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December 21, 2009




With average growth of 3% over the past four weeks, we’re seeing the athletic footwear space put up its first positive growth numbers in 14 weeks. Why? It keeps coming back to this ‘toning shoe’ trend (ie MBT, Reebok’s Easy Tones, Skechers’ Shape Ups, etc…). These shoes are embedded in the ‘walking’ category of the industry. ‘Walking’ is only 3% of an $18bn industry – which might not seem like much. But its size has nearly doubled over the past year due to ‘toning shoes’.  The interesting point here is that the athletic category is actually down on a year/year basis if we take ‘walking’ out of the mix. Are we alarmed by this? Not particularly. In past boot cycles – like we have today – athletic rarely has grown, and has not even held up as well as we’re seeing today. While a pair of Manolo Blahnik boots hardly competes against a Nike Dunk for share of consumer wallet, between 5-10% of the athletic business fights for dollars from the marginal fashion consumer who has been drawn to other areas  of footwear and apparel throughout 2009. 

As it relates to market share, this naturally knocks performance brands and rewards those that don’t chase fashion. In other words, it dings Nike and helps Reebok and Skechers.  Several people have asked me whether Nike will throw its hat in the ring here. Fat chance. As for retailers, while one could argue that it attracts dollars to the athletic retailers, I’d push back and call it a simple mix shift. What it does, however, is broadens the retail base that could sell the product (these brands will jam the product into a CVS if they could…).   One of the few companies that will benefit from both the boot and toning trend is PSS. The trend gods are finally throwing PSS a bone.

The charts below tell the story.

R3: PSS/Footwear Trend Update  - Walking Category Chart

R3: PSS/Footwear Trend Update  - Walking Category Pie Charts

R3: PSS/Footwear Trend Update  - 1


  • In an effort to try and make up for potentially lost sales due to the major snowstorm in the Mid-Atlantic/Northeast, many retailers have announced extend hours until Christmas. Target is now opening one hour earlier than planned and closing at midnight up until Wednesday night.
  • According to Neilsen, OldNavy.com was the most visited apparel/beauty site during the month of November. Based on the unique visitors, the site saw a 32% increase in traffic y/y and registered 7.93 million visits. Avon, The Gap, Ebay, and Victoria’s Secret round out the top five for the month.
  • While the buzz is building around the World Cup this summer in South Africa, another international sporting event is gearing up as February approaches. The Winter Olympics this year will feature a higher profile sponsorship program for Under Armour, a brand that sells outerwear but is not necessarily equated with cold weather. The company has apparel deals with the men’s and women’s U.S. freestyle skiing teams, U.S. bobsled and skeleton teams and Canadian curling teams. Expect to see a substantial amount of marketing focused on U.S Alpine skier Lindsay Vonn. Vonn is now considered one of the best U.S skier’s of all time and has won back-to-back World Cup championships.



Loehmann's Lands Credit Deal With GE Capital - Loehmann’s has secured a three-year, $35 million asset-based revolving credit facility with GE Capital, Corporate Retail Finance. The deal, expected to be unveiled today, replaces the revolver held with CIT Group Inc. and takes some pressure off Loehmann’s parent company, Istithmar. Loehmann’s would have required additional support from Istithmar if the revolver didn’t come through. Istithmar is an investment arm of the troubled Dubai World, which is saddled with debt, but last week got a $10 billion lifeline from Abu Dhabi. Along with Loehmann’s, Barneys New York is part of the Istithmar portfolio. Asked if last week’s news on Dubai World had anything to do with securing the GE credit, Jerry Politzer, chief executive officer of Loehmann’s, said, “I don’t think so. I am sure everything in some way, shape or form affects other things, but in this case, not really. We were working on this way before. During the course of discussions [with GE] it didn’t come up.”  <wwd.com>

American Apparel Sale benefits unemployed illegal immigrants - American Apparel sells clothes at up to 85% off, with proceeds going to help the 1,600 employees recently let go after federal inspections found problems with their immigration documentation. "It makes me feel less guilty for buying all this stuff," said Dolores Arellano, 19, one of hundreds of shoppers who thronged Saturday to the parking lot of American Apparel in downtown Los Angeles. The trendy, L.A.-based clothier sponsored the "Justice for Immigrants" event to benefit some 1,600 employees let go in recent months after federal inspections uncovered discrepancies in their immigration documentation. All the proceeds from the sale will go to the families of the dismissed workers and to organizations representing immigrants, said Peter Schey, an attorney for American Apparel in the immigration case. Saturday's pre-Christmas sale featured discounts of up to 85% on shirts, sweaters, and sweaters.  <latimes.com>

Solorzano to Lead Wal-Mart Latin America - Wal-Mart Stores Inc. promoted Eduardo Solorzano to executive vice president, president and chief executive officer of Wal-Mart Latin America, overseeing the retailer’s operations in nine of the region’s countries and Puerto Rico. Solorzano will also become chairman of Wal-Mart de Mexico, which he currently leads as president and ceo. He takes on his new role Jan. 18. Scot Rank, executive vice president and chief operating officer of Wal-Mart de Mexico, will fill the void left by Solorzano. <wwd.com>

Helly Hansen Appoints Baselayer Designer and Category Manager - Helly Hansen announced two new appointments to assist with the development of the brand’s baselayer category. Ida Gullhav was hired as a designer and Kristoffer Ulriksen has been promoted to category manager for baselayer and midlayer. Gullhav, 29 years old, joins the brand with an background in fashion design. Having graduated from the Oslo National Academy of Arts in 2003, she went on to launch her own underwear brand at Oslo Fashion Week the same year. In 2006 her continued success was recognised by the Norwegian magazine, Henne, as she was awarded with the prestigious title of Norway’s Best Fashion Designer. <sportsonesource.com>

Bottega Veneta Opens at CityCenter - Bottega Veneta has launched its third Las Vegas location, a 2,000-square-foot store at CityCenter, the $8.5 billion resort, entertainment and retail development that opened Thursday. The new store will carry the entire line for women’s as well as men’s accessories, fine jewelry, home, gifts and luggage. “The store at CityCenter enables Bottega Veneta to extend the reach of our unsurpassed service and unique shopping experience within an important luxury goods market,” said Bottega Veneta president and chief executive officer Marco Bizzarri.  <wwd.com>

Scoop Opens 'Swing Shop' -  Scoop has converted its clearance space at 875 Washington Street here into a “swing shop” that will change its merchandise concept six times a year like a fashion chameleon. The 770-square-foot boutique, formerly called Scoop It Up, is now known as Scoop After Dark, reflecting the array of evening dresses, sequin skirts and blouses and festive jewelry, shoes and accessories. Yet that could be a temporary moniker since by the end of January, the shop will have a different persona. It could morph into a showcase for a handful of young, emerging designers, or something else. “Open-see” days, an opportunity for designers who may never have been seen by Scoop buyers to show their lines and potentially get an order, are in the works. Or when the weather gets warmer, the shop could be called Scoop Beach, or possibly a spring version of After Dark. It’s to be determined. <wwd.com>

CIT Survival to Be Tested - CIT Group faces some challenges as it hopes it can move certain operating divisions, such as factoring, to the group’s bank in order to survive, while knowing it’ll also have to rebuild some of those operations. That’s the conclusion from CIT on Friday in a management update the firm provided to shareholders following its exit from bankruptcy proceedings on Dec. 10. CIT addressed the firm’s liquidity challenge and the recapitalization of its balance sheet during its bankruptcy. It reduced debt balances by $10.5 billion to $44.3 billion, and it now has some debt maturities that don’t come due until 2012. Bondholders now own CIT, having received equity shares in the reorganized firm. The firm’s goal is to move certain operations, such as the factoring arm, or trade finance division, into CIT’s bank. That will first require regulatory approval. And it still needs to work with the Federal Deposit Insurance Corporation to lift the cease-and-desist order on CIT’s Utah bank. That order prevents CIT’s bank from originating new loans, entering into transactions with affiliates or even accepting new brokered deposits. <wwd.com>

Third record week in a row for John Lewis - John Lewis achieved sales of over £112m in the seven days to Saturday, its third record sales week in a row. The figure is 15.5% up on the same week last year but also beat the same week in 2007 by 11.4%. Online sales growth was more muted, up 7% on the same week last year. Unsurprisingly outerwear sales were a standout performer in the icy conditions, while childrenswear and home technology were also strong. Food gifts, electronic games and board games were popular too. <retail-week.com>

With Christmas a week away, online retailers highlight expedited delivery - Though one fewer of the top 100 online retailers offered free shipping this week than last, several retailers’ home pages put an increased emphasis on free expedited shipping offers that would ensure gifts arrive by the day before Christmas, according to a survey by Internet Retailer. 72 of the top 100 online retailers offered free shipping this week, down from 73 the week before, according to the survey, which was based on reviews of offers presented on the web sites of the top 100 online retailers as listed in the Internet Retailer Top 500 Guide 2009 Edition, which ranks retailers by 2008 web sales. In the comparable week a year ago, 66 offered free shipping. In addition, 74 retailers in the top 100 also presented major promotional displays on their home pages—many highlighting last-minute gift ideas—and a number of retailers followed up with special e-mail offers to shoppers who had signed up for e-mail promotions. Among the e-mail promotions, one of the most generous came from apparel retailer Coldwater Creek, which sent an e-mail offering 30% off anything on the site. <internetretailer.com>

Novelty Fading for Pop-Up Shops - The hottest trend in retailing this year isn’t Zhu Zhu pets or over-the-knee boots — it’s pop-up stores. Global luxury brands, mass merchants and even small, independent designers have opened an avalanche of pop-up stores in the last 12 months to introduce new products or collections, generate buzz or motivate the ever-elusive shopper to buy. They also can be a way for a retailer to test a neighborhood before plunging head-on into an expensive real estate commitment. But the question is whether all these pop-ups are too much of a good thing. Observers believe the concept may be wearing thin and, in 2010, retailers might need to come up with another idea or a fresh angle for the pop-up to excite consumers. That’s key, since the main role of pop-ups is primarily to be marketing vehicles rather than drivers of significant profits and sales. <wwd.com>

Debit-card use grows, but risks still an issue - An estimated 13.5 million Americans still are paying off the Christmas presents they charged to their credit cards last year. This year, eager to control their spending and avoid steep finance charges, many consumers entered the holiday shopping season determined to use the "other" plastic in their wallets: their debit cards. I can control my money that way," said shopper Chris McIntyre. "I know what I can spend and what I can't spend." Debit-card use started to rise dramatically last year, when the depth of the recession became apparent and nervous banks began to freeze credit lines, boost interest rates and tighten lending requirements. In the fourth quarter of 2008, debit-card purchases ($206 billion) exceeded credit-card purchases ($203 billion) for the first time, according to CreditCardGuide.com, a subsidiary of Bankrate Inc. This year, 72 percent of holiday shoppers are relying on cash, checks or debit cards. Avoiding credit cards certainly can pay off: Studies suggest that consumers spend 12 percent to 18 percent less when they pay with cash or its equivalent. <dispatch.com>

U.K. Retailers fear imposition of VAT on food - Fears have been expressed that VAT may be imposed on food in next year’s Budget. Politicians are understood to be considering a levy of about 5% on food in a bid to address the country’s financial challenges, a “senior supermarket figure” told the Sunday Express. The source said VAT on food is “on the agenda” and that, although overall weekly spend would likely remain unchanged, shoppers on a limited budget might switch to cheaper products and cut back on treats. After last year’s temporary VAT reduction to 15%, the rate will return to 17.5% at the start of 2010. Retailers fear that after next year’s general election it could be raised further on non-food items. <retail-week.com>