Blog: Leonie BarrieMore changes in US retail landscape

Leonie Barrie | 18 August 2008

More changes will be seen soon in the US retail market after teen apparel retailer Tween Brands said it is to convert 560 of its Limited Too stores to its more value-oriented Justice brand. Both sell fashion basics and lifestyle items to 7-14 year-old girls, but after swinging to a second quarter loss of $7.6m, from a profit of $2.1m last time, the retailer believes its focus on one store brand will appeal to customers who are trading down to lower-priced goods.

The retailer says the change to the Justice format – which is priced around 20-25% lower than Limited Too – is supported by strong sales comps at Justice and weaker comps at Limited Too. But analysts ask whether the company is being a bit impulsive in its actions, they are concerned over the disappearance of the Limited Too nameplate altogether, and caution that bad economic times won’t last forever.

Also about to disappear is PreVu Inc, the company formed last month after Wilsons The Leather Experts sold its outlet store and e-commerce assets to AM Retail Group, a wholly owned subsidiary of G-III Apparel Group for US$23.3m. The retailer has begun an immediate liquidation of its stores after running short of finances.

Footwear retailer Skechers USA has made a second attempt to buy wheeled footwear specialist Heelys, with its bid of US$142.8m or $5.25 a share tabled last week beating the $4.75-5.10 per share which was offered – and rejected – at the end of May

Just two weeks ago Heelys, whose shoes are often dismissed as a passing fad, swung to a second quarter loss of $0.4m, from a profit of $12.8m in the same period a year earlier, as sales tumbled 75% to $18.2m. But a deal could help Heelys grow internationally as well as boosting Skechers’ children’s business.

Last week US retailer Gap Inc also confirmed to just-style it will split-up its London-based design team, shifting the workload to New York. Gap, which set up the European design unit less than three years ago, wants to focus its efforts on more American-styled clothing and will now dedicate a small team of New York designers to the European range, guided by new head of design Patrick Robinson.

And as this summer's Beijing Olympics gets underway, we have taken a look at how leading brands are tussling for marketing gold. The 2008 Games has take on extra significance given the economic momentum of host nation China, but will lucrative team deals, official partnerships and timed product releases enable apparel and footwear companies to stamp a lasting impression on the Chinese market? 


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