Same store sales preview: investors brace for a chilly spending environment

Despite temperatures soaring well above 85 degrees across the country, however there's a chill and it's coming from the American consumer. In light of same store sales numbers that will be reported later this morning, analysts are estimating ( by way of Reuters) May comps will be up 2.6 percent a  mere whimper compared to March and April numbers. What gives? A lot of factors. For example, March and April's push to purchase reflected a phenom. I like to call "frugal fatigue" also known (to the economist set) as pent up demand. In addition, Easter came a week earlier compared to the previous year. Also, fears of Euro debt contagion,  BP oil spill environmental disaster, stock market volatility and unemployment numbers are causing the American consumer to spend less and save more.  The result- deparment store comps are expected to be up 0.9 percent and 1.1 percent while teen retailers are expected to take a nose dive by 2.6 percent. In light of uncertaintly, there are retailers I think will weather the storm:

1) Norstrom ( JWN)

Reasons why: Multi- channel increases of 13.9%, Nordstrom Rack highly successful for them opened 6 new stores in the last quarter and  inventory mix is STELLAR (read: perfectly merchandised jeggings, denim and DvF dresses).

2) JCrew (JCG):

Reasons why: Posted strong first quarter results, with net income doubling to more than $44.7 million and comp store sales rising 15 percent. Raised guidance for fiscal year 2010 earnings from $2.35 to $2.45 a diluted share.  Hi-fi partnerships with designers such as Belstaff, Essie nail polish, Hunter wellies, Fallon jewelry and Net-a-porter will give J.Crew fashion street cred and presence in over 170 different countries without overhead cost.

3) TJMaxx (TJX):

Reasons why:  Analysts expect comp store sales to come in at 2.7% and by the looks of store traffic from my numerous visits, assortments and inventory control they are in a good position.  Also, Carol Meyrowitz announced at the annual meeting on Wednesday TJX is rolling out another off-price retail concept set to launch in 3Q 2011. One thing to be wary of is their plan to invest almost all of thier $750 million of capital budget in Marmaxx and TJX Europe. Biut with a rise in first quarter profits of 58.4% to $331 million, euro currency fears may not have much of an effect on this retail behemoth.

4) Blue Nile (NILE):

Reasons why: According to the CEO in an interview on CNBC, net sales increased 18.7% to $74.1 million operating income grew 23.3 % to $3.6 million in the 4th quater.  In addition, international sales grew 71.4% and there is iscounting on top of sinking diamond prices compared to gold:  $NILE’s prices are 20% - 60% lower than retail because they don’t have infrastructure of the store.

The Style File Daily Cheat Sheet

Jil Sander's Navy, Limelight Marketplace, Nordstrom and Target Grow, Price of Cotton Increasing, Polo and Target Report Strong Quarter

(wwd) Jil Sander Navy Spring 2011

"Prints, color and California are not words typically associated with Jil Sander, a collection anchored in strict devotion to minimalism and precision cuts. Yet those concepts unite in Jil Sander Navy, Raf Simons’ new casual collection that the Milan-based company is launching for spring 2011." see more

(wsj) Cotton Tale: Apparel Prices Set to Rise

"After a decade of deflation, the cost of producing apparel is on the rise. Prices for cotton are up about 55% from a year earlier. "We are facing a very serious problem in terms of increased cotton prices,"Abercrombie & Fitch Co. Chief Executive Michael Jeffries said Tuesday. The increases are making it harder for the high-priced teen retailer to restore margins already eroded by steep markdowns and depressed sales."

read more

(wwd) Polo, Target Beat on Gains

"Better apparel sales helped both Polo Ralph Lauren Corp. and Target Corp. come in ahead of Wall Street expectations Wednesday. Polo’s net more than doubled in its fourth quarter to $114.1 million, or $1.13 a share, from $44.5 million, or 44 cents a share, in 2009. Target grew its first quarter bottom line by 28.6 percent to $671 million, or 90 cents a diluted share, from $522 million, or 69 cents a share, a year ago." read more

(nyt)Limelight Marketplace

It was an Episcopalian place of worship, then a drug rehab center, briefly a nightclub, and now a pricey specialty  marketplace in the heart of Chelsea. There are a range of shops, everything from a bakery to an antique store, including a shop for dog bone shaped cookies for your 6 inch teacup poodle. The maze of shops will keep you looking for hours, but we do have to agree, the black and white theme is vertigo inducing!       read more

Gap and Nordstrom talk Growth

"Coming out of the recession, Gap has no debt, $2.3 billion in cash, a clearer grasp of what apparel customers want in the lean economy, remodeled and relocated U.S. and Canadian stores, and online sales in Canada poised to launch, Murphy said."

“As consumers sit on the sidelines, we have to give them a reason to part with their dollars,” said Nordstrom. “This forced us to evolve our product offering. We continue to see improvement with bringing in fresh new product every day."  Reflecting on recent improvements in the business — such as the 43.2 percent increase in first-quarter profit reported last week and the 10 percent improvement in 2009 earnings — Nordstrom said, “It’s a lot better to be here today than it was a year ago.”” read more

The Style File Daily Cheat Sheet

(NBC) Express Goes Public with Lunchtime Fashion Show in Wall Street

"Express went public today, and to celebrate 30 years in the biz, models rang the bell at the NYSE and this afternoon, they'll host a fashion show on Wall Street itself. Headliners Alek Wek, Isabel Goulart and Flavia de Oliveira will lead the catwalk down the main thoroughfare of the financial district at 12:30pm, before taking to the streets with "mystery" gift cards loaded with up to $75 -- according to Modelinia, there'll be thousands up for grabs."

(WWD) Zac Posen May Show in Paris

"The designer told a visitor to his showroom Tuesday that he will show his spring 2011 ready-to-wear collection in Paris where, he said, “they understand my clothes.” Posen cited as an additional reason for the move his inability to secure his preferred time slot during New York Fashion Week."

(WWD) Nordstrom Earnings Up in First Quarter

"Reporting after the markets closed Thursday, the high-end retailer said first-quarter earnings for the period ended May 1 jumped to $116 million, from $81 million.Sales rose 16.6 percent to $1.99 billion from $1.71 billion, while same-store sales rose 13.7 percent."

(WSJ) At Gap, Two Brands on Mend, One to Go

"While Gap Inc.'s Old Navy and Banana Republic divisions are showing signs of life, the Gap brand itself continues to struggle with styles that consumers find easy to ignore.This week, Gap is expected to post its first quarterly same-store sales rose in more than five years—the first of Mr. Robinson's tenure. But a rise, for the quarter ended May 1, would come with the caveat that last year's quarter was especially bad. The question is whether Mr. Robinson can build on the gains and convince people inside and outside the company that a turnaround is under way."

(WWD) Urban Outfitters Profits Leap

"Urban Outfitters, which operates the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands, on Thursday reported record first-quarter earnings of $53 million. Net income was 31 cents a diluted share, a 72 percent increase over last year’s 18 cents, when earnings totaled $31 million. Glen Senk, chief executive officer of Urban Outfitters Inc., said  “We achieved record sales and earnings, but to do so within the greater context of our longer-term goals of investing in store productivity, e-commerce penetration, international expansion and new brands, is even more satisfying.""

The Style File Daily Cheat Sheet

After slight break from blogging, I'm back! Here is the newest addition to the Style File Group, The Daily Cheat Sheet-- where I will be updating you with the latest news in the Fashion Business for your reading enjoyment.

(WSJ) Talbots Politely Shows Granny the Door

"After spending last year atop the retail death-watch list, Talbots Inc. is now a favorite on Wall Street, thanks to cost cuts and a complex financial arrangement for unloading its enormous debt. Chief Executive Trudy Sullivan is attempting to refocus on women 35 and older. Talbots, known for classic apparel targeted at the middle- and upper-class suburban set, still has work to do. Its image had gotten so old that in a customer survey a couple of years ago, women 65 years of age and older said the brand was for "someone older," says Ms. Sullivan. Making a brand younger is notoriously tricky: Talbots must make its clothes more youthful without alienating its core customers during the transition, and it has to persuade a new swath of women in their 30s and 40s to consider shopping there.Talbots has stepped up its fashion quotient, with offerings that include a sequin-trimmed sweater and leopard-print-lined black booties. So far, it has had some hits and misses. Last spring, "ethnic" prints in bright colors including orange and lime green misfired."

(WWD) Macy’s Swings to 1st-Qtr. Profit

"Macy's inc announced Wednesday that it's profits rose to it's highest point since the recession. Sales totaled $5.57 billion an increase of 7.2% over last years %5.2 billion while comp store sales rose 5.5%. Even Macy's online sales were up 34% since last quarter."

(NYT) Discount Store Is New York Beachhead for Nordstrom

"After more than a century, Nordstrom, the upscale department store chain from Seattle, will make its Manhattan debut on Tuesday. Expect 25,000 pairs of discounted shoes, and an automated checkout line more at home in a supermarket than a purveyor of luxury goods. Like any other Nordstrom Rack, though, only about 25 percent of the merchandise comes from full-line Nordstrom stores. And with the luxury retail business improving, Nordstrom stores have been turning over inventory more quickly than ever."

(WWD) Urban Outfitters, Kohl’s on the Rise

"The retail rebound appeared to be alive and well Thursday morning as Urban Outfitters Inc. and Kohl’s Corp. both beat first-quarter expectations, posting double-digit gains on both the top and the bottom lines. Urban Outfitter’s earnings jumped 72 percent to $53 million and Kohl’s net income rose 45.3 percent to $199 million.Kohl’s also boosted its full-year profit projections. The chain now expects to earn $3.57 to $3.75 a share, up from the $3.40 to $3.63 previously predicted."

(WWD) Warnaco Posts Net Gain, Ups Guidance

"The Warnaco Group Inc. on Monday posted a 27.7 percent increase in first-quarter profits and raised fiscal 2010 guidance. Joe Gromek, president and chief executive officer, said, “Looking ahead, we are optimistic about the prospects for our company….In addition to powerful brands, Warnaco possesses a highly efficient business model, an established global infrastructure and an experienced leadership team.” He said in 2010, the company will continue to focus on global expansion and “opportunities to expand our direct operation through strategic acquisitions of key distribution and franchise partners.”"

(The Frisky)Chanel Cruises Through Saint-Tropez With Playful Fashion Show

"With a sidewalk outside a patisserie as a makeshift runway, there was nothing theatrically lacking about Chanel‘s cruise 2011 fashion show presented yesterday in the jet-setter’s paradise of Saint-Tropez, France. Karl Lagerfeld substituted his usual black suit for a shiny purple ensemble (but kept the fingerless gloves, bien sûr), models approached the runway by yacht, and teen fashion sensation Georgia Jagger supposedly snuck out of the house to walk in the show, finishing it off with a motorcycle ride down the boardwalk. "

Despite Kalinsky, Norstrom STILL falters.

Man, you know the economy is REAL bad when someone like Jeffrey Kalinsky can't save a retailer like Nordstrom! The other day the retailer reported a fall in same store sales by 9.1% far worse than what analysts expected. Total sales dipped to $750 million from $803 million in 2007.  Jeffrey, who started the extremely well edited and influential Jeffrey boutiques in New York and Atlanta sold a majority interest of his stores to Norstrom and took on a full time gig. Problem is even his keen eye for knowing what's hot way before it sizzles (I bought my Balenciaga motorcycle bag because I saw it first at Jeffrey six years ago), isn't really working for Nordstrom right now.  The tourists aren't buying into it either!