Retail Rollback: Wave of Store Closures Expected
Call it the Great Retail Rationalization of the Great Recession. And even though the economy already has forced retailers to take a scalpel — or a meat cleaver — to their store portfolios, there’s still plenty of excess to cut. “You need stores that at the end of the day are going to contribute a positive cash flow to the portfolio,” said Esteban Bowles, principal in A.T. Kearney’s retail and consumer products practice. “Many [retailers] are not sophisticated enough in their understanding of true profitability of a store from a cash-flow standpoint.”
Top Vendor Execs See Pay Decline 25.6 Percent
Apparel vendors felt the sting of a slower economy very directly in 2008 — right in their wallets. Lower profits dragged down the compensation of top industry executives by a total of 25.6 percent last year, and a few even elected to forgo some bonus money as they made tough decisions that often translated into smaller head counts. Atop the WWD List for the fifth year in a row: Ralph Lauren, chairman and chief executive officer of Polo Ralph Lauren Corp., who earned $20.3 million. (Click to see who ranked 11 through 20, as well as the previous list of retail executive earnings.)
CFDA Forum Debates the Fashion System
A meeting convened by the Council of Fashion Designers of America initially was meant to address the relevance of fashion shows and whether they should be targeted at consumers or the industry. But that topic rapidly got subsumed by a litany of complaints over the entire hyperactive fashion system. “There is no way when you are in the middle of a tsunami that you can change absolutely everything,” CFDA president Diane von Furstenberg, all too familiar with how the economic crisis has taken its toll on the industry, told the crowd. “But one thing that we can do and that I would like to do is make New York Fashion Week the most dynamic fashion week in the world.”
Bottom Lines Squeezed at Key Beauty Firms
Beauty companies on three continents continued their uphill battles against unenthusiastic consumers, inventory-adverse retailers and unsteady currencies even as their financial results revealed the ugliness in the market. Second-quarter earnings dropped 64.3 percent at Avon Products Inc. and nearly evaporated entirely at Revlon Inc., with both citing restructuring initiatives and currency fluctuation as contributing to the decreases. In Tokyo, Shiseido Co. Ltd. reported a 57.8 percent slide in first-quarter profits along with a 14.9 percent sales decline.
De Beers Net Falls 99 Percent in First Half
De Beers SA reported a 99 percent decline in first-half net profit, hurt by what the diamond mining company called the “historically difficult trading conditions” it faced at the start of the period. Other notable earnings include LVMH Moët Hennessy Louis Vuitton, which reported a 23 percent decline in first-half profits, despite a modest sales gain, and Kao Corp., which said its net profit for the first quarter ended June 30 slid 31 percent to 11.80 billion yen, or $121.19 million at average exchange rates for the period.
Borletti Bids for Christian Lacroix
The administrator of Christian Lacroix SNC received a “serious” bid from Italy’s Borletti Group, the owner of department stores La Rinascente and Printemps, in association with the designer. The announcement was followed by a meeting the next day between Lacroix and Industry Minister Christian Estrosi. “We have had an extremely positive conversation,” Lacroix said afterward.
Retailers Bank on Functional, Well-Priced Handbags
Intent on offering shoppers more, stores are keeping a close eye on pricing and banking on handbag styles that offer multiple options. In the 12 months through May, handbag and tote sales were estimated at $7.5 billion, down 5 percent from the previous year, according to The NPD Group market research firm. Meanwhile, studding, quilting and tooling techniques give some relatively simple leather and PVC pieces a style all their own — and animal skins are still in.
Michelle Obama Honors Francisco Costa
Calvin Klein designer Francisco Costa was living the American Dream. Costa, winner of the Smithsonian’s Cooper-Hewitt National Design Awards fashion design category, found himself at the White House being honored by First Lady Michelle Obama for 17 years of creative and innovative women’s wear design. “I had a dream to come to America, which I did, and I worked really hard,” he told WWD. “To me, what is most incredible — I have such a thick accent — I feel totally integrated into the country. America has given me so much opportunity and I don’t think you’ll find that anywhere else in the world.”
Material Girls: The Stars of 'The Beautiful Life'
The show must go on. And according to the executive producers of the highly anticipated CW series, “The Beautiful Life,” it will, despite star Mischa Barton’s recent well-publicized hospitalization. Real-life intrigue aside, the show’s other stars were plenty enthusiastic at a shoot for WWD the day after the Barton news broke.
WWD Back in Time: Getting Punkadelic
“Punk? It’s only rock ’n’ roll, but you wear it,” said WWD in December of 1977. Rock music and counterculture had solidified their bond in the Fifties and Sixties, but Seventies punk was arguably the biggest shock to the establishment yet. Punks dethroned hippies, at least in fashion. “It’s a rebellion against Frye boots, Indian things, beige and tweedy stuff,” said Gina Franklyn, co-owner of Manic Panic on Manhattan’s St. Mark’s Place. Another hot spot for the New York punk scene was CBGB on the Bowery, infested with black leather, stretch pants and “a plague of T-shirts,” according to WWD reporters. (Click to see all the images.)
Click to see the previous WWD Week in Review (7/24/09).
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