Blog: January chill ruffles retailers
Leonie Barrie | 11 February 2008
If the January sales results posted by many US retailers last week were even worse than already weak forecasts suggested, the actions taken by some others show just how serious the continuing retail and economic turmoil is becoming.
Talbots and Charming Shoppes are the latest firms joining AnnTaylor Stores and Eddie Bauer in deciding to close sizable numbers of stores as they take preventative action to rein in their operations amid an uncertain economic climate.
Talbots, which sells apparel to women aged over 35, said it would shut more stores as it swung to a fourth quarter loss in the face of worsening economic conditions. In addition to the 78 Talbots Kids and Talbots Mens concepts already slated for closure this year, another 22 underperforming stores will now be axed.
And at Charming Shoppes, 150 stores – including 100 Fashion Bug locations and four Petite Sophisticate stores – are to be shuttered as the retailer attempts to get back on track. The measures are the result of an ongoing business review, and follow the axing of 150 jobs and the relocation of its Catherines operations last autumn.
Analysts by and large believe these changes are essential – particularly in the crowded women's apparel sector – and are reshaping the sector for a stronger rebound when the market improves.
But signs of a bounce-back don’t yet appear to be on the horizon. According to the International Council of Shopping Centers, same-store sales in January rose just 0.5%, the worst January since it began compiling the data in 1969.
And most worryingly, the slowdown seems to be crossing all sectors – including teen retailers like Pacific Sunwear of California, American Eagle Outfitters and Hot Topic, mall-based apparel chain Limited Brands, discounters such as Wal-Mart Stores, and even those targeting more affluent shoppers, like Nordstrom.
And heralding the way for a gloomy outlook for the department store segment, Macy's Inc revealed a 7.1% slump in January same-store sales and a restructuring plan that will see the loss of more than 2,500 jobs.
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