January’s post-holiday bump

In a bit of welcome news for retailers, January same-store sales rose 3.3% compared with the 2.5% that analysts had forecast. Gift-card spending and post-holiday sales helped fuel the rise, particularly in teen apparel.

Many industry experts and analysts question whether retailers will be able to sustain the momentum going forward, especially if unemployment remains high. I say, give retailers one day to celebrate some good news before worrying about what February and March will bring.

Meanwhile, here’s my take on some of today’s results:

• Among the biggest surprises -- and winners -- in January was Abercrombie & Fitch, which posted an 8% rise in same-store sales. Forecasts had called for a decline of 8.6%. The news prompted a friend to call me: “Abercrombie is back,” he said. I’m not convinced -- at least not yet. One month does not make a turnaround. I think at least part of A&F’s January sales gain had to do with holiday gift-card redemptions. It will be interesting to see how the chain fares this spring. However, A&F’s results do make one thing clear: Teens are among the most fickle consumers out there.
  

• Another big surprise was The Buckle, which posted a 1.2% decline. Analysts were looking for a 4.1% gain. The Buckle has been an exceptionally strong performer throughout the downturn. Unlike a lot of other retailers, it was going up against a strong performance from last January.

• Hot Topic is no longer benefiting from the “Twilight” phenomena. The teen retailer, which has been struggling for the past few months, posted a 13.1% drop in January.

• Luxury is rebounding. Both Nordstrom and Saks had strong gains that were markedly better than Wall Street expectations,

• Kohl’s continue to shine. It had a 6.5% gain in January sales compared with the 2.8% uptick Wall Street predicted.

• Don’t count department stores out -- at least not yet. Macy’s posted a 3.4% sales increase in January. The retailer’s January sales rose to $1.25 billion.

• Value remains key. TJX had a double-digit gain in same-store sales. Ross Stores posted an 8% increase.

Wanted: Borders CEO -- Again

The big news this week is the sudden departure of Ron Marshall from Borders, which leaves the struggling bookseller forced to find another chief executive for the fourth time in five years.

When Marshall arrived at Borders last January, he was billed as a “turnaround expert.” But so far as I can tell, he did little to turn the chain around. Sure, he is credited with spearheading operational improvements (read: cost cuts) to drive increased cash flow and reduce debt. But cost-cutting, as many retailers are sure to learn in the coming months, can only get a chain so far. Marshall seemed to have a blind eye when it came to improving or defining the Borders brand and in-store experience. Improving a company’s cash flow without giving equal attention to improving its traffic flow is folly in the long run. Look at the numbers: Borders has reported three consecutive quarterly losses, and crucial holiday same-store sales dropped 14.6%.

On a macro-level, Borders’ struggle is indicative of a trend that has befallen Circuit City and other big-box specialty retailers: In today’s super-competitive environment where shoppers have so many shopping choices, there may only be room for one national brick-and-mortar big-box player in any particular category. Barnes & Noble has outplayed Borders in nearly every way. Sure, it’s had some rough sailing during the recession. But it is a rock of stability compared with Borders.

As for Ron Marshall, amazingly, he has already landed a new gig: He will report to duty as CEO of the Great Atlantic & Pacific Tea Co. (A&P) on Feb. 8. In some ways, he is jumping from the frying pan into the fire. The supermarket operator has been losing money since June 2008.

In the eye of retail: Holiday takeaways

One of my favorite sources is Retail Eye Partners, an independent equity research and consulting firm, which, among other things, offers up a real-time pulse on the consumer and the performance of specific retailers and brands. The company also has a consumer panel of 400 women that it surveys every month.

Here are the big takeaways from Retail Eye’s latest consumer panel (the comments in blue are from the firm’s principals, Lisa Walters and Sapna Shah):

• Shoppers spent more than they planned to on holiday gifts, so spending rebounded above 2008 levels, likely to have a very positive impact on December sales for most retailers. (We suspect that great deals in stores and online helped to boost spending and consumers ended up doing a little self purchasing as well, given they were able to stretch their budgets further given better-than-expected discounting by retailers.)
• While shoppers didn’t buy for more recipients, they did spend more on each gift. (Again, we believe that hard-to-pass-up pricing and doorbusters made shoppers want to spend.)
• Consumer electronics and gift cards were still hot this year, and gift-card purchasing rose to 2007 levels. (Our store checks show that CE was strong all month long with almost half of our panel buying at least one CE item as a gift this year, and shoppers favoring strong pricing at mass merchants over consumer electronics stores.)
• Mass merchants, off-price and online were the biggest channels that shoppers looked to for holiday buying. (Similar to what we saw for Black Friday, value-oriented retailers continued to have the best traffic and selling across each region of the United States.)
  

On the all-important teen front, the firm made the following observations:

• Teens received fewer gifts this year, with cash, gift cards, apparel and consumer electronics being the most popular gifts.
• Uggs are still hot -- 30% of our teen panel said they received Uggs boots, slippers or shoes this year.
• Most teens received gift cards this year, but haven’t spent the bulk of them yet. (We believe many are saving them for apparel and other purchasing later in the spring. As a result, we expect to see slow sales trends for most teen retailers until mid-first quarter.)
  

J.Crew: Dressed for success

Here’s what I found so invigorating about J.Crew’s strong third-quarter performance (its profit more than doubled): The retailer did not attribute it to cost cuts. Instead, the chain based it on something slightly more old-fashioned but a lot more significant with regards to long-term growth: sales. Same-store sales rose 8% in the quarter, while overall sales jumped 20%.

I wasn’t all that surprised by the results. J.Crew seems at the top of its game. Its stores look great, and the merchandise even better. And unlike a lot of other retailers, when you shop J. Crew, you don’t get the feeling that the sweater that sells for $69 one day will be on the clearance rack the next. The fact is, J.Crew occupies a great sweet spot right now: It has become the go-to store for upscale shoppers looking to trade down a bit and for middle-market ones who want to trade up.

There’s no getting around the fact that J.Crew is a merchant-driven company, with the message set at the top by CEO Millard “Mickey” Drexler. Commenting on the third-quarter results in a company statement, Drexler said the company's success was tied to doing simple things well.

"It's about product, it's about quality, it's about design, it's about creativity," he said.

Interestingly, J. Crew reportedly doesn’t have any special promotions or discounts in place for the holiday season. It may be of the few retailers that doesn’t have to.

Retail reality of the TV variety

I love reality TV shows about retail. My latest fave is “Mary Queen of Shops,” a British import that is being shown here on BBC America.

The star of the show is Mary Portas, the former creative director of the fashionably trendy Harvey Nichols store in London. Like so many other retail consultants, she is inclined to blanket statements and arching pronouncements: In the opening show, she opted that the Primark chain is “ruining” England.

The premise of the show has Portas traveling all over Britain, helping shopkeepers attain greatness (think of it as a “Ramsay’s Kitchen Nightmares” for the retail trade).

Portas has a big mouth. She has an air of self-importance and is arrogant as all get out, which is ultimately what makes the show so entertaining. As she put it in the first episode: “What I don’t know about shops isn’t worth knowing.” See if you agree -- the show can be seen on Wednesday nights at 9 p.m. on BBC America. As it happens, my other fave TV reality show, “Man Shops Globe,” featuring the suave and dapper Keith Johnson from Anthropologie, is on Wednesday night also, at 10 p.m. on the Sundance channel. It’s a solid night of retail nirvana -- who could ask for anything more?

My new must-see TV: Shopping around the world -- for Anthropologie

Ever wonder where Anthropologie finds some of the goods that make its stores so interesting? Well, wonder no longer. A new series on the Sundance Channel, called “Man Shops Globe,” will take viewers around the world with Keith Johnson, buyer-at-large for Anthropologie, as he scours flea markets, out-of-the-way antique shops, obscure art studios, private dealerships, craft stalls and even a student design show in search of decorative antiques and found objects. Some of his finds will be sold in Anthropologie stores. Others will serve as inspiration for the company’s in-house design team. Johnson also seeks out gifted artisans to create original works.

Johnson, who spends a good deal of the year abroad, will visit a different country in each of the show’s eight episodes. In the first, which airs on Oct. 7, he haunts flea markets in Paris and sprints through an Avignon antiques show. Other episodes will follow his shopping exploits in Holland, South Africa, Belgium and other global destinations.

Promotional material describes Johnson as having “the greatest job in the world.” It’s a job he was seemingly born to. The son of a global-trotting art dealer, Johnson often accompanied his father on excursions around the world. His association with Anthropologie dates back to 1994, when his partner and company president Glen Senk (now CEO of Anthropologie's parent company Urban Outfiitters) asked Johnson to find decorative antiques and found objects for the company’s first store. As the brand grew so did Johnson's responsibilities. He now buys for Anthropologie’s 123 U.S. stores and two in Canada, and also curates the brand’s art gallery in its Rockefeller Center location.

To see a preview of “Man Shops Globe,” click here.

Boom times for Dollar Tree

My neighbor called me over a few days ago to check out some of her newest purchases. It was a mixed bag, with everything from candy and gift wrap to Halloween décor and scented candles. As I looked the goods over, she proudly said: “I bought it all in a dollar store. I always thought of those places as junk stores, but it wasn’t anything like that at all.”


I couldn’t help but think about my neighbor as I listened in on Dollar Tree executives on Wednesday at the chain’s annual capital markets conference, which was broadcast over the Internet. At a time when most retailers put the brakes on store expansion, Dollar Tree is forging ahead. Along with such other extreme value retailers as Family Dollar and Dollar General, Dollar Tree is growing its footprint. With 3,717 stores as of Aug. 1, the chain will end the year with about 3,800 stores, expanding its square footage by 6.5%.

"For us, the world's our oyster," said COO Gary Philbin with regards to expanding real estate opportunities. "With other folks canceling deals or cutting back, Dollar Tree is still out there to take advantage and we can move quickly."

On the call, CEO Bob Sasser said the company is betting that the momentum it gained during the downturn will remain in place even as the economy improves. All the evidence -- anecdotal though it may be -- points to the fact that consumers have undergone a change of thinking, he added. Frugality is in.

I think Sasser is right. These are boom times for stores such as Dollar Tree -- and they’re not all that bad for the suppliers who do business with them either.

But I’m not sure I agree with all the experts who say the new frugality mindset is here to stay. Consumers have short memories. What do you think?