 Weekly Retail Archive
Airlines |
Retail Industry Update
by Risa Kaplan (TMF Style)
A special note! Due to some reorganization of our area, we will no longer have a special "page" for Retail on AOL or the Fool website. However, I am still your host for this area, and I will continue with my weekly update. Starting next week, please look for industry updates on the Retail message boards (in the Industry & Market Analysis folder) on either AOL or the web. I will post these on a weekly basis, typically on Friday. As always, I am available to answer any questions you might care to post to the message boards. Thank you, and I look forward to your participation.
SAN FRANCISCO, CA (July 10, 1997) -- Montgomery Ward & Co., the 125-year-old privately held department store chain, filed for bankruptcy protection Monday after talks with lenders failed. The 400-store chain had been negotiating a financing package involving fresh funding to pay vendors and waivers on $1.4 billion in debt, but the negotiations fell apart. The future of this once American star seems to have completely faded.
In contrast, the nation's largest retailer, WAL-MART <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %> posted a 6.4% increase in same-store sales, or sales at stores open at least one year. Total sales were up 11.8% at $11.15 billion, the Bentonville, Arkansas-based discount retailing giant said. Same-store sales at its Sam's Club warehouse stores rose 2.3%.
This week American specialty retailers tumbled as same stores sales declined in both ANN TAYLOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANN)") else Response.Write("(NYSE: ANN)") end if %> and TALBOTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLB)") else Response.Write("(NYSE: TLB)") end if %> . Talbots over two days was hit for a $6 1/8 loss to $22 7/8 on reporting a 7.9% decrease in June same-store sales. The company said it will have a loss per share of $0.28 to $0.38 for its quarter ending in August. The failure was predominantly blamed on the wrong merchandise and execution of goods into the stores.
For Talbots it has been noted the company was trying to change its look to fit more with the times and this has been unsuccessful. Ann Taylor appears again not to have the merchandise that women want at the prices they want to pay. AnnTaylor Stores Corp. said that a June shortfall in sales means it won't meet Wall Street's estimates for the second quarter of $0.17 a share since same-store sales fell 5.8%. Total sales fell 3.8% to $69 million.
Because of these weak numbers, other women's retailers were brought down on the coattails. PAUL HARRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PAUH)") else Response.Write("(Nasdaq: PAUH)") end if %> and RALPH LAUREN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RL)") else Response.Write("(NYSE: RL)") end if %> both suffered on no news. So if women aren't buying in stores like Talbots and Ann Taylor where are they spending their money?
There is a theory that women are shopping more and more in department stores again where many manufacturers have created stores within stores, where the boutique feel is apparent but there more vendors to choose from. If this is true then the department stores such as FEDERATED <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FD )") else Response.Write("(NYSE: FD )") end if %> which owns stores such as Bloomingdales, and Macy's, and MAY DEPARTMENT STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAY)") else Response.Write("(NYSE: MAY)") end if %> which manages a handful of stores including Lord & Taylor, Filene's and Hecht's, may prosper. The June same-store sales were up 4.6%, above company and analyst's expectations at May's as total sales rose 10.4%. Federated reported a 3.2% increase in same-store sales, and a 3.9% rise in total sales, to $1.33 billion.
Speaking of trends, when looking for a new retail stock, it is important to get a feel for what is hot early on in the game. People who saw sunglasses becoming a fashion statement and not just a utilitarian purchase made money on both SUNGLASS HUT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAYS)") else Response.Write("(Nasdaq: RAYS)") end if %> and OAKLEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OO)") else Response.Write("(NYSE: OO)") end if %>. In looking at the fall fashion styles I noticed that once again sexy and slinky has creeped back into fashion. The debut of haute couture for fall-winter designers showed sexy girls in sleek, revealing clothes with mixes of leather and bareness. Leather appears to be all over the fall lines in both jackets, skirts and dresses. So if sexy is the operative word in the fall fashion arena, the issue is which companies may benefit from this look.
WILSON LEATHER EXPERTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WLSN)") else Response.Write("(Nasdaq: WLSN)") end if %>, a retailer of leather apparel and accessories, said Tuesday that sales performance will remain challenging through the second quarter. The company, which operates 451 stores in 45 states, the District of Columbia and England under the names Wilson's, The Leather Experts, Tannery West and Georgetown Leather Design.
The retailer reported this week a fiscal first quarter net loss of $7.3 million, compared with a loss of $7.2 million a year earlier. Net sales for the quarter, ended May 3, fell to $57 million from $66.8 million in the 1996 period. Wilson's said on average it operated 31 fewer stores for the first quarter of 1997 versus the first quarter of 1996, as it closed stores that did not meet cash flow targets.
During the first quarter of 1997, the company had a 7.5% decrease in comparable-store sales. The company said its business is seasonal, with a majority of its sales and all of its net income generated in the fourth fiscal quarter, which includes the holiday selling season. Perhaps if leather does make a big splash Wilson could benefit.
Another retailer synonymous with sexy clothes is Victoria's Secret, which is owned by INTIMATE BRANDS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBI)") else Response.Write("(NYSE: IBI)") end if %>. Besides selling lingerie, Victoria's Secret also sells apparel. Both areas of merchandise may see strong buying. This week the company reported net sales for the five-week period ended July 5, 1997 of $340.5 million, a 38% increase from $246.6 million for the comparable five- week period ended July 6, 1996. Comparable store sales increased 29% for the five weeks ended July 5, 1997.
In a corporate press release, Phil Mallott, Chief Financial Officer, noted that given June's strong comparable store sales, second quarter earnings should exceed the currentstreet consensus estimate of $0.22 per share by two cents. He also said that, led by the customer response to the Victoria's Secret Stores' semi-annual sale, all Intimate Brands' businesses met or exceeded their sales plans for the period.
REFUNDS RETURNS and EXCHANGES
PIERCING PAGODA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PGDA )") else Response.Write("(Nasdaq: PGDA )") end if %>said Tuesday that net sales for the first quarter of fiscal 1998 ended June 30 were $42.9 million, an increase of 42% from net sales of $30.2 million in the prior year period. Comparable store net sales increased 6% in the quarter, the company said.
99 CENTS STORES ONLY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:NDN)") else Response.Write("(NYSE:NDN)") end if %> reported record quarterly sales of $53.8 million for the second quarter ended June 30, 1997, and record sales for the six months ended June 30, 1997, of $104.5 million. This represents an increase of 24.6 % over sales during the second quarter of 1996 and an increase of 22.3% over sales for the six months ended June 30, 1996.
Similar retailer DOLLAR GENERAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DG)") else Response.Write("(NYSE: DG)") end if %> reported total retail sales for the five weeks ended July 4, 1997, equaling $238.1 million compared with $192.9 million in 1996, an increase of 23.4%. For the year-to-date through July 4, 1997, Dollar General total retail sales increased 16.3% in the same period a year ago. Same stores sales for the 22 weeks increased 4.3%.
ALTERATIONS
On July 7th, like the Three Stooges in a perfectly timed comic routine, Morgan, Merrill and Goldman all started coverage of retailer POLO RALPH LAUREN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RL)") else Response.Write("(NYSE: RL)") end if %>. Morgan Stanley gave the company an "outperform" rating. Merrill Lynch said it initiated coverage of Polo as an intermediate-term "accumulate" and long-term "buy". Goldman Sachs said it added the stock to its "recommended" list. All three firms were underwriters of Polo Ralph Lauren's initial public offering in June.
Lehman Brothers said it raised its rating on OFFICE DEPOT INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ODP)") else Response.Write("(NYSE: ODP)") end if %> to "buy" from "neutral" with a 12-to-16-month price target of $23. In a research note the firm stated it believes Office Depot is wrongly perceived as the "stepchild in a failed merger." Last week Office Depot and STAPLES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %> terminated their proposed merger after a federal judge allowed regulators to block the deal.
Gruntal & Co said it raised its one year price target for PAYLESS SHOESOURCE, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PSS)") else Response.Write("(NYSE: PSS)") end if %> to $62 from $58. Analyst Michael Conn said Payless is getting increasing recognition for its leadership position in the discount footwear sector and cited positive sales trends. Share buybacks, potential international expansion and its "Parade of Shoes" were cited as solid EPS growth opportunities. Payless shares are up 20 % since the end of May and are up more than 50 % year-to-date.
Wheat First Butcher Singer analyst Ralph Jean said he started coverage of DOLLAR TREE STORES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLTR)") else Response.Write("(Nasdaq: DLTR)") end if %> with an "outperform" rating. He estimated that the company will earn $1.55 a share in 1997 and $1.94 a share in 1998. The analyst said he has a 12-month price target of $48 to $58 on the shares.
Shares of retailer KMART <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %> fell on heavy trading volume Thursday, as Morgan Stanley & Co. lowered its investment rating to "outperform" from "strong buy" after the company's weak outlook late Wednesday. Kmart said the listless pace of women's clothing sales in June will force its second-quarter earnings below both the year-ago level and analyst's estimates. While Kmart said it expects the second quarter to be profitable, the company noted it won't be as profitable as it was a year ago, when it earned $34 million, or 7 cents a share, on revenues of $8.31 billion. The mean estimate of 22 analysts surveyed by First Call was for Kmart to post a profit of eight cents a share in the quarter, which ends this month.
© Copyright 1995-2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. The Motley Fool is a registered trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us