Blog: April showers fail to dampen US sales
Leonie Barrie | 10 May 2010
Despite same-store sales at many US retailers taking a tumble in April, there were enough gains to convince industry commentators that the recovery in shoppers' spending continues. The early Easter shifted pre-holiday selling into March and came at the expense of April sales. Many firms also blamed unseasonably cool and wet weather for hurting their performance.
One way to offset the shifting holiday and provide a truer comparison of consumer spending is to combine results for March and April - which yielded a 1% year-on-year growth in specialty apparel sales.
Retailers have been keeping a tight control over inventories and costs in an attempt to align their products with demand and avoid discounting in order to drive shoppers into their stores. Crucially, this policy seems to be working, with the average ticket price for apparel up by a healthy 3.5%.
Growth is also part of the plan at sportswear giant Nike, which has revealed it is targeting revenues of US$27bn by the end of fiscal 2015, led by expansion in emerging markets and hundreds of new Nike stores. The targets equate to high single-digit revenue growth per year, with much centred on the Nike brand - including 250-300 new Nike-branded stores around the world.
Look behind the plans, though, and they seem to be little more than a development of past strategies. Its retail target, for example, is a surprisingly modest goal - with Nike's focus more on continuing to support retail partners.
Jones Apparel Group, meanwhile, is building its portfolio of "strong brands" with the acquisition of women's footwear maker Stuart Weitzman Holdings. The US$180m deal will see Jones take an initial 55% stake in the business, with plans to expand Stuart Weitzman's reach in the upscale footwear market.
There has also been good news for Sri Lanka's leading apparel exporter, Brandix, which has finally opened its long-awaited apparel park in India. The clothing maker says the new facility will help consolidate South Asia's strength as a major sourcing hub.
The Brandix India Apparel City (BIAC) covers a 1000-acre site near the port city of Vishakhapatnam in Andhra Pradesh, and will eventually house 20 garment factories, three fabric mills, eight accessories manufacturers and a finishing plant.
The Indian government's recent decision to halt cotton exports has led to claims of shortages from textile-producing countries like Bangladesh and Pakistan, and fears that upcoming manufacturing deadlines will be missed. A rise in world cotton prices and a scramble to find new sources of the fibre are two possible scenarios being played out if the Indian ban drags into next season.
But are these trends a symptom of India's stance - or a smokescreen that masks a more widespread rise in input costs as the economic recovery gains momentum? Cotton is one of a range of fluctuating commodity prices the industry is watching closely right now, and rising demand for textiles and garments could intensify pressure on input costs.
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