Our retail news roundup covers the latest developments from the UK and Germany to the US and Australia. A BRC–KPMG Retail Sales Monitor shows sales in January fell 0.6%, compared with 2.6% growth a year earlier. Bonmarche holiday sales were up 3.3% over the previous year but overall sales are trending down. Meanwhile, Dollar General may hire as many as 10,000 new employees to staff 1,000 new stores and distribution center for the discount retailer.
Walmart shut its Amazon Prime-like ShippingPass membership program, instead offering shoppers free two-day shipping with orders over $35. German e-tailer Zalando hit €1billion in sales in its fourth Q for the first time and is on track to exceed €3.63 billion in annual sales. Amazon, eBay and Alibaba’s online e-commerce sales in 2016 reached $365 billion – 31% of all online sales worldwide.
Burlington Stores could see earnings per share grow 15% after Macy’s closure of 60 nearby stores according to Capital Markets analyst John Morris. WDWayfind looked back at the Federated-Macy’s merger to see why the retailer started to lose its luster and brand identity. The Wall Street Journal reports Hudson’s Bay is discussing a potential takeover of Macy’s.
Eastern Outfitters filed for bankruptcy protection on Sunday as UK sportswear retailer Sports Direct began exploring it’s acquisition. Herringbone and Rhodes & Beckett filed for bankruptcy in Australia and more retailers may also fail this year according to Power Retailer. Nordstrom announced it is dropping the Ivanka Trump fashion line due to weak sales.
New figures show “slowest growth of the festive period since 2009”
New results from the BRC–KPMG Retail Sales Monitor have revealed that like-for-like sales in January fell by 0.6 per cent, compared to a 2.6 per cent growth in the same period a year before.
Total sales rose by 0.1 per cent in the same period, compared to a 3.3 per cent increase in January 2016, well below both the three-month average of 1.1 per cent and yearly average of 0.9 per cent.
“While this may appear disappointing overall, retailers were up against a strong January last year to try and deliver a repeat performance and many reported an increase in the number of returns received in January,” British Retail Consortium (BRC) chief executive Helen Dickinson said. Via retailgazette.co.uk
Bonmarché delivers “satisfactory” quarterly update
Bonmarche has recorded a mixed bag in its latest trading update, with sales increasing in the third quarter but online performance was poor and overall sales for the year to date have declined.
Sales at the womenswear retailer for the 13 weeks to December 24 went up by 3.3 per cent compared to the period a year ago, while like-for-like sales increased by 0.8 per cent. Meanwhile, sales for the 39 weeks to December 24 dipped by 1.3 per cent and store like-for-like sales decreased by 5.3 per cent.
The retailer took a less promotional stance throughout the third quarter and while this had an impact on overall sales volumes, it led to a product gross margin that was 2.2 per cent higher year-on-year. Via retailgazette.co.uk
Dollar General to Hire 10,000 Workers
Dollar General Corp. said Friday that a rollout of new stores and distribution centers will lead to the creation of roughly 10,000 new jobs this year. The Goodlettsville, Tenn.-based discount store chain is expecting to open 1,000 new locations, along with two distribution hubs, adding new positions that will grow its staff by about 9 percent.
Total Retail’s Take: Unlike sporting goods, dollar stores are a bright spot for the retail industry. In addition to Dollar General hiring 10,000 new workers, Dollar Tree announced in its most recent earnings call that net sales were up 48.9 percent year to date, and profit increased $1.58 billion year to date. Furthermore, these are businesses that rely on brick-and-mortar stores more heavily than other retail verticals, further bucking the trend that retail sales are moving online. Lastly, it’s nice to see jobs being added to the retail industry (and economy in general) after news of store closures (Macy’s, Sears) and companies going out of business have dominated the headlines so far in 2017 (The Limited, Wet Seal). Via mytotalretail.com
Wal-Mart scraps Prime-like ShippingPass membership
Wal-Mart has ended its Amazon Prime-like ShippingPass membership program, which gave members free two-day shipping on most orders for a $49 annual fee. Current memberships will be automatically refunded in full, the company said in a press release.
In its place, the retailer will open up its free two-day shipping to all customers purchasing orders over $35 starting on Tuesday, while shipping to stores will be free on eligible orders.
ShippingPass was unlikely to win much business away from Amazon, as research shows more than 90% of Amazon Prime members renew their memberships for a second year. While Wal-Mart expanded its program nationally just last year, it’s now scrapped, and Lore’s statements to reporters Monday sounded like a challenge to Amazon Prime. But Wal-Mart’s move to lower its free shipping minimum stands in direct contrast to Amazon’s move to up Prime membership last year. Via retaildive.com
Zalando’s quarterly sales smashes €1bn ($1.07 billion) mark for the first time
Zalando has broken the €1 billion barrier for the first time in its latest trading update, with online retailer raking in €1.086-€1.094 billion in revenues during its fourth quarter.
These preliminary figures equate to about 25-26 per cent growth, and the German-based e-tailer is expected to post full-year revenues of around €3.633 billion to €3.642 billion.
Zalando also expects to achieve an adjusted earnings before tax of €81-104 million during the last quarter, and €202-225 million in adjusted full-year profits. Via retailgazette.co.uk
Why the marketplace revolution keeps gaining momentum
What do you call a place where people can shop for a huge assortment of goods from a variety of sellers? Maybe they’re looking for a big-ticket item like a couch, or something small like lipstick. Maybe they need sneakers, cutlery, luggage or food — or maybe they’re just browsing.
These scenarios could unfold at a department store, a mall or the Grand Bazaar in Istanbul. But increasingly, they bring to mind an online marketplace — a digital mall of a sort that, when done right, can drive efficiencies and sales for retailers and brands alike, while giving consumers a smooth way to shop for just about anything they may want to buy.
For a while now, Amazon, eBay and Alibaba’s Online e-commerce have been the big names in marketplaces, and it’s still true that those three alone accounted for about $365 billion in sales worldwide in 2016, or 31% of all e-commerce sales, according to global market research firm Euromonitor. And the marketplace momentum is growing: Half of all merchandise sold on Amazon’s site now comes from third-party sellers. Via retaildive.com
Burlington will be a big beneficiary from Macy’s store closures
As Macy’s closes up shop at more than 60 U.S. locations, one off-price chain stands to gain the most from its contraction. New Jersey-based Burlington Stores could see a 15-cent boost to its earnings per share, as the chain’s nearby locations pick up sales Macy’s is leaving behind, BMO Capital Markets analyst John Morris said.
That’s substantially more than the 1-cent per share opportunity for TJX, and the 7-cent increase he forecasts for Ross. Despite those chains’ larger overlap with the Macy’s locations slated to close, the stores account for a smaller percentage of their respective footprints.
Burlington has 47 stores within a five-mile radius of Macy’s store closures. But because its store base is smaller than its peers’, those locations account for roughly 8 percent of its domestic square footage. Via cnbc.com
The Macy’s Effect
It was February 28, 2005. The day Terry Lundgren, CEO of Federated Department Stores, announced one of the largest deals in retail history: The merger of 491 May Department Stores with 450 locations operated by Federated. You could sum up the deal’s promise, as pitched to investors on Wall Street, with one word: Big. Lundgren wanted scale—economies of scale, efficiencies, and synergies. Get big enough, and the competition couldn’t touch you.
The $11 billion deal would, in fact, create the largest department store brand in US history. At last, there would be one unified “national branding message,” and one singular go-to-market strategy at Federated. No more unique, locally-based brands merely popular in specific metro markets, yet lacking in national recognition. All those regional nameplates, with distinct offerings and employees with decades of market knowledge, would now be rolled up into a single, unified brand for the sake of synergy. For the first time, Federated would command a “truly national retail footprint,” Lundgren told analysts during a conference call as he detailed the logic behind the merger. There would soon be stores in 64 of the nation’s top 65 markets under a single banner: Macy’s. “This is truly an exciting day in American retailing,” a corporate press release said.
Heralded as a new beginning for the department store category, this merger, in retrospect, might have been the beginning of the end: The fateful day the department store category obliterated its greatest strengths. From that day forward, the strength of the corporate machine at Federated worked to consolidate regional brands under one banner, shedding brands from Marshall Field’s in Chicago to Lazarus in the Midwest. Loyal local shoppers rebelled. The dismantling of local institutions left shoppers feeling betrayed. The company’s ticker symbol on Wall Street changed from “FD” to “M” for Macy’s. Via wdwayfind.com
Hudson’s Bay reportedly approaches Macy’s about a takeover
A blockbuster deal in retail could be on the horizon. Or not.
Canada’s Hudson’s Bay Company has approached Macy’s about a takeover, reported The Wall Street Journal, citing people familiar with the matter.
The talks between the companies are in the early stages and could lead to something other than an acquisition, according to the Journal, such as a deal for Macy’s real estate, which could be valued at roughly $14 billion. The talks could also go nowhere. Via chainstoreage.com
Eastern Mountain Sports’ Parent Files for Bankruptcy
Eastern Outfitters, the parent of discount chain Bob’s Stores and outdoor retailer Eastern Mountain Sports, filed for bankruptcy protection on Sunday, the latest U.S. retailer to do so amid increased competitive pressure facing the sector. British sportswear retailer Sports Direct International has engaged in extensive talks with Eastern Outfitters to become a stalking-horse bidder in a bankruptcy auction, the Chapter 11 filing showed. Eastern Outfitters listed assets and liabilities in the range of $100 million to $500 million, according to court documents filed in the U.S. Bankruptcy Court for the District of Delaware.
Total Retail’s Take: While the retail industry as a whole has faced challenges as of late, perhaps no vertical has been under more pressure than sporting goods. Sports Authority and Sport Chalet both went out of business last year, and now the parent company of Eastern Mountain Sports is filing for bankruptcy. The beneficiary of this upheaval in the vertical appears to be Dick’s Sporting Goods, which reported net sales grew 10.2 percent in its most recent fiscal quarter (including a 5.5 percent increase in same-store sales). Looking to continue to grow market share, Dick’s acquired The Sports Authority’s intellectual property assets and the right to acquire 31 store leases. Via mytotalretail.com
Two More Fashion Victims This Week
Warnings have arisen that there could be more Australian fashion retailers, that could go broke and call in the administrators this year.
Upmarket mens and women’s clothing chain Herringbone and Rhodes & Beckett will do exactly that this week, and this follows other local brands including Marcs and David Lawrence, who hit the brakes last week after faltering under the weight of almost $30 million in debt. If this is anything to go by, there are more to come. Last year saw Pumpkin Patch and Payless Shoes go broke.
Banks are sitting down with the retailers, trying to make decisions on whether to keep on lending to them or whether to pull the pin. Fashion retailers going into administration is one story where the numbers don’t really tell the full picture. In December last year, Australians spent more than $ 2 billion on clothing and footwear. That’s $140 million dollars, or 7.3% more than the Christmas period last year. Via powerretail.com.au
Nordstrom plans to drop Ivanka Trump’s fashion line
Nordstrom will no longer be the place to go for Ivanka Trump fashion.
The upscale department store said Thursday evening that it’s no longer going to be carrying the Ivanka Trump label for the new season. While Nordstrom didn’t address the reason directly, it indicated in a statement that it isn’t selling well.
Nordstrom said that the change is part of the normal comings and goings of the fashion business. Politics was never mentioned. “Each year we cut about 10 percent and refresh our assortment with about the same amount. In this case, based on the brand’s performance we’ve decided not to buy it for this season,” it says. Via cnbc.com