Blog: Price worries not yet hurting sales
Leonie Barrie | 9 May 2011
US retailers posted their April sales results last week which, as expected, were lifted by this year's late Easter which shifted holiday selling into the month.
Average retail sales at stores open at least a year rose 8.7% in April – beating the 2.5% same-store sales gain last month and the 1.2% gain in April 2010. And even the combined results for March and April held steady as concerns over rising prices appeared to be cushioned by strong job gains in February and March. But worries continue to persist over the impact of higher fuel prices on consumers' spending power.
Some encouraging news on the pricing front came from VF Corp, the world's largest apparel maker and the company behind brands like Nautica, Vans and The North Face, which said price increases in its domestic jeanswear business have so far had less impact than expected. Like most clothing firms it had been unsure how consumers would react as rising input costs feed through to the shop floor. In its first quarter, VF Corp's profit rose 23% to $200.7m, with revenues climbing 12% to $1.96bn.
But while specialty retailer Gap Inc posted better same-store sales in April, it also cut its first-quarter earnings outlook – and dismissed Patrick Robinson, the design director of its namesake brand. The company is taking major steps to try to shake up its business after a five-year run of declining same-store sales, including a raft of changes to its North American management team and setting up a Global Creative Center in New York. But it has repeatedly blamed misses on the design front for its poor performance.
Elsewhere, evidence of the steps being taken by textile and apparel companies – especially those from emerging nations – to seek out new investment opportunities in poor Asian and African economies are highlighted by a United Nations report. The relocation comes as firms are gradually shifting operations away from costlier settings such as China, which is being weighed down by the loss of tax rebates and wage increases.
But technology also has a role to play in offsetting some of the industry’s supply challenges, according to experts consulted by just-style for this month’s management briefing. The reports look at where apparel firms should be focusing their software investments now if they want to remain competitive into the future, as well as technologies they would be wise to watch.
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