Wednesday, December 11, 2013

Today's Retail News Reel

Here's what we're paying attention to in today's news:

Store Intel: Consumer Taking a Break in Holiday Shopping

We observed over the weekend a true lull in both traffic and pace of business in the stores we visited through last evening. With a shortened holiday shopping calendar we are very concerned about the next phase of promotions which will begin this coming weekend. The compressed shopping period traditionally places enormous pressure on all retailers but with the start to this years Christmas season the promotional level has become even more treacherous. Enough said . We all knew this was an inevitable outcome. Here are some thoughts :

Aeropostle (ARO): The launch of Bethany Mota seems to have created an increase in foot traffic this past weekend. We received positive feedback from the multiple locations we had visited . The unfortunate reality is most stores commented that business had been disappointing the last 5 days. In summary, a successful launch, definitely improved traffic, the customer is responding to Bethany but overall it has not seemed to improve top line sales at a significant level as of today.

Gap (GPS): a name that Retailsails has been a fan of since December 2012. Surprisingly we found Gap to be one of the more promotional stores in the mall. In fact Gap was running a more promotional event than Old Navy as of yesterday. Gap was promoting up to 50% off during the weekend and yesterday keep up the promotional pressure by running a promo for up to 40% off. Old Navy was running a promo over which is continuing thru today at up to 40% off "cozy comfort" and today ramped up the promotional cadence by going to up to 50% off for the same category. We believe this is a promotional strategy in response to concern for top line sales. In our opinion they are attempting to promote heavy now before the rest of their competitors get more aggressive with promotions as we move through this weekend. In summary we are concerned the margins, like all other retailers are worse than expected and with the current lull in both traffic and top line sales we are concerned.

Thursday, December 5, 2013

Black Friday: The Strategy has to Change

We are in the midst of a change in mindset for the Black Friday and Holiday selling period. As we review the transcripts from many of the earnings call this week by retailers such as ARO,FRA,ANF the message is no different--promotions this season will be more aggressive than anticipated. While shopping the malls over Black Friday, we spoke with an unnamed CEO from a leading Missy Specialty Retailer, and asked how can a store be profitable during Black Friday weekend. We mentioned the obvious of extra payroll, opening on Thanksgiving day ,and the promotional cadence which now run at a minimum of 50% off must provide an enormous hurdle to make the weekend profitable. His answer "we offset all the costs by planning and purchasing for this weekend a year in advance!". In a day of fast fashion which each and every retailer claims to be their goal, this strategy runs counter to that logic. Black Friday has little if any organic growth remaining. Those in the know are projecting low single digit growth for the Holiday period. Business tends to go into a lull until next weekend when we start to have less than 10 days until Christmas. Those retailers , particularly in the teen space, who piled in product from years past best selling styles, in our opinion are in great danger of top line and margin pressure.

Today's Retail News Reel

Here's what we're paying attention to in today's news:

Wednesday, December 4, 2013

Store Intel: Recap of Black Friday and a First Look at Holiday Trend

Here are some bullet points to focus on as we begin the Holiday push:
  • If you had the chance to listen to our conference call yesterday we reiterated our belief in a strong start to Holiday at JCP. Sure enough JCP announced a double digit increase(+10%)for the month of November. While we are confident the positive comp trend will continue, we are concerned with the warnings on margins and promotions we are hearing from many retailers. This mornings announcement by EXPR is one prime example, while on the discount front ROST, was another callout that cannot be ignored
  • We are also very positive on GPS for the month of November when they announce their numbers tomorrow.
  • Knowing that the next 12 days are extremely important to assessing our Holiday winners and losers we urge you to be mndful of the enormous inventory levels that are in stores. Most if not every retailer will not be delivering any new floor sets so we will be tracking these levels very closely
  • According to our shoppers in the south it seems as though the month of November was a challenging. Florida, in particular, we heard was slow. Keep this in mind for retilers with a high penetration of stores in that area. Top of mind would be CHS.

Monday, December 2, 2013

Conference Call: December 3, 2013 at 9:15AM EST

Dear Loyal Followers of Retailsails,

As we work through this busy and unpredictable holiday period, we would like to invite you to our first of 4 conference calls tomorrow morning at 9:15 AM. We were actively shopping many of the stores in various locations this weekend and would like to share our thoughts and observations. We see the Holiday selling period divided into 4 parts with each part being a very important pieces to analyzing the 2013 Holiday season. We will discuss many of the important names in the apparel space and look forward to your participation.

Date: December 3, 2013 at 9:15AM EST
Dial-in number: 1 (513) 386-0000
Access code: 279919#