(wsj)Penney Weaves New Fast-Fashion Line
In an attempt to win over fashionable young women, J.C. Penney Co. is going to try running with a faster crowd. This week, the Plano, Texas-based retailer unveiled an unconventional collaboration with Mango MNG Holding SL, the closely-held Barcelona chain known for whipping up cutting edge looks that go from design studio to store shelves in as little as four weeks. The move is a big bet for the 108-year-old Penney, which has been trying to grab market share from more stylish competitors to spur sales as overall demand for women's apparel is sluggish. The two retailers are a fashion mismatch. Penney's average customer is a 35- to 53-year-old bargain hunter who shops four times a year. Mango, founded in 1984, caters to style-obsessed twenty-somethings who shop every month and pay full price. By delivering new merchandise to stores at least once a week, the chain has trained customers to buy early and often. But for Penney, that's the draw. "If you only deliver four times a year, there's only a reason to come to the store four times a year," Chief Executive Myron E. Ullman III said at a recent conference. Mango is one of the hottest retailers in Europe, where it operates hundreds of stores and its ads feature celebrities including Penelope Cruz and Scarlett Johansson. Unlike other fast-fashion chains such as Inditex SA's Zara and Hennes & Mauritz AB's H&M, the chain is little-known in the U.S., where it only has 12 retail outposts. Revenue last year was €1.15 billion ($1.82 billion). The exclusive-to-Penney brand, called MNG by Mango, will launch at 77 stores on Aug. 18 and roll out to 600 of Penney's 1,100 stores by next fall. Penney is investing in fixtures such as hardwood floors, black chandeliers and modern tables that showcase looks like skinny jeans and lace-embellished blouses. In-store boutiques, averaging 1,000 square feet, will be refreshed every other week—twice as fast as Penney's other brands. Prices will be in the mid-to-upper tier of Penney's offerings, with skirts ranging from $50 to $100, and jackets from $60 to $160. The Mango-Penney collaboration comes as U.S. apparel retailers have been fighting for market share. The women's apparel market has been essentially flat for the past three years, according to market researcher NPD Group, but "there has been huge growth in dollar volume in fast fashion," says Liz Sweney, senior general merchandise manager for Penney's women's businesses. read more
(wwd)American Apparel to Miss Filing Deadline
As other retailers prepare to start reporting their second-quarter results this week, American Apparel Inc. has informed the Securities and Exchange Commission that its numbers will neither be punctual nor profitable. The increasingly embattled purveyor of chic basics said in an SEC filing late Tuesday that its new independent auditor, Marcum, needs more time to work through the figures for the second quarter, ended June 30, as well as those for the first quarter, which have yet to be filed. The company offered a summary of what it expects its second-quarter figures to look like, and it contained little in the way of encouraging news. The firm anticipates a second-quarter loss against a net profit from the year-ago quarter. Net sales are expected to drop as declines in its retail business were only partially offset by increases in its sales with wholesale customers. Furthermore, the shift in its business towards wholesale, coupled with higher production costs, is expected to produce lower gross margins for the second quarter against its 2009 counterpart. In effect, American Apparel now has two sets of auditors trying to make sense of its books. Deloitte & Touche LLP resigned the account last month after identifying “material weaknesses in internal control” with respect to the closing and reporting of its figures. Additionally, American Apparel told the SEC, Deloitte became aware of certain information “that if further investigated may materially impact the reliability of either its previously issued audit report” or the financial statements made regarding fiscal 2009. With Deloitte’s resignation, American Apparel brought back its previous auditor, Marcum, with which it had worked during fiscal 2008 and which had issued an adverse opinion about the company’s financial reporting in early 2009. While Deloitte looks into the veracity of previous reports, Marcum will have to hustle to compile information for both the first and second quarters of the current fiscal year. American Apparel told the SEC on May 11 that its first-quarter report would be delayed — it still hasn’t been filed — and then on Tuesday made the same statement about its second-quarter data. The audit problem is but the latest in a series of crises for the once high-flying chain. London-based Lion Capital helped it pay off a $51 million loan from SOF Investment in March, but just two months later American Apparel fell out of compliance with a covenant of the Lion loan covering its debt-to-EBITDA ratio. Last September, it laid off 1,500 immigrant workers who couldn’t show that they were in the U.S. legally, touching off a labor shortage that further hurt results. It received a vote of confidence in June when Ronald Burkle of The Yucaipa Cos. LLC reported that he held over 4.3 million shares of AA, giving him a 6 percent stake in the firm. read more
(business insider)Goldman Sachs Says Jeggings Are Going To Be This Year's Big Fashion Trend
The latest fashion trends, according to Goldman Sachs: military, jeggings, and the same prints and plaids you wore last year. Apparently analysts at Goldman recently published a report on Back To School fashion trends, which invites a fun thought: ideally Blankfein in jeggings (a new abbreviation for jean leggings), but also the concept of Goldman businessmen analyzing the latest fashion trends and coming up with jeggings and military. The bank's first three predictions don't exactly seem inspired, they're on point with Fox Business, New York fashion week, and Teen Vogue, but until we get a hold of the full report from Goldman to print (we asked for a copy), we'll let your imagination run wild. For now, here's a brief round-up of what Goldman thinks will be trendy this fall, from Benzinga: Back-to-School fashion trends: military styles, jeggings, and carries over prints and plaids from last year. And here's what it means for the market: Driven by persistent hot temperatures, sales of classic B2S long denim have been weak. If the weather doesn’t start to cool down, analysts expect that inventory could begin to build and pressure margins. We were very encouraged by traffic trends at ANF and continue to believe stabilizing the domestic business will unlock greater value from international growth. We also remain positive on LULU which has substantial comp-store and footage growth potential and should be much less vulnerable to weather and competitive pressures this fall. read more
(wwd)Macy’s Ups Outlook, Second Quarter Profits Surge
Localized merchandising, exclusive brands and private label development helped Macy’s Inc. post a better-than-expected second-quarter profit Wednesday. The department store also raised its full-year outlook. For the period ended July 31, the Cincinnati-based retailer said its net income grew to $147 million, or 35 cents a diluted share, versus income of $7 million, or 2 cents a share, in the year-ago quarter. Revenue for the period rose 7.2 percent to $5.5 million, from $5.2 million. Wall Street was looking for EPS of 29 cents on sales of $5.50 billion. "We believe our business is beginning to hit its stride after implementing significant structural and organizational changes over the past two years,” said chairman, president and chief executive officer Terry Lundgren. “While the economic environment remains uncertain, Macy's and Bloomingdale's have a terrific opportunity to continue to take market share and grow our business profitably.” Macy’s increased its annual earnings guidance to between $1.85 and $1.90 a diluted share, up from prior guidance of $1.75 to $1.80 a share. Analysts expect earnings of $1.87 a share. read more