Blog: Cost cuts and discounts persist
Leonie Barrie | 1 September 2009
Second quarter earnings results continued to roll in last week, but mostly promised little cheer for the ongoing back-to-school season. Cost cutting and discounting persist as the key driver for sales, with a lot of work still required to lift the top line.
There are exceptions to the rule though. Apparel group Guess posted a 10.6% rise in second quarter profits to US$59.6m, thanks to a revenue surge from the company's expanding European operations.
The jeans-led company has responded to the recession-fuelled decline of the US retail market by targeting overseas growth – and the strategy is working, despite an imminent third quarter blip thanks to shipment shifts.
“We believe now more than ever that we can continue to gain global market share and that our brand can achieve worldwide recognition as the economy recovers,” said CEO Paul Marciano.
A focus on unique products and seasonal must-haves, along with careful control of costs and inventory, have also helped apparel retailer J Crew to better-than-expected second quarter results. Net income at the New York based firm edged up 2.8% to $18.6m, while revenues rose 6% to $357.6m.
Explaining the reason for this success, chairman and CEO Millard Drexler said: “We are and have been on a long term mission to be recognised for our quality, style, design and service. This mission puts 'taking care of our customers' front and centre in every part of our business.”
Concerns remain at American Eagle Outfitters, however, where second quarter profit more than halved to $28.6m on sliding sales at its stores. The retailer, which targets 15- to 25-year-olds, admits there is still work to do getting teens and college students to kit themselves out in its stores.
“Today's AE customer expects us to be faster to trend and offer greater variety at more compelling prices,” CEO Jim O'Donnell told analysts. “We are strengthening how we approach fashion and trends and pricing and the flow of products.”
Another teen retailer, Charlotte Russe, is to be acquired and taken private by private equity firm Advent International Corporation, for a total of $380m. Under the terms of the merger agreement, an affiliate of Advent will purchase all of the outstanding Charlotte Russe shares at a price of $17.50 per share. The company’s board has unanimously approved the deal.
And in other news, apparel maker Perry Ellis International has signed a licensing agreement to source, sell and distribute the Pierre Cardin brand for men's sportswear in the US, Puerto Rico and the US Virgin Islands.
Fresh from their disappointment at seeing the Trans-Pacific Partnership (TPP) free trade deal abandoned last month with an executive order by President Donald Trump, the US apparel and footwear sector...
With the ultimate aim of ensuring all the cotton in its products is sourced sustainably, value clothing retailer Primark is adamant that having a business model focused on offering the lowest prices o...
Last week we marked the inauguration of Donald Trump as the 45th president of the United States by taking a closer look at what's at stake for the textile and apparel trade – especially his promises t...
Continuing our look at what lies ahead for the apparel industry and its supply chain in 2017, the panel of industry experts consulted by just-style last week tackled likely shifts in the sourcing land...
- Hard hit Turkish industry is not knocked out
- "Power of the many" drives change at Otto Group
- China leads US apparel sources with falling prices
- Vietnam grows share of US apparel imports in 2016
- US apparel sector braces for potential cost hikes
- US Q4 in brief – Foot Locker, Nordstrom, Carter's
- Bangladesh crackdown has cost garment sector $100m
- Inditex and H&M boycott Dhaka Apparel Summit
- Macy's will "do the right thing", says Lundgren
- JC Penney to close 140 stores amid lower sales
- When Things Go Wrong - A Practical Guide to Managing Common Problems in Apparel Sourcing
- Outdoor performance apparel 2016: A broader perspective
- Technical textile markets: product developments and innovations, December 2016
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Global market review of lingerie – forecasts to 2022