nashville, TN (211,000 square feet; 76 employees; opened in 1990).
These store closings represent a troubling sign of things to come for the retail industry. I believe Macy’s is just the first in a line of retailers to announce downsizing over the next few weeks. Who’s next?
More coverage from the Consumerist, Reuters and BloggingStocks.
Photo above from Flickr user pkeleher. Use under Creative Commons License.
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Wednesday
December 3, 2008
Talk about targetted advertising. I just saw that this American Eagle post, over at ecommr, is picking up an American Eagle banner via Google Adsense. The post is about the American Eagle e-mail that advertises the BOGO Tops event and the banner is for the same promotion. The banner looks like part of the page now!
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Wednesday
December 3, 2008
Chris Churchill, of the Times Union newspaper in Albany, NY, has a good look into the expansion plans of drug stores like Walgreens, CVS, and Rite-Aid in the New York region: Sick economy, healthy business. Despite the downturn in the economy, drug stores have not completely cut out their expansion plans and are still opening new locations at a solid rate.
And despite the recession, the proliferation continues. Other retailers, shaken by falling sales, are limiting expansions — but nearly every planning board agenda, it seems, contains a drugstore proposal.
The retail economy is ill. But drugstores seem healthy.
“We’re not immune from what’s going on in the economy, but we’re better insulated,” said Michael DeAngelis, spokesman for Rhode Island-based CVS Caremark Corp. “People are still getting their prescriptions filled. They’re still getting sick.”
I think there are a lot of people in the industry, myself included, who spend a lot of time looking at the big picture – national plans and trends of retailers – that we overlook the unique impact that every retailer has on the different locales that they serve. I like articles like this that examine the localized plans of retailers.
Also to note and put out there as a disclaimer, that Chris reached out to me for my thoughts on these retailers expansion plans. I am quoted about midway down the first page of the article. Thanks to him for allowing me to share some of my thoughts with him.
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Cyber Monday is here and.. almost gone. This is a holiday created by marketers looking to capitalize online sales that may or may not one day match the phenomenon that is Black Friday. In the meantime, it still represents a day in which there area significant chunk of e-commerce sales and deep discounts.
Regardless of the hype, Cyber Monday seemingly caused an uptick in visitors to e-commerce websites throughout the industry. Web servers across the country saw their processors stretched to the limit and on-call IT technicians had their hands full. By and large, it appears that most websites were winners – with only a few retailers seeing minor downtime or sluggishness – applause and props go to the often overlooked network engineers and sysadmins who kept their servers runner.
The Cyber Monday cross hairs were aimed directly at the web servers of two retailers: J.Crew and Bloomingdale’s. Both retailers have seen significant outages today – with each website serving “System Unavailable” messages since early this afternoon.
Earlier in the year, J.Crew redeveloped their website. The site has seen problems and glitches ever since the launch. J.Crew went as far as to blame their decline in Q3 revenue on the problems they were seeing with their relaunched website. A lot of money was spent, I’m sure, on this new implementation of the website and it’s incredible to see the downtime they are still happening. Being down for a few hours on a weekday in June is bad – being down on one of the busiest days of the holiday season is unimaginable.
I don’t know what the issue is with Bloomingdale’s, but they haven’t fared much better. As with J.Crew, they’ve been serving a system error message for the better part of the afternoon. Another missed opportunity.
Additional coverage of the site outages from Computerworld and Crain’s, New York Business. I also have an on-going collection of System Maintenance screenshots over at ecommr.
Slowness and downtime issues aside, I’m hoping the rest of the industry is seeing a positive sales day. Looking forward to seeing the sales estimates over the next few days.
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Focusing today’s Express Lane on Black Friday and Cyber Monday. Here’s some articles that I’m reading that I’d like to share:
ComScore estimates e-commerce sales only up 1% on Black Friday. Retail stores only saw a 3% gain, the smallest gain in several years, according to ShopperTrak. The modest sales growth, combined with the deep discounts cutting into profit margins, has already helped send Wall Street into another daily tail spin.
For a further look into the Black Friday numbers, the National Retail Federation released a comprehensive survey into this year’s shopping habits. Seeking Alpha does a great job of digesting and breaking these numbers down.
CNBC has a good look at how Black Friday transpired at one local mall. Good snapshot into the events of this day at one New Jersey mall.
Of course, today is Cyber Monday. Retailers are offering deep discounts and free shipping. Twitter is on fire with people discussing deals and sharing links. Looking forward to seeing the sales figures for today and I wonder what impact social media will have today.
And finally, the industry did have some very tragic events occur on Black Friday when a worker was trampled to death at a Long Island Wal-Mart and two men were killed in a shooting at a California Toys R Us. Very sad and tragic events, indeed.
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Wednesday
November 26, 2008
Couple of stories that I’m reading this morning:
CNBC’s got a great run down on Amazon’s holiday strategy. The online retailer saw a 42% sales growth in Q4 2007 and forecasts 12 – 15% growth this year. Remarkable feat considering consumer spending is forecast to be down this season. The retailer looks to siphon sales from other retailers by offering low prices and “ridiculous deals”.
Shop.org has released more data on expected consumer habits through this Holiday season and especially for this weekend. Bottom line, consumers are using the web to enhance their real world shopping experience. Be prepared.
Just on the heals of reporting very soft e-commerce sales growth in October, Comscore forecasts flat growth in e-commerce sales for this holiday season. They estimate a 4% decline in sales through the first 23 days of the Nov-Dev shopping season.
Earlier today I talked about JCPenney’s use of social media, Twitter, and viral marketing. I missed this press release from the retailer detailing some of the improvements they’ve launched on jcp.com for a better online shopping experience. More product photos, customer reviews, and more online-only promotions. Kohl’s holiday strategy also emphasized a better online experience.
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