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THE STORES THAT SCARED THE GRINCH AWAY
To update the old carol, 'twas the season to pinch pennies. That's how many people felt about Christmas, 1990. As retail analyst and consultant Walter Loeb explains: "The consumer was worried about higher heating oil and gasoline prices, unemployment, and a war." Hardly a formula for carefree shopping--and not even mid-December clearance sales could boost overall holiday retail sales much. In inflation-adjusted dollars, Christmas sales actually dropped slightly.
But not every retailer suffered from dismal results. Several chains are expected to report healthy sales gains for the season (table). The Gap Inc. has been a strong performer: December sales in Gap stores open a year or more will probably be up 5% to 10%. Costco Wholesale Corp., an operator of giant membership warehouse stores, reports same-store sales for the four months starting last Sept. 1 were up 20%. Analysts estimate that one division of The Limited Inc., Victoria's Secret, did particularly well, with same-store sales up 20% or so.
Not surprisingly, a key strategy in many of these successes was to offer consumers a way to stretch their dollar. Claire's Stores Inc., which dots malls nationwide with its tiny boutiques, sells costume jewelry and such inexpensive accessories as belts--items that cost a lot less than a dress. "As women have less money to spend, they will look for ways to revive an old outfit," says Claire's Chief Executive Rowland Schaefer. Profits for 1990 should increase 25%, to $24 million on sales of $260 million.
TO THE MAXX. Stores offering consistently low prices also attracted new customers. "Consumers trade down in rough times," notes Richard N. Baum, an analyst at Sanford C. Bernstein & Co. One beneficiary, says Baum: the T. J. Maxx chain of off-price stores, which manages through tight cost controls and opportunistic buying to offer lower prices on brand names year-round.
Crate & Barrel, the purveyor of moderately priced tableware, also benefited from an influx of affluent consumers feeling the pinch: Its same-store sales in Chicago, Texas, and Washington were up 14% or more. "We were thrilled with the season we had," says Gordon I. Segal, Crate & Barrel's founder and chief executive.
Other retailers did not have to rely exclusively on lower prices. At Seattle-based Bon Marche Inc. department stores, Chairman William Fix reports same-store sales gains of 7% to 8%. Not bad for a company whose parent, Federated-Allied Stores, is laboring in Chapter 11. Fix believes that extensive remodeling of existing stores and a sturdy regional economy did the trick. Pricey items such as $40 neckties moved briskly, and, says Fix, "we had a huge leather-jacket year."
Most consumption, though, wasn't so conspicuous. "Excessive, glitzy things are not cool anymore," says Carol Farmer, a retail consultant based in Boca Raton, Fla. The trend toward '90s-style restraint, she says, helps explain the phenomenal success of the basic T-shirts, pants, and sweaters from The Gap, whose ads stress simple attire.
CREME DE LA CREAM. Then there's the all-natural appeal of Body Shop International PLC, a British-based chain. Since Body Shop entered the market here in 1988, startup costs have kept U. S. operations in the red. For November and December, though, Body Shop's U. S. locations have been profitable, thanks to an impressive 27% sales growth rate for its 13 stores open more than a year. Body Shop lotions and creams are made with natural ingredients and without the use of animal safety tests. The products aren't bargains: A 20-ounce bottle of peppermint-scented foot lotion goes for $23.15. But the lotion and many other items sell fast. Says Helen Mills, co-owner of four Washington area Body Shop franchises: "On Dec. 17, we phoned our bankers to say we had already met our sales projections for the month."
With Christmas past them, even winning retailers face a year when meeting sales projections will just get harder. "We were slugging it out every day" this Christmas, says Crate & Barrel's Segal, who expects a very competitive 1991. But the successful stores have built up a momentum that ought to help them get through one of the toughest stretches retailers have faced in years.BRIGHT SPOTS
IN THE GLOOM
Retailer Holiday sales growth*
BODY SHOP 27%
Natural beauty aids
VICTORIA'S SECRET 20
Fancy lingerie retailer
CLAIRE'S STORES 16
MERRY GO ROUND 16
Midpriced trendy clothes
T.J. MAXX 8
Discount fashion apparel
BON MARCHE 7
*Estimated year-over-year growth of holiday-season retail sales in stores open
a year or more
DATA: COMPANY ESTIMATES,
SANFORD C. BERNSTEIN & CO.
Christopher Power in New York, with Julia Flynn Siler in Chicago and bureau reports