WWD.com/fashion-blogs/bearing_the_bad_news-09-02

the Insiders

Archives

February 3, 2009 12:35 PM

Business

Bearing the Bad News

It's getting harder to tell the good news from the bad news in fashion.Take Avon Products Inc. The beauty giant Tuesday said fourth-quarter sales fell and would be pressured for the "foreseeable future," but profits rose 80.3 percent as costs...

It's getting harder to tell the good news from the bad news in fashion.

Take Avon Products Inc. The beauty giant Tuesday said fourth-quarter sales fell and would be pressured for the "foreseeable future," but profits rose 80.3 percent as costs and expenditures were trimmed. Even with the increase, Avon's earnings of 54 cents a diluted share came in a nickel below analysts' estimates.
 
What to make of this muddled picture?

Investors didn't have any doubts and pushed the beauty firm's shares up more than 8 percent in the first hours of trading after the earnings release.

One would think the case of Macy's Inc. would be an easier call. The retailer laid off 7,000 workers and said it would consolidate its four Macy's divisions into one.

That's bad, right?

Actually, it's awful for those 7,000 people suddenly on the job hunt. But the consolidation also expands the successful My Macy's localization program, helps bring costs more in line with sales and gives the department store a streamlined operating structure more akin to those of
competitors like J.C. Penney Co. Inc. and Kohl's Corp. Macy's stock fell the day of the restructuring was revealed, by 4 percent.

As painful as it is for workers, it's sometimes best for firms to cut back so the larger whole can continue and thrive.

Certainly Macy's has lots of company. Retailers from Target Corp. and The Bon-Ton Stores Inc. to Eddie Bauer Holdings Inc. and Chico's FAS Inc. have all issued pink slips in recent weeks.

Their suppliers are also hurting. Liz Claiborne Inc. said it would cut about 725 jobs, or 8 percent of its U.S. workforce, and suspend merit pay increases for all employees. The moves followed even steeper job cuts at Claiborne over the last year.

---------------------------------------------------------------------------------------
What's your opinion?
Comment below.
---------------------------------------------------------------------------------------

Economists call this, oddly enough, "creative destruction." The workers that are being cut loose now might well find a way to be more productive elsewhere at smaller, more nimble companies or budding industries such as green energy, for one.

Whether or not any of this is good news or bad news is going to require a gut check. Are you a glass-half-empty type or do you see it as half full?

Of course, all of this theory is cold comfort to anyone trying to find work as job losses pile up throughout the economy.


load comments

ADD A COMMENT

Sign in using your Facebook or Twitter account, or simply type your comment below as a guest by entering your email and name. Your email address will not be shared. Please note that WWD reserves the right to remove profane, distasteful or otherwise inappropriate language.