R3: Information Overload

R3: REQUIRED RETAIL READING

March 5, 2010

When same-store sales day and earnings collide, there is always the risk of information overload. Within all the data points, forecasts, and ultimately opinions, there are a handful of items that caught our eye.

TODAY’S CALL OUT

When same-store sales day and earnings collide, there is always the risk of information overload. Within all the data points, forecasts, and opinions, there are a handful of items that caught our eye: 

  • Target noted that traffic continues to increase to its stores, but that the overall result was driven by a balance of transaction growth and average transaction size. Consumables also remain a leading category, with sales increasing in the mid to high single digit range. 
  • JC Penney highlighted that all major categories showed positive same store sales for the month, with one exception. Home continues to lag and remains in negative territory. Interestingly, Kohl’s noted that home was one if its best categories. While this is not the first month we’ve seen such a divergence, there is clearly a market share shift underway. 
  • Urban Outfitters announced its latest concept, set for launch on Valentine’s Day 2011. The company will create a wedding lifestyle concept, selling bridesmaid and special occasion dresses, shoes, bags, accessories, and intimate apparel. The first prototype is slated to open by year-end. The concept rounds out management’s goal of having six concepts in its portfolio as keys to growth over the next 10 years. 
  • Ross Stores noted exceptional growth in its shoes and home categories during February, with both increasing by over 20% on a same store sales basis. Both categories have been performing well for a while now, but not to this extent. Dresses were no longer mentioned as a top performer. 
  • Nordstrom noted that traffic continues to be the driving force behind its accelerating comp trend. For the sixth month in a row traffic has increased while average ticket remains negative. 
  • Genesco noted that it is seeing early signs of a shift to “brown shoes” for its customers at the same time their athletic business is underperforming. We suspect this has something to do with the recent pick up in athletic elsewhere in the mall. With Journey’s narrow athletic assortment, they are clearly having a tougher time competing. 
  • Aeropostale noted solid initial selling of its Spring merchandise. However, a mix shift towards lower priced, lighter weight Spring apparel put pressure on average unit retails (down low single digits). Units per transaction increased by mid single digits and overall transactions increased by low single digits. 
  • Abercrombie noted that its strongest week of February occurred while all brands were executing their Winter clearance and sale events. This took place over week one.

Eric Levine

MORNING NEWS

Amazon launches an invitation-only WebStore - Amazon.com Inc.’s Amazon Services division has launched the new Amazon WebStore that enables online sellers to build and operate an e-commerce business and integrates with other Amazon services including Selling on Amazon and Fulfillment by Amazon. Amazon is offering a limited number of invitations to the new program, which is in a beta version, each day. Sellers can request an invitation at http://webstore.amazon.com. The new product is Amazon’s revamp of its current WebStore by Amazon that enables businesses to create their own privately branded e-commerce sites using Amazon technology. With WebStore by Amazon, businesses can choose from a variety of web site layout options and customize their sites with their own photos and branding. Retailers using the existing WebStore by Amazon service pay a commission of 7% for each product purchased through their site and a $59.95 monthly fee, which includes the cost of credit card processing and fraud detection services. Amazon did not disclose the fees for the new Amazon WebStore, but says the pricing will vary with the size of a business. <internetretailer.com>

Coach to Expand Fragrance Reach - Coach is expanding its fragrance distribution. The accessories giant, which launched its first eponymous fragrance in March 2007 in its own doors only, is rolling out that scent to about 1,400 department and specialty store doors in North America, including selected Bloomingdale’s, Nordstrom, Macy’s, Dillard’s, Lord & Taylor, Von Maur, Bon-Ton, Belk and Sephora units in the U.S. The effort begins this month. The launch will be supported by an integrated marketing and communications campaign, including widespread national print and web efforts, noted Veronique Gabai-Pinsky, global brand president, Aramis & Designer Fragrances, BeautyBank and IdeaBank at the Estée Lauder Cos, Coach’s fragrance licensee. “We’ve handled the brand very carefully and steadily since its launch, allowing it to incubate at its own pace,” noted Gabai-Pinsky. “We’ve always been in this business for the long haul, and it’s time to expand its reach.” This fall, the brand will enter global markets, beginning with Asia, and will also enter travel retail doors. <wwd.com>

Cabela's Appoints Supply Chain Officer - Cabela's Inc. hired Doug Means as its executive vice president and chief supply chain officer. Previously, Means served as Executive Vice President of Production for Better Sportswear at Jones Apparel Group, which he joined in 1992. During his 18 years at Jones Apparel, Means held a variety of positions within supply chain operations focused on day-to-day management as well as process, speed and cost improvement. His responsibilities included managing the industrial engineering, distribution, logistics, social compliance, customs, production, sourcing and product development areas. Prior to joining Jones Apparel, Means was a consultant for Kurt Salmon Associates in Atlanta, Ga., where he assisted clients in improving operations, developing strategic distribution and logistics plans, and building logistics optimization models.  <sportsonesource.com>

Winter Weather Cut into February Apparel Sales - After January's increase of 0.6%, U.S. apparel sales fell 1.8% in February 2010 on a year-over-year basis as severe winter weather depressed sales in many areas of the country, according to MasterCard Advisors' SpendingPulse. While the decline was driven by women's apparel, which was down 1.6% against last year, both men's apparel and footwear were up 5.7% and 2.2% respectively, over February 2009. While severe snowstorms hurt apparel sales in the Mid-Atlantic, Northeast and North Central regions, most U.S. retail sectors showed year-over-year growth in February, following a largely positive January, according to Michael McNamara, VP, research and analysis for SpendingPulse. He said pricing continues to remain strong. "Retailers seem not to have needed extreme discounting to drive traffic to their stores," McNamara said. "This may have been due to a much tighter inventory situation than what we saw last year." Particularly strong results were posted in eCommerce, with 16.7% year-over-year growth. McNamara noted that while the channel may have benefited from the severe weather, it was the seventh straight month of double-digit growth. "This sales channel continues to outperform traditional brick-and-mortar stores as consumers shift more of their purchasing online." According to the SpendingPulse Price Index, which tracks average ticket size and can be impacted by discounting or change in product mix, the average price of an online transaction dropped 3.7% compared to last year. McNamara explained that this was due to consumers' increasing willingness to make even small purchases online. Continuing on a positive note, Luxury ex-jewelry sales were up 15.2% over February of 2009, following a gain in December of 5.5% and again in January of 8.1%. <sportsonesource.com>

Video messages in e-mails are set for a boost in 2010, study says - Consumers this year will see a jump in e-mail marketing messages that contain videos showing content such as customer testimonials and product demonstrations, e-marketing firm Implix says in a new report. At least 80% of the approximately 200 small- and medium-sized e-mail marketers surveyed by Implix between Jan. 27 and Feb. 5 said they plan to use video e-mails this year, up from about 16% that said they used videos in 2009. Implix operates the GetResponse platform for e-mail marketing campaigns. 46% of survey respondents said videos within e-mail marketing messages significantly increase conversion rates, while another 20% said videos moderately increase conversion rates. 5% doubted videos influence conversation rates, while 29% said they were unsure. Videos that offer training courses or product demonstrations were considered the most effective types of videos by 51% of respondents. Product promotions, customer testimonials and brand image messages were considered less effective. <internetretailer.com>