Festive sting for retailers
2nd January 2009 12:31

There was no reprieve for retail businesses in the final week of 2008, as chains including Adams, The Officers Club, Morgan and USC all filed for administration during the festive break.

In addition, there are fears that further companies will fall victim to the financial crisis over the coming months - despite being boosted by Christmas sales and falling interest rates.

In many cases, creditors will have kept a watchful eye on Christmas revenues and January sales with a view of recovering debt while they have the chance to do so.

Should bleak predictions for around 100 total retail casualties per month be correct, then 2009 will be a venomous one for the High Street.

With the casualty list adding to Woolworths' collapse last month, it seems that fringe retailers are struggling to compete with value operators like Tesco and Primark amid sloping demand from consumers.

But the disappearance of established brands like this - and thousands of resulting job losses - is all concrete proof that the banking crisis that dominated the business pages last year has well and truly filtered down to the consumer.

On a positive note, less debt-laden retailers will be looking to snap up their own bargains in 2009, as parts of businesses, remaining stores and brands go on the block.

They know that by the end of this calendar year there might well be some light at the end of the tunnel.

On this final note, Happy New Year from all the team at just-style.

By Joe Ayling, news editor.

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The eye of the Christmas trading storm
22nd December 2008 14:53

The week ahead will find retailers at the eye of the Christmas trading storm, with seven out of the ten top grossing days of the holiday season all occurring in the eight-day period from 19-26 December. However, even the most bullish of predictions provided by the US’ National Retail Federation is forecasting a 2.2% increase in holiday sales to US$470.4bn – the slowest growth since 2002.

Other observers are even more pessimistic. ShopperTrak expects a record low 0.1% increase in sales and a frankly depressing 9.9% drop in foot traffic, while The NPD Group found that more than a quarter of consumers were planning to spend less this Christmas – prompting a prediction of flat to declining sales.

It’s a similar picture in the UK, where private equity firm Silverfleet Capital, the owner of discount department store TJ Hughes, is warning of bleak times ahead for retailers in 2009. It believes consumers will continue to trade down to value and discount retailers, and there will be lots of merger and acquisition activity in the form of distressed purchases, refinancing and equity injections.

The predictions are little consolation to UK retail chain Woolworths, which is to close all 807 of its stores by 5 January, with the loss of 27,000 jobs. The administrators say more than 300 Woolworths stores are under offer from food, clothing and value retailers, along with interest in brands such as Ladybird children's wear – but it is increasingly unlikely there will be a last-minute bid for the business as a whole.

Other firms are responding to the tough economic climate and the downturn in consumer spending by trying to reduce costs. This is seen in the form of job losses at apparel maker VF Corp’s jeanswear and services groups, while US children's wear retailer The Gymboree Corporation is to cut the salaries of its senior management by 10-15%.

International Textile Group, meanwhile, is realigning its Cone Denim and Burlington Worldwide divisions to create a single business group called ITG Apparel & Specialty Fabrics. The company says the move to combining its apparel resources into a single unit "provides a simpler, more robust platform to leverage our strengths and offer customers greater support within a more flexible, cost-competitive structure."

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Nike picks ups its pace
19th December 2008 8:50

Nike continues to outpace the economy and its sportswear rivals, posting a 9% increase in second quarter profit to US$391m, and a 6% rise in sales to $4.6bn – helped by strong performances in its international markets. Even a 1% drop in US sales as retailers cancelled orders and delayed receipts couldn’t deflect from a 6% rise in Europe and a 22% and 21% revenue jump in Asia Pacific and the Americas respectively.

Future orders scheduled for delivery from December through April 2009, an important indicator of future demand, also took the market by surprise with a 6% jump excluding currency effects. And even as the global slowdown has accelerated, “we haven’t seen a worsening situation as we look at November going into December,” confirmed CEO Mark Parker in a conference call today.

Breaking down the futures figure, orders in the US were up 6% – driven by retailers’ demand for Nike and Jordan footwear – Asia Pacific was up 11%, and the Americas 6%, but EMEA, the region that includes Europe, the Middle East and Africa, was down 13%.

This also seems to bear out figures just released by market research company The NPD Group Inc, which show the European market for athletic footwear and apparel is being hit harder by current economic challenges than in the US. The downturn is said to be most noticeable in products intended for casual use.

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Consumer spending curb continues
15th December 2008 12:49

More proof of the problems being faced by the UK retail sector came with a survey published last week which revealed British retail sales fell at their sharpest annual pace in more than three years in November. The figures published by the British Retail Consortium are seen as a grim sign of what retailers can expect next month as consumers continue to curb their spending in the run-up to Christmas.

The data showed total retail sales fell by 0.4% year-on-year in November, and were down 2.6% on a like-for-like basis. Despite extensive heavy discounting, clothing and footwear fell further below year-earlier levels.

Looking ahead, things could well get a lot worse before they begin to improve, another report says. Verdict Consulting warns high street retailers should brace themselves for one of the worst years on record in 2009, with growth not expected to return until 2014. The research suggests UK retail spending growth on the high street will shrink by over 4% next year.

The impact of the economic slowdown continues to be played out at UK high street chain Woolworths Plc, which has begun a store closing sale at its 800 branches across the country as it looks increasingly unlikely that the business will be sold as a going concern. Some shops may close before the end of December, and the administrator is to consult with Woolworths' 30,000 staff over possible redundancies.

However for Spanish retailer Inditex, owner of the Zara fashion chain, growth at new stores in emerging markets such as Asia and Eastern Europe has helped push nine-month profit up 2%. Sales in the period rose 11% to EUR7.35bn. Europe's biggest clothing seller said results for the six weeks since the beginning of its fourth quarter show a similar pattern of growth as consumers snap up its fast fashions.

Canadian T-shirt, fleece and sock maker Gildan Activewear is to phase out its sock finishing operations in the US by the middle of next year, after its fourth quarter profit nearly halved and negative market conditions look set to hit its first quarter results. The manufacturer said sales in the quarter rose 27.4% to $324.7m, but were offset by higher cotton and energy costs and an unfavourable product-mix.

Of course one way that companies can achieve a competitive edge is by having the right systems in place to juggle constant order changes and short product lifecycles across complex global supply chains. So here at just-style we’ll be kicking off the New Year with a dedicated PLM (product lifecycle management) hub to help clothing and footwear firms keep up-to-date on the latest products, developments, applications and roll-outs specifically aimed at them.

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Who's doing well - and why
10th December 2008 15:09

The US retail market, I’ve seen written somewhere, can be divided into Wal-Mart...and everyone else. Of course this is a big generalisation, but there’s more than an element of truth to the observation that the discount chain is one of the few places where US consumers are still shopping.

But what about the specialty chains? Well the good news is that there are still some who are bucking the downward sales slump, including Hot Topic, Buckle, American Apparel and Cato. And the message seems to be that if you're selling something unique or something with value for consumers – like irresistible fashions – then they will still buy.

5 stores bucking the sales slump

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