Most Recent Articles In Business
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CONSUMER CONFIDENCE: American consumers may feel the worst of the economic downturn is behind them, judging by the eight-month high that the Conference Board’s Consumer Confidence Index hit in May. The index, which surged to 54.9 percent this month from 40.8 percent in April, has more than doubled since March, but most of the increase this month hinged on consumers’ belief that better times lie ahead. Of the index’s two components, the forward-looking Expectations Index rose to 72.3 from 51, as the Present Situation Index inched up to 28.9 from 25.5. Although retail stocks historically have been among the first to improve in past slowdowns, their shares — which have marched forward 46 percent since early March — could be moving upward too quickly, said Paul Lejuez, a Credit Suisse analyst. And even though the torrent of retail bankruptcies the market feared late last year hasn’t happened, serious change is still afoot, he said. “These companies are very slow to die,” Lejuez said. “It’s bound to happen.” In the three months through April, sales at apparel and accessories stores fell 5.1 percent from a year earlier, while department store sales declined 6 percent, according to government figures. But, said Lynn Franco, director of The Conference Board Consumer Research Center, “Consumers are considerably less pessimistic than they were earlier this year. While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us.” — EVAN CLARK
RALPH HEADS EAST: Ralph Lauren built much of his empire on images of the American West, but the company is now looking to Southeast Asia for growth. Polo Ralph Lauren Corp. reported on May 27 that lower sales and restructuring charges drove down fourth-quarter profits by 57 percent, but the firm also laid out plans for accelerated growth in selected parts of Asia. Polo will assume direct control of its wholesale and retail distribution in Southeast Asia at the beginning of next year and is creating a Hong Kong-based hub to oversee operations in the region. Roger Farah, president and COO, said the firm ultimately expects the region to account for one-third of its sales. For the fourth quarter, income was $44.5 million, or 44 cents a diluted share, 4 cents better than consensus estimates. Revenues slid 1.3 percent to $1.22 billion, and same-store sales fell 15.9 percent. For the year, income slipped 3.3 percent to $406 million, or $4.01 a share, while revenues rose 2.8 percent to $5.02 billion. Farah said on a conference call that footwear has “seen very strong growth, whether it’s at the Collection price point or the Lauren price point. ... We are now beginning to push that out into an international business opportunity.” As for general economic conditions, Farah said that “demand is strongest for need-now, wear-now merchandise [and there is] very little nice-to-have buying or purchasing ahead of next season.” — VICKI M. YOUNG & JESSICA PALLAY
CARNIVAL CHALLENGED: The value-conscious footwear consumer continues to feel the impact of a weak economy, which has caused profits at Shoe Carnival Inc. to drop by 15 percent in the first quarter. The Evansville, Ind.-based retailer reported a net income of $4.1 million, or 33 cents a diluted share, for the quarter ended May 2, versus $4.8 million, or 38 cents a share, in the year-ago period. Sales, led by a single-digit increase in athletic footwear, totaled $167.3 million, a 3 percent increase from last year’s first quarter. Same-store sales decreased by 0.3 percent. Still, Shoe Carnival beat analyst expectations for earnings per share of 25 cents. Margins came in below expected levels, as clearance pricing of adult dress and casual product during February and March contributed to a 1.3 percent decrease in merchandise margin for the quarter. Mark Lemond, Shoe Carnival’s president and CEO, said in a statement, “We recognize that our targeted moderate-income customer will continue to be impacted by the economic downturn, and sales within the retail sector may continue to experience downward pressure.” — J.P.