Money to spend but there's nothing to buy

makapaaa · Oct 9, 2009

<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published October 9, 2009

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>POOR RICH
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Money to spend but there's nothing to buy
US luxury chains stick to conservative plans for high-end inventories

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(WASHINGTON) Jennifer Prentice spent half of what she usually does when she and a friend shopped at Neiman Marcus Group Inc, Saks Inc and Nordstrom Inc stores on a recent business trip to San Francisco. They weren't cutting back. They just didn't find much to buy.

'We tried really hard to spend money,' said Ms Prentice, 42, a Minneapolis resident whose favourite brands include Missoni, Trina Turk and True Religion. What they got was 'really frustrated'.
US luxury chains may stand to lose more sales to shoppers like Ms Prentice as they remain wedded to conservative plans for high-end inventories and are unable to shorten delivery times for designer clothes, shoes and accessories, said Stacey Widlitz, a retail equity analyst at Pali Capital in New York.
'The luxury retailers may be caught short when there is a turn,' Ms Widlitz said. 'Investors should keep in mind that that may delay their recovery behind other retailers, because it will take them more time to get inventories up to speed.'
Retailers found themselves overstocked last holiday season and are trying to avoid repeating markdowns of as much as 70 per cent. The discounts have hammered the bottom line: Saks had a net loss of US$54.5 million in the most recent quarter, while Neiman Marcus posted a US$168.5 million net loss.
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</TD></TR></TBODY></TABLE>At Saks and Nordstrom, inventories declined more than revenue in the second quarter. Saks's inventories were down 18 per cent on Aug 1 from a year earlier and second-quarter sales dropped 15 per cent. Nordstrom's inventories were 7.1 per cent lower as sales fell 6.2 per cent.
At stores open at least 12 months, sales declines have moderated from the start of the year. In August, sales on that basis decreased 17 per cent at Neiman and 20 per cent at Saks, while Nordstrom reported a 7.6 per cent drop.
Executives at the two retailers and at Neiman say that it is premature to accelerate orders. Keeping luxury inventory low is also part of a strategy to create demand.
'We feel very good about the amount of product that is on the floor,' Stephen Sadove, chairman and chief executive officer of New York-based Saks, said. 'Will there be missed opportunities? Absolutely. That is part of what you want to happen.' Having less inventory will spur shoppers to make purchases before stores run out of hot styles and sizes, he added.
Luxury goods take about six to nine months to get to stores because they are frequently hand-crafted with scarce materials, compared with two to three months for more mass-produced clothing, said Steven Dennis, president and founder of Dallas-based SageBerry Consulting LLC. -- Bloomberg
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SamuelStalin · Oct 9, 2009

makapaaa said:
<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published October 9, 2009

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>POOR RICH
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Money to spend but there's nothing to buy
US luxury chains stick to conservative plans for high-end inventories

<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right> </TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right> </TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right> </TD><TD>Feedback</TD></TR></TBODY></TABLE>
(WASHINGTON) Jennifer Prentice spent half of what she usually does when she and a friend shopped at Neiman Marcus Group Inc, Saks Inc and Nordstrom Inc stores on a recent business trip to San Francisco. They weren't cutting back. They just didn't find much to buy.

'We tried really hard to spend money,' said Ms Prentice, 42, a Minneapolis resident whose favourite brands include Missoni, Trina Turk and True Religion. What they got was 'really frustrated'.
US luxury chains may stand to lose more sales to shoppers like Ms Prentice as they remain wedded to conservative plans for high-end inventories and are unable to shorten delivery times for designer clothes, shoes and accessories, said Stacey Widlitz, a retail equity analyst at Pali Capital in New York.
'The luxury retailers may be caught short when there is a turn,' Ms Widlitz said. 'Investors should keep in mind that that may delay their recovery behind other retailers, because it will take them more time to get inventories up to speed.'
Retailers found themselves overstocked last holiday season and are trying to avoid repeating markdowns of as much as 70 per cent. The discounts have hammered the bottom line: Saks had a net loss of US$54.5 million in the most recent quarter, while Neiman Marcus posted a US$168.5 million net loss.
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</TD></TR></TBODY></TABLE>At Saks and Nordstrom, inventories declined more than revenue in the second quarter. Saks's inventories were down 18 per cent on Aug 1 from a year earlier and second-quarter sales dropped 15 per cent. Nordstrom's inventories were 7.1 per cent lower as sales fell 6.2 per cent.
At stores open at least 12 months, sales declines have moderated from the start of the year. In August, sales on that basis decreased 17 per cent at Neiman and 20 per cent at Saks, while Nordstrom reported a 7.6 per cent drop.
Executives at the two retailers and at Neiman say that it is premature to accelerate orders. Keeping luxury inventory low is also part of a strategy to create demand.
'We feel very good about the amount of product that is on the floor,' Stephen Sadove, chairman and chief executive officer of New York-based Saks, said. 'Will there be missed opportunities? Absolutely. That is part of what you want to happen.' Having less inventory will spur shoppers to make purchases before stores run out of hot styles and sizes, he added.
Luxury goods take about six to nine months to get to stores because they are frequently hand-crafted with scarce materials, compared with two to three months for more mass-produced clothing, said Steven Dennis, president and founder of Dallas-based SageBerry Consulting LLC. -- Bloomberg
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We used to have the same problem too.

Money to spend but there's nothing to buy

makapaaa

Alfrescian (Inf)

SamuelStalin

Alfrescian

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