Things were finally looking up for the nation's retailers at the end of August. Consumer spending was rising, and inventories were down. It appeared that retailers were going to report strong third-quarter growth, followed by a blockbuster holiday season.
But September same-store retail sales grew only 2.9%. Women's specialty retailers fared worse, with those sales dropping 1.4%. Some chains reported double-digit drops: Sales at AnnTaylor Stores Corp., which has been losing ground since June, 1996, fell 13.9%.
What went wrong? Retailers are blaming the death of Britain's Princess Diana, which kept some consumers glued to their television sets, and September's unseasonably warm weather, which kept others outdoors--and out of the stores. But the poor sales for women's clothiers in particular also reflect mistakes in fashion and marketing by companies that once had a lock on the women's apparel market. Now these retailers are racing to reduce earnings and sales forecasts and lower end-of-year expectations. AnnTaylor, for instance, is now expected to earn as little as 50 cents a share for the year, vs. 53 cents for 1996. Just two months ago, analysts put its EPS at 58 cents for 1997.
IMPORTING TALENT. Execs at the women's chains are hoping for a comeback in the fourth quarter. And a few companies are bringing in new merchandising talent to try to save the critical Christmas season. On Oct. 14, AnnTaylor tapped a Bloomingdale's Inc. executive, Diane Holtz, to run its merchandising. That was just four days after Liz Claiborne Inc. turned over merchandising and marketing for its Liz Claiborne Collection to Elissa Skala Bromer, formerly president of Andrea Jovine Sportswear. But change won't come quickly: Talbots announced a return to conservative styles in the second quarter, and even so, same-store sales still fell 4.7% in September.
Women's specialty retailers are being squeezed on two fronts. On one side are the revived department stores. On the other are discounters such as T.J. Maxx and Ross Stores. Analysts say The Limited Inc. expects third-quarter earnings of 16 cents a share, compared with 15 cents a share a year ago. But off-price Ross Stores should earn 41 cents a share, compared with 32 cents a year ago. "The woman who was shopping at AnnTaylor or Talbots a decade ago is maybe 35 or 40 years old and may have had a baby," says Kurt Barnard, president of Barnard's Retail Trend Report. "She's not wearing those styles today."
As cold weather and the holidays approach, women are expected to head back to the stores. For women's apparel specialists, Santa can't come too soon.