Retail Bulletin

RAPAPORT... Census Bureau: Department Store Sales Decline
U.S. department store sales fell 5.4 percent in February 2009, compared with one year ago, to $16.1 billion, according to the latest government figures. The U.S. Census Bureau, which calculates the monthly sales estimates, stated that all food service and retail sales during February, including automobile and gasoline sales, dropped 8.6 percent to $346.8 billion. Retail trade sales decreased 9.8 percent during the month.

Discount Stores’ Sales Weaken

Sales at Wal-Mart Stores, including the company’s Sam’s Club locations, dropped 2 percent to $36.2 billion in March. Comparable store sales in the U.S., excluding fuel, rose 1 percent. 

BJ’s Wholesale Club’s March sales increased 2 percent to $870.3 million and comparable store sales were down 0.1 percent. Costco Wholesale Corporation reported that its sales fell 3 percent to $6.4 billion, while comparable store sales decreased 5 percent.

Chain Stores’ Sales Slip 
   
U.S. chain store sales fell 2.1 percent on a year-over-year comparable store basis, according to the International Council of Shopping Centers (ICSC). The council reported that it expects April’s comparable store sales to either be flat or increase by up to 1 percent.

Luxury Jewelry Sales May Fall

Jewelry and watch sales were forecasted to slump by 12 percent in a new estimate by consultants Bain & Co, as reported in the Wall Street Journal. Overall sales of luxury goods could plunge globally by 10 percent this year to about $201 billion, the newspaper noted. *

Deutsch Bank Downgrades Blue Nile

Deutsche Bank analyst Herman Leung said positive company developments at Blue Nile are already reflected in the stock price and subsequently downgraded the online jewelry retailer’s stock to “Sell” from “Hold,” according to the Associated Press (AP). In a note to investors, Leung stated that while diamond prices have come down in 2009, which helps Blue Nile save money, consumer demand for jewelry is slowing, AP reported.*

Luxury and Department Stores’ Sales Plunge

Retailers in the U.S. continued to post year-over-year sales declines during March. Saks Incorporated reported that its sales for the five weeks that ended April 4, 2009 fell 24 percent to $209.4 million and that comparable store sales also decreased 24 percent.

Sales at Neiman Marcus dropped 29 percent to $307 million and comparable store sales were down 30 percent, with weak performance in all product categories. Online sales at Neiman Marcus Direct declined 24 percent in March.

Macy’s reported that sales fell 10 percent to $1.9 billion, while its comparable store sales declined 9 percent in March. However, online sales at macys.com and bloomingdales.com combined rose 18 percent.

Kohl’s Corporation reported that March sales increased 0.5 percent to $1.4 billion, while its comparable store sales fell 4 percent. Sales at Nordstrom were down 10 percent to $674 million during the month and its comparable store sales declined 14 percent.

LVMH’s Jewelry Revenue Plummets

LVMH Moet Hennessy Louis Vuitton’s watch and jewelry segment suffered in the first quarter as revenue plunged 27 percent to $199 million (EUR 154 million), making it the company’s worst-performing segment. In a company statement, LVMH attributed the drop in sales at the jewelry division to global destocking by watch and jewelry retailers and TAG Heuer and De Beers Diamond Jewellers’ exposure to the U.S. market.  The company’s overall first-quarter revenue was virtually flat from a year ago, up 0.4 percent to $5.2 billion (EUR 4 billion).

Bulgari CEO Warns of Loss

Francesco Trapani, chief executive officer (CEO) of Bulgari SpA, warned that the Italian jeweler is likely to post a first-quarter net loss when it announces its results on May 12, according to the Wall Street Journal Europe. Citing remarks made at the company’s annual shareholder’s meeting in Rome, the newspaper reported that Trapani stated “January started badly,” but he anticipates a slight year-on-year improvement in revenue by the end of this year. *

J. C. Penney Completes New Credit Facility
J. C. Penney Company completed a new three-year, $750-million bank credit facility, the retail giant announced. The new facility replaces a $1.2 billion credit facility that was scheduled to mature in April 2010, according to a statement. The arrangement of the facility was co-led by J. P. Morgan Securities, Bank of America, Barclays Capital and Wachovia Bank.

J. C. Penney had not utilized its original $1.2 billion facility for cash borrowing and it contended that “with the strength of the company’s current liquidity position,” no borrowing is expected under the new facility, other than to provide support for the issuance of letters of credit. The facility will mature in April 2012.

J. C. Penney’s March sales dropped 5 percent to $1.5 billion, while its comparable store sales decreased 7 percent. The company noted that its fine jewelry segment registered the weakest sales in the stores for the month.

Gitanjali Launches Retail Expansion Plan

The $992.5 million (INR 50 billion) Gitanjali Group, which recently unveiled a joint venture with state-owned MMTC for gold and diamond jewelry, has lined up a $59.5 million (INR 3 billion) expansion plan for a threefold increase in its company-owned retail stores. The group has established a strong presence in the U.S., where it operates 143 retail stores that it took over as part of its acquisitions of Samuels Jewelers and Rogers Jewelers.*
 
Easter Week Sales Boost Performance

The International Council of Shopping Centers (ICSC) and Goldman Sachs reported that U.S. same-store sales benefited from Easter week in that sales fell 0.4 percent for the week that ended April 11, 2009 — a marked improvement from the January 3 through March 21 period, which registered an average drop of 1.5 percent. Michael P. Niemira, ICSC’s chief economist, said that ICSC Research anticipates that April’s sales will “increase by one percent or possibly more — on a year-over-year basis.”

Ultra Stores Files Chapter 11

The weak U.S. economy helped to push Ultra Stores into voluntary bankruptcy, according to the retailer. The parent company of Ultra Diamonds filed for Chapter 11 protection, stating in court documents that the company’s assets and liabilities stood at $10 million to $50 million.

Arthur Diamonds Files Chapter 7

Wholesaler Arthur Diamonds of Los Angeles, California filed for Chapter 7 bankruptcy, listing assets totaling $317,483 as of February 23, 2009, $41,287 of which consisted of inventory and $275,494 of which were comprised of accounts receivable. The court filing reveals, however, that $241,986 of these receivables appear to be uncollectible. Arthur Diamonds’ liabilities as of February 23 were listed as $756,409.

eBay’s First-Quarter Revenue Down

First-quarter revenue at eBay fell 8 percent to slightly more than $2 billion. The decrease was primarily caused by the impact of the stronger dollar and the decline of the online company’s core marketplaces business unit, according to eBay spokespersons. 

*Additional reporting by Acquire Media.
 

Article from the Rapaport Magazine - May 2009. To subscribe click here.