Blog: Retail's winners and losers
Leonie Barrie | 12 January 2009
The market divided into winners and losers this week, as retailers on both sides of the Atlantic started filing their holiday trading results.
As expected, US retail sales took a major hit in December after heavy discounting and promotions largely failed to halt slumping sales and cut into margins instead. Indeed, a wave of profit warnings suggests there is little likelihood of any sort of rebound for the sector in the first half of 2009.
Among the losers, Gap, J Crew, Abercrombie & Fitch, Limited Brands and Target Corp all cut forecasts. But perhaps the biggest surprise came from discount giant Wal-Mart, which disappointed with a same-store sales rise of just 1.7% and lowered its fourth quarter profit forecast. Until now its results have held up as cash-strapped consumers trade down to its stores.
Macy's went a step further, cutting its fourth-quarter and full-year earnings outlook and revealing plans to close 11 underperforming stores. While women's fashion retailer New York & Company is cutting 310 jobs and plans to close up to 50 stores over the next five years. Footwear firm Wolverine is also axing 450 jobs as part of a restructuring of its global supply chain.
Results from UK clothing retailers Debenhams, Next and New Look, on the other hand, took the market by surprise by being better than expected. New Look’s like-for-likes were up 2.8%, while Debenhams and Next were both optimistic about their full-year profits. A focus on fast fashion seems to be key here, with New Look able to get new clothes into its stores in less than six weeks. And a strong performance from its non-food ranges also helped Sainsbury’s to its "best ever Christmas."
But it wasn’t all good news in the UK. Retail giant Marks & Spencer revealed plans to close 27 stores and axe over 1,200 jobs as it seeks to cut costs after UK like-for-like sales fell 7.1% over the Christmas trading period and discounts hacked into margins. Adam's Childrenswear shut 111 stores with the loss of around 850 jobs. And 225-year-old women's wear brand Viyella called in the administrators.
As we’ve said before, one way 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. just-style’s dedicated PLM (product lifecycle management) hub is launching this week to help clothing and footwear firms keep up-to-date on the latest products, developments, applications and roll-outs specifically aimed at them. Click here to be kept updated.
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