Retail Bulletin

RAPAPORT... January Retail Sales Down

Retailers in the United States reported lower than expected sales for the first month of 2008 as consumers turned to only buying basic necessities. While analysts increasingly include January in their Christmas sales measurements due to gift cards, those purchases also failed to boost sales. Wal-Mart reported that gift card redemptions were below expectations and customers appear to be holding gift cards longer and using them more often for food and consumables rather than discretionary purchases. Retailers noted that January 2008 had one less week than last January, which negatively impacted net sales, but did not necessarily affect comparable store sales.

Wal-Mart’s comparable store sales — excluding fuel purchases — rose just 0.5 percent. Macy’s Inc. reported a 28 percent drop in sales in January at $1.2 billion, while same-store sales fell 7.1 percent. Nordstrom’s same-store sales fell 6.6 percent in January and net sales fell 20 percent to $486.3 million during the four weeks ended February 2, 2008. Excluding the extra week in 2007, net sales fell 1.2 percent in January, the company added. Saks Incorporated reported that sales plunged 15.7 percent to $190.3 million, while comparable store sales rose 4.1 percent for the period. J.C. Penney’s comparable department store sales decreased 1.9 percent, while total company sales — department store and direct sales — fell 16.6 percent to $1.16 billion on a five-week basis. Similarly, comparable sales at Kohl’s Corporation fell 8.3 percent, while total sales declined 20.4 percent to $791.4 million.

It wasn’t all gloom for everyone, though, as Neiman Marcus reported January comparable revenues rose 3.3 percent and total sales grew 5.6 percent to $290 million. Comparable revenues at Neiman Marcus Direct, however, fell 0.5 percent in the four-week period. Similarly, BJ’s Wholesale Club reported that total sales for January 2008 increased 11.2 percent to $652 million, and rose 7.8 percent on a comparable club basis.


Signet Sales Plunge in U.S.

Signet reported that sales fell 6.1 percent to $1.38 billion in the fourth quarter of fiscal 2008, as overall U.S. retail sales declined. Same-store sales declined 6.7 percent.

The jeweler’s U.S. sales dropped 7.2 percent to $1 billion during the three months ended February 2, 2008, and U.K. revenues were down 3.3 percent to $384.3 million. For the complete fiscal year, total sales increased 3 percent to $3.66 billion, though same-store sales dropped 0.7 percent. U.S. revenues grew 2 percent to $2.7 billion in fiscal 2008, with same-store sales down by 1.7 percent. Signet’s U.K. sales grew 5.8 percent to $959.8 million, and same-store sales rose 2 percent.


Tiffany Expects Healthy International Growth

Tiffany forecasts a 10 percent increase in its worldwide sales for 2008. The U.S. sales increase will be a high single-digit percent increase, but same-store sales will experience only a low single-digit increase, the company reported in a statement. International sales projections call for growth in the mid-teens, with mid to high single-digit, same-store increases. The company plans for a mid single-digit percentage increase in net earnings and a low double-digit increase in diluted earnings per share in the range of $2.50 to $2.55.


Blue Nile Sales Up 23 Percent in Fourth Quarter

Blue Nile’s sales increased 23 percent to $111.9 million for the quarter ended December 31, 2007. Profits rose 31 percent to $7.5 million, while international sales were up 155 percent to $7.2 million during the quarter. Gross profit grew 26 percent to $23.7 million, and gross profit as a percentage of sales increased to 21 percent for the quarter, up 0.4 percentage points from the fourth quarter of 2006. For the year, profits rose 34 percent to $17.4 million, with sales up 27 percent to $319.3 million. International sales increased 108 percent to $17.2 million. Capital expenditures totaled $4.9 million, up from $1.9 million in 2006, with the hike related primarily to the expansion of the company’s domestic fulfillment center.

Blue Nile’s board of directors authorized the repurchase of an additional $100 million of common stock over the next 24 months. The company also announced that Mark Vadon has assumed the new role of executive chairman, after serving as chief executive officer (CEO), with Diane Irvine replacing him as CEO.

Blue Nile started shipping to 12 new countries in Europe and across Asia-Pacific, the retailer announced. In addition to the United States, Canada, the United Kingdom and Ireland, the company will now serve customers in Australia, Belgium, France, Germany, Hong Kong, Japan, Netherlands, New Zealand, Singapore, Spain, Switzerland and Taiwan. Since launching in Canada and the United Kingdom, the company’s international sales have grown over 150 percent. The decision to expand into the new markets was based on online shopping adoption in those countries, market size and, most importantly, an increased consumer demand for diamonds.


Birks & Mayors Sales Up

Retail chain Birks & Mayors Inc. reported a sales increase of 6.4 percent to $122.6 million for its third quarter ended December 29, 2007. Same-store sales were down 6 percent, while net income fell 35 percent to $12.7 million. For the 39 weeks ended December 29, sales increased 4.9 percent to $250.5 million. Same-store sales decreased 1 percent and net income fell 52 percent to $7.2 million.

Gross profit was $59.5 million, or 48.5 percent of net sales, down from a 50 percent margin on $57.6 million one year ago. The 150 basis point decline in gross margin was primarily related to the company’s sales mix in the United States, which had a higher percentage of timepieces — a lower margin than jewelry. It also reflected the price decrease of certain products offered in Canadian stores, the strategy being to reduce price disparity with the U.S. market. The company believes foot traffic decreased during the quarter for their stores in Canada, as consumers took advantage of the weak dollar and shopped in the United States instead.


Bulgari Sales Rise 14 Percent

Luxury retailer Bulgari SpA reported a sales increase of 13.7 percent to approximately $1.58 billion (EUR 1.09 billion) for 2007. In a statement, the company expressed confidence in meeting its profit targets of 12 percent for the year. Sales in the U.S. grew 21 percent while Europe was up 10 percent. Asia posted a 14.9 percent rise and Japan dropped 0.9 percent. The company’s core jewelry category registered 20 percent revenue gains. All figures are at comparable exchange rates, which do not take currency fluctuations into account.


Sotheby’s Record Fourth Quarter

Sotheby’s financial results set records for the fourth quarter and for the fiscal year. Fourth quarter revenues rose 31 percent to $345.8 million for the period ended December 31, 2007, while profits rose 46 percent to $102.4 million. Fiscal year 2007 revenues rose 38 percent to $917.7 million and profits doubled to $213.1 million. Strong results were partially offset by a 30 percent rise in salaries and costs from higher incentive compensation. General and administrative expenses increased 22 percent due partly to a 33 percent increase in professional fees and a 28 percent increase in travel and entertainment costs over the period. For the first time, contemporary art became Sotheby’s largest category, with auction sales of $1.34 billion, an increase of 107 percent for the year.

Article from the Rapaport Magazine - March 2008. To subscribe click here.