THE  

Keeping Our Finger On The Pulse Of The Retail Industry

Back-to-School Buying Helps Retailers

August U.S. retail sales advanced 2.9% based on results from 47 retailers, the International Council of Shopping Centers said. Wal-Mart Stores Inc., Macy's Inc. and retailers catering to teenagers reported August sales that topped analysts' estimates on purchases of clothing and electronics for the new school year. Retailers benefited from back-to-school shopping, the industry's second-biggest sales period after the December holidays.

Many retailers were able to rebound from a sluggish July, as consumers set out for the malls in August for late back-to-school shopping. Many schools started classes later, delaying back- to –school purchases. There was a boost in business due to the tax-free sales week in two critical states, Florida and Texas. Teens also like to wait to do most of their shopping until after they see what their classmates will be wearing.

As retailers throughout the nation posted solid sales, winners came from all sections of the industry and included Wal-Mart Stores Inc., Target Corp., Pacific Sunwear of California and Saks Inc.

Wal-Mart posted a 3.1% increase in August same-store sales, helped by strong sales of back-to-school items. Wal-Mart said that electronics, school supplies and children’s apparel were their top selling categories. Laptops and calculators also did well in some states such as Florida and Texas who prepared for later school start dates. Wal-Mart also had several price cuts, which helped sales of items such as bedding, bath towels, and storage items. Wal-Marts competitor, Target, also posted strong sales results for August. They reported a 6.1% gain in same-store sales, better than the 5.0% estimated.

Luxury stores did well again this month. Saks Inc., reported a 18.2% gain. Nordstrom Inc. posted a 6.6% gain in same-store sales. Macy’s Inc. had a 2.4% gain, but the store says that same-store sales could be down in September.

Teen retailers scored a strong rebound from sluggish results in July. Wet Seal Inc. reported a 1.7% gain, better than the 0.6% estimate. Abercrombie & Fitch had a 6% gain in same-store sales, while Pacific Sunwear posted a 9.6% gain.

``The question is whether this is a one-time improvement or a sign of better sales for the rest of the year,'' said ICSC Chief Economist Michael Niemira. ``It's more of a continuation of the underlying trend of sluggish consumer spending.''

The August 2007 edition of NRF Stores featured the banner article “Hot 100 Retailers: The Nation’s Hottest Retailers of 2007”. Alliance Data sponsored this year’s rankings.

The Hot 100 Retailers is the definitive annual ranking of the fastest-growing retail chains.  To be included in the elite ranking indicates that the retailer is a U.S.-based retail company, had $100 million or more in revenues, is publicly held, and had one of the highest increases in year-over-year revenues as of the end of their most recently-completed fiscal years.

For the first time, this year’s list includes restaurants - reflecting their increasing ties to traditional retailing.

The hottest retail groups included:

The top retailer in each retail sector, along with their overall ranking (out of 100), are listed below:

We have listed the first 5 companies from the complete list of the Hot 100 - is your company included here?

To view the complete list, Click Here, or go to http://www.hartsystems.com/cgi-bin/news.cgi?id=43

Hot 100 Retailers by % revenue increase from 2005-2006

		Revenues	Change	Earnings	Change	No. of
Rank	Company	2006	from 2005	2006	from 2005	Stores
1	The Bon-Ton Stores	$3,455,810	164.29%	$46,883	80.20%	280
2	GameStop	5,318,900	72.03%	158,250	57	4,778
3	Triarc	1,243,278	70.94%	-11,329	N.A.	3,600
4	Zumiez	298,177	45.04%	20,856	62.3	238
5	The Pantry	5,961,702	34.60%	89,198	54.3	1,493
	N.A.=Not Applicable
	*=Extracted from NRF Stores, August 2007

Shrinkage Results Reported from 2006 NRS Survey

As reported in Newsbeat, according to the National Retail Security Survey’s preliminary results, shrink’s financial impact experienced double-digit growth for the second consecutive year, while inventory shrinkage, as a percentage of sales, was almost flat in 2006.

The shrink rate rose to 1.65 of sales in 2005, and then a smidgen more in 2006 to 1.61%.  The financial impact of those losses is estimated at $41.56 billion - an increase of 11.2% from 2005, which was a year that saw the impact from shrink grow more than 20%.

Average Shrink by Retail Category

(Categories with at least three companies reporting)

How does your company’s shrink results compare with your category’s average?

The NRS Survey noted that pre-employment screening is down, while the greater effort is being expended into detection technology.  Richard Hollinger, Professor of criminology at the University of Florida and NRSS project director, says “This indicates a disturbing trend from pro-active to reactive LP.  I expect that this is a function of decreasing loss prevention budgets”.

For more information on conducting self-scanned inventories to improve accuracy and better identify shrink issues, visit us at www.hartsystems.com

Supreme Court Allows Retailers to Set Price Floors

In a 5-4 decision, the court said that agreements on minimum prices are legal if they promote competition.  The ruling, reported in late June by the Associated Press, means that accusations of minimum pricing pacts will be evaluated case by case.

The Supreme Court declared in 1911 that minimum pricing agreements violate federal antitrust law.  Supporters said that allowing minimum price floors would hurt upstart discounters and Internet resellers seeking to offer new, cheaper and less expensive ways to distribute products.

Respected authorities in the economics literature suggest that the long-standing decision "is inappropriate, and there is now widespread agreement" that price floors can help promote competition, Justice Anthony Kennedy wrote.

"The only safe predictions to make about today's decision are that it will likely raise the price of goods at retail," Justice Stephen Breyer wrote in dissent.

In recent decades, the Supreme Court has chipped away at what many economists traditionally regarded as vital consumer protections against anticompetitive conduct.  For example, exclusive dealer territories and setting price ceilings are no longer automatically unlawful.

The current case involves Leegin Creative Leather Products Inc., based in City of Industry, Calif. The company entered agreements with retailers setting minimum prices for the Brighton brand of women's fashion accessories.  Leegin said that by maintaining price consistency among niche retailers it sells to, businesses could offer improved customer service. This enables smaller stores to compete against rival brands sold by discounters, Leegin argues.

Joining Kennedy in the majority were Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Samuel Alito. With Breyer in dissent were Justices John Paul Stevens, David Souter and Ruth Bader Ginsburg.  The case is Leegin v. PSKS, 06-480.

Belated Happy Labor Day!

Origins of Labor Day:

Labor Day is a legal holiday celebrated on the first Monday in September in the United States, Puerto Rico, and the Virgin Islands.  Peter J. McGuire, founder of the United Brotherhood of Carpenters, first suggested the celebration of Labor Day in honor of the working class.  The first Labor Day celebration in the US – a large parade in New York City organized by the Knights of Labor – took place 125 years ago, in 1882.  Five years later, Colorado passed the first state law to declare the day a legal holiday, followed by New York, Massachusetts and New Jersey... and it only took the federal government 97 more years to make it official.  In 1894 the US Congress made the day a legal holiday… and a great excuse for a backyard barbecue!
 

Neiman Marcus Turns 100!

The current WWD Magazine is devoted almost exclusively to the upcoming 100th birthday of Neiman Marcus, and a retelling of its storied history and many milestones.  Neiman Marcus turns 100 on September 10th - the anniversary of the date that Herbert Marcus, his sister Carrie, and her husband A.L. Neiman first began their business. This fashion staple has somehow managed to have only gotten better through the ages, while we keep peering in the windows for the latest and greatest fashion finds. Their showcases still feature four-inch heels, a grand display of ready-to-wear and eveningwear, an array of sparkling baubles and a collection of clutches that any fashion guru would die for. 

It all began in 1907, when the original owners of Neiman Marcus had a choice to invest their $25,000 in distribution rights for a new bottled drink by the name of Coca-Cola, or a Dallas-based department store. They went with the latter in what workers of the ever-growing company jokingly describe as a “bad business decision”.

It began as an ambitious pledge to bring ready-to-wear designs seen in New York and Paris to Dallas. Now, there are 39 stores sprinkled around the country, and last year their revenues were well over $4 billion.

Their business plan seems to have been built upon fulfilling their customer’s style dreams and accessory wishes, while establishing a reputation of excellent customer service that is second-to-none. Not for the faint of finances, Neiman Marcus department stores offer high-fashion, high-quality women's and men's apparel, accessories, fine jewelry, china, crystal, and silver.

100 years have passed but still, it managed to stand strong, poised and loved by fashion lovers all across the United States as well as shopaholics from Canada and Mexico and international jetsetters. 

We at Hart Systems raise our glasses to Neiman Marcus on their 100th anniversary, and thank them for raising the bar for retailers everywhere!

Movers and Shakers

People You Know Who Are On The Go

This monthly installment to The Hart Monitor includes executive moves within the retail industry —

as reported in publications such as WWD, Hoover's, and various other sources.

Ann Taylor Stores:

Ann Taylor has hired Mark Mendelson, former chief merchandising officer at Jones Apparel Group, to serve as president of a new concept slated for a fall 2008 launch.

Babies “R” Us:

Gary Moncur has been promoted to regional LP director for Babies “R” Us.

Bath & Body Works:

Camille McDonald was promoted to president, brand development and merchandising.

Best Buy:

David Hemler was promoted to president Best Buy for Business.  Bill Thompson was promoted to VP and territory general manager.

Bloomingdale’s:

Jonah Moore has been appointed LP manager at Bloomingdale’s.

Borders Group:

Susan Harwood — previously VP of information technology at Books-A-Million where she was responsible for all IT operations for the 200 stores - has been appointed chief information officer of Borders Group, effective immediately. 

Coldwater Creek:

Timothy O. Martin has been promoted to senior vice president and chief financial officer.

Family Dollar Stores:

Jeff Thomas has been promoted to the position of VP- replenishment.

The Gap:

Former Shoppers Drug Mart CEO Glen Murphy has succeeded interim chairman and CEO Bob Fisher, who will remain as director.

HMS Host:

James LeChuga has been named LP manager for HMS Host.

Hudson’s Bay Company:

Hbc has filled the post of president with Robert Johnson, who was vice president of Intertech Group of Charleston, SC.

JCPenney:

Steve Hodgkins, formerly director of LP for Radio Shack Corporation, has been named shrinkage control manager for JCPenney Company, Inc.

Lowe’s Companies:

Doug Robinson has resigned and Don Stallings has moved higher, from regional VP to president, Canada.

PetSmart:

Lawrence “Chip” Molloy has been named senior vice president and chief financial officer.  Molloy joins PetSmart after four years at Circuit City, including the last year as vice president and chief financial officer of retail.  Additionally, Jason Coren, senior regional LP Manager for Old Navy, has been appointed director of LP for PetSmart.

Toys “R” Us:

Toys “R” Us has named Fred Becker as corporate LP Manager.

Preparation is Key… Keep your Inventory Service Informed of any Changes

A number of things may have changed since the last time you took inventory, and some of these may affect your inventory systems and processes.  Some items should obviously be discussed with your inventory partner (such as a new bar code type), but others are less obvious (such as new phone systems). 

At Hart Systems, we ask our clients to provide us with information on any of the following changes:

At Hart, we make a point of meeting with all of our clients (usually in person, or else through conference calls) several months before each inventory to discuss the above… as well as any other enhancements to the systems and procedures that can improve the count process.

If you think that anything may have changed that could affect your inventory count, transmission of inventory data, etc., then contact your inventory partner well in advance of your inventory date.

HART SYSTEMS The Self-Inventory Experts 

To learn more about how we can help you achieve your physical inventory goals, please call us at 800-252-2818, click here -Tell Me More- to send an e-mail, or visit our website at http://www.hartsystems.com/.

To view a previous Hart Monitor, click June, July, August

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© 2007 Hart Systems, Inc.

Hart Quote !!!

“It is the loose ends with which people hang themselves.”

Zelda Fitzgerald (1900-1948) author, flapper, wife of F. Scott Fitzgerald

Hart Systems Inc.
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Hauppauge, NY 11788