Buyers in Las Vegas Weather Stock Market Swings

8/25/2011

Women's Wear Daily (From WWD Issue 8/23/2011)

By Jean E. Palmieri and Rachel Brown

August 23, 2011

LAS VEGAS - Retailers remain upbeat about the future despite the gyrating stock market, stubborn unemployment and rising prices.

While not oblivious to the macro-economic issues, merchants walking the trade shows here this week reported promising back-to-school business and continue to feel optimistic about fall and holiday. As a result, the majority said they were not planning to slash their open-to-buy budgets for spring.They were, however, more diligent than ever about unearthing the most trend-right, value-priced items for the coming season to lure customers to their stores.

In men's, that translates into a classic, more conservative offering. "It's all about cleaning up and dressing up," said Tim Bess, men's fashion/trend analyst for the Doneger Group.

Key items included vintage-inspired plaids, slim-fit chinos, soft blazers, safari jackets, utility shorts, ethnic prints and drawstring pants. White shirts, tech outerwear, skinny suits and striped shirts were also singled out as opportunities for retailers to consider for spring. And to provide needed energy to the floors, stores need to inject pops of color by adding brightly hued shorts and jackets or exploded print shirts.

"Overall, the picture is very, very positive," said Abbey Doneger, president of the Doneger Group. "There is some concern with regard to third and fourth quarter, but if [retailers] present the right product with a value equation, they will continue to do business."

Durand Guion, vice president and men's fashion director of Macy's, said, "Our men's business is on a very healthy roll." He attributed it to men being more interested in shopping. "There's less of a taboo about men looking good," he said.

Guion also pointed to the updated, slimmer fits that are making many men's wardrobes look obsolete. "Our tailored clothing business is fantastic," he said. "Is it the whole 'Mad Men' influence? Who knows."

Regardless of the reason, Guion said, "We are excited to see what's next that will propel the business. We know that if we just keep doing more of the same, it will get us into trouble. So we're focusing on newness."

The Macy's buying team was primarily shopping for its young men's and youth areas, he said. "We need to see what we can do to push the envelope on graphic tees" and he also sees opportunity in the "continuation of the whole prep thing, from collegiate to varsity.

"And color, color, color. We need a real breadth of that."

Steve Lawrence, executive vice president and senior general merchandise manager of men's wear for J.C. Penney, said that although the retailer is still "in the heart of back-to-school" selling, he believes "when all is said and done, it will be good. We're seeing more of a buy-now, wear-now movement" and the b-t-s business is getting later every year.

Penney's said the jury is still out about whether consumers will accept price increases on apparel, but he said there's not much to do but "let it play out."

In Vegas, Lawrence said he was primarily shopping for spring and wasn't expecting to shrink his open-to-buy budget. "That's harder to do with 1,100 stores," he said. "We have our open-to-buy and contingency plans if we feel we need to hold back a little."

Doug Ewert, chief executive officer of Men's Wearhouse, said that although "it's a shaky world, we still feel good about our business and our inventory levels. We think we have the right value proposition and our customers are responding, macro-economic roller coaster aside."

At the shows, the Men's Wearhouse team was shopping for spring and was not cutting back on open-to-buy, Ewert said. "We're excited about our big & tall business and we're looking for opportunities to expand that. And our slim, modern-fit tailored clothing is also getting a lot of attention."

Jeff Gordman, president and ceo of Gordmans, said that even though the Omaha-based chain always "maintains a high level of flexibility and liquidity," he wasn't planning to hold back on first-quarter orders.

"In every category of business, from men's to juniors to missy, accessories and home, it's all about offering compelling value and newness," he said. "If it's new, our customers won't hesitate to buy." In fact, the company's merchandising motto is "new or no."

Gordman said, "Our business model is contingent on offering timely, relevant fashion as opposed to basics."

At the shows, the Gordmans team was seeking "fast-fashion" items in young men's and juniors with a particular bent toward surf-skate in young men's, along with an "Americana look."

Conrad Szymanski, president of Beall's Outlet, said back-to-school sales have been geographically uneven, with strength in Florida and Texas and challenges in the mid-South. "The other dynamic is that customers are buying kids', young men's, shoes and juniors, but they're on vacation on missy and men's. Home has also turned off. It appears they're shifting their purchases to the moment of need."

Looking ahead to holiday, he said that although the luxury sector has been "red-hot," he expects that to "retreat a little. And the middle market has demonstrated some weakness going into back-to-school, which is emblematic of the economy. So we don't expect great things for holiday and we're planning our inventories conservatively."

Szymanski said he was shopping for immediates and spring at the shows, although many of his spring orders were placed when cotton prices were at their peak, "so we skinnied up on units," he said. He was hoping to beef up his orders in Vegas to "benefit from the better cotton prices."

Tim Leamy, operating partner of Sebastian's Closet in Dallas, warned the industry against being too cautious in light of the macro-economic climate. "Inherently, our industry goes into a bunker [when sales fall off], but that's absolutely the wrong way to go. Safe and repetitive is not a reason to spend money - it has to be enticing."

The open-to-buy is heading upward at Apricot Lane Boutique as it expands from 56 locations to at least 100 next year, according to Ken Petersen, ceo and founder of the Vacaville, Calif.-based women's apparel retail franchise company. While he said there was a hesitancy to shop on the part of Apricot Lane customers as the stock market sunk over the last two weeks, he found they quickly snapped out of it. "Our customers, they have still been so pent up over a period of time. We've been growing in this type of economy," said Petersen.

Susan Gregg Koger, chief creative officer and co-founder of ModCloth, said the San Francisco-based online retro clothing resource is doubling its open-to-buy this spring. As ModCloth has matured since it was established in 2002, she spends more of her time at the trade shows here focusing on uncovering the best spring merchandise and filling in a few remaining holes for the rest of the year. "This year, it is more about discovering newness than buying immediates," she remarked.

April Koza, buyer for Cerritos, Calif.-based Revolveclothing.com, is planning the biggest budget for spring in the site's eight-year history. "We have had so much success the past couple of seasons. The units that we are buying are deeper than ever. We are selling out of entire deliveries. We know that our customer is shopping and wants something fresh and new," she said, adding, "With everything that is going on in the economy, it is difficult to reorder. That played a big factor in placing much larger orders initially so we have that product to support our customers."

With shoppers still under pressure, many women's apparel retailers reported it is necessary to offer a wide range of prices to suit a variety of shoppers, no matter their economic situation. In its own private label hitting stores for the fourth quarter, Apricot Lane is providing three price tiers: what it is calling ivory label at $15 to $45, black label at $45 to $80 and couture at $85 and up. In 12 Apricot Lane stores owned by Cristi Hargroves, she said the average transaction has inched up to between $75 and $100, fueled by customers buying more lower-price-point items that are being sprinkled into the assortment.

ModCloth is looking to branch out from its strength in dresses by further developing the intimates and accessories businesses, categories that currently constitute only a small percentage of sales. "We want our customers to come and complete an outfit," said Gregg Koger, who added accessories are a good opening price point as well. "You can buy a $12 necklace even if you can't afford that $45 dress," she said.

In contrast, Revolveclothing.com is moving away from the cheaper lines it brought in when the recession took hold in 2008. Koza said the online retailer had introduced some brands with dresses priced as low as $150, but now isn't having trouble selling dresses that are $700 to $800. "We don't have much price resistance at all," she said. "We have a customer that is willing to pay a little bit of extra money to get a label and better quality and something that will last, more of an investment piece."

For spring, Koza sees important fall colors sustaining their momentum, including purple, sapphire and emerald, but bright turquoise and coral are being added to the mix. "We are going to see a bit of resurgence of color," she said. "I think it is time to get people excited to shop again and be happy for spring."

Women's stores will be feeling the groove for spring, with Seventies-inspired silhouettes moving to the forefront. Andrea Updike, director of product development at DownEast Basics, a Salt Lake City, Utah-based retailer with almost 50 stores, pointed to soft shoulder pads in tops, crocheted vests and high-waisted, wide-legged trousers as emblematic of the Seventies vibe for spring. In accessories, she singled out an oversized bag with a short strap as a key item.

Hargroves believes that dresses, fall's hot commodity, will continue to be formidable as merchandise shifts to spring. She estimated they currently account for 25 percent of sales in her stores and could increase to 30 percent or more come spring. In particular, maxidresses are expected to remain popular at Apricot Lane, although their silhouette will get slimmer. Dresses just above and below the knee are also anticipated to gain traction.