Over the past quarter-century, the growth of off-price has been one of the biggest long-term retail trends in the U.S. Neither the 2000 tech bust nor the Great Recession of 2008-2009 interrupted the growth of this market segment. The increasing size of off-price relative to the full-price retail ecosystem (and especially department stores) hasn't hindered growth, either. During the decade ending last year, industry leaders TJX Companies, Ross Stores, and Burlington Stores all roughly doubled their sales. However, that long-term growth trend …
Are Department Stores Getting the Wake-Up Call on Inventory Management?
Amid a disastrous second quarter for department stores (and most apparel retailers, for that matter), one company stood out: Dillard's. Dillard's didn't exactly have a great quarter. Retail sales declined 35 percent year over year, and the company posted a net loss of $8.6 million. However, that was actually a smaller loss than what Dillard's reported for the comparable period in 2019. (The second fiscal quarter tends to be a seasonally weak period for the company.) Aggressive inventory management actions were the reason why Dillard's …
Are Department Stores Getting the Wake-Up Call on Inventory Management?Read More
Why (Most) Brands Can’t Just Go It Alone
Last month, retail analysts at UBS further reduced their ratings for department stores. They declared that it was time for brands, particularly those with premium positioning, to "go it alone" rather than selling through third-party channels like department stores. The analysts also argue that brands can no longer rely on malls to generate walk-by traffic that leads to sales. Instead, they wrote, "Brands have to generate their own audiences and become destinations." There are certainly good reasons for brands to rethink their distribution …
Fixing Macy’s: Possible and Impossible Solutions
Macy's was struggling even before the Covid-19 pandemic decimated fashion retailers, with profitability falling almost continuously since peaking in 2014. Earlier this year, management announced a new turnaround strategy called Polaris, but even successful execution of the plan would have translated into lackluster results. Management's targets entailed sales declines and only modest improvement in profitability over the next three years. The pandemic has made Macy's situation far more dire. The company posted an adjusted loss of $630 …
J.C. Penney May Survive Covid-19 (For the Wrong Reasons)
The moment of truth is nearing for J.C. Penney. The struggling department store chain faces a July 15 deadline to gain lenders' approval for its bankruptcy reorganization plan and thereby unlock additional bankruptcy funding. Unless two-thirds of its bankruptcy lenders consent to its restructuring plan by then, J.C. Penney will be required to pursue an immediate sale of its assets. That could lead to a liquidation and the effective disappearance of this iconic brand. J.C. Penney's rapid fall from relevance over the past decade, plunging mall …
J.C. Penney May Survive Covid-19 (For the Wrong Reasons)Read More