Tuesday, July 19, 2011

Calling Off Auction, Borders to Liquidate

Borders called off an auction for itself after finding no last-minute saviors, and instead plans to go ahead with a bid from two liquidators.

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Calling Off Auction, Borders to Liquidate

Back to School? Summer Season for Shopping Is Early This Year

Many retailers and advertisers are moving up the start of their back-to-school campaigns, hoping to catch shoppers whenever they can.

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Back to School? Summer Season for Shopping Is Early This Year

Customers Search Internet For Back To School Deals

Facing sticker shock at the pumps, consumers are traveling no further than their computers to log onto price comparison search engines for back-to-school deals for their kids.

While b-t-s shopping budgets will be flat or shrink slightly as cautious consumers maintain a recession mind-set, e-commerce is poised to significantly gain market share, as it did last Christmas season when it more than doubled its growth rate. “The Internet is already highly promotional,” said Walter Loeb, founder of Loeb Associates. “That’s where retailers are gaining share. Many retailers at the mall were empty last Sunday. Success this b-t-s season will be selective and it won’t be for all retailers. There’s no sense of free spending exuberance. Department stores will get their share if they don’t have a sale every Friday and Saturday,” as has been their custom during the b-t-s selling period.

A b-t-s forecast survey by PriceGrabber, a part of Experian, found that 69 percent of consumers plan to shop online and use comparison shopping sites as a money-saving technique, compared with 23 percent in 2010. Forty-one percent of shoppers said they’ll visit retailer Web sites this b-t-s period to print out coupons, versus 33 percent last year.

“Clothing retailers will always benefit from the b-t-s shopping season, and we suspect that the increase in purchases in this category can be attributed to the recent wide availability of affordable, designer-inspired clothes,” said Graham Jones, general manager of PriceGrabber. “Parents looking to keep their kids on-trend may find it easier to stay within their budget by comparing prices online for a discounted pair of designer jeans and extending the life of the expensive electronics they already own.”

PriceGrabber’s survey found that 48 percent of consumers plan to spend $250 or more on b-t-s purchases, and 25 percent will spend $500 or more, a modest decrease from b-t-s budgets in 2010, when 56 percent of consumers said they’d spend $250 or more and 31 percent planned to spend $500 or more. The survey of 2,612 U.S. online consumers was conducted May 12 to 19.

The NPD Group’s study of consumers’ purchasing intentions for the b-t-s season saw little change in the amount shoppers plan to spend. The same number — 38 percent — said they planned to spend more this year than last, and 22 percent said they would spend less in both periods. Once again, value is their modus operandi.

“We have a clear sign that ‘trendy and fashionable’ or ‘influenced by friends’ is shrinking and ‘value’ is gaining momentum,” said Marshal Cohen, NPD’s chief industry analyst. “The study’s results clearly point out that consumers will be shopping later, looking for value, and searching out lower priced options.”

That should benefit mass chains like Target, Kmart and Wal-Mart. “Target.com continues to be a destination, especially at monumental moments like b-t-s,” said a spokeswoman for the retailer. “There’s an expanded assortment on Target.com, an option for students to make lists and a back-to-college checklist where we’ve curated a list of products students need as they head back to college. Even if they’re not shopping online, our guests are doing some homework and preview shopping.”

A key launch for b-t-s is Denizen jeans from Levi’s, with styles for the whole family. The brand, which is exclusive to Target, features jeans in a variety of washes, dyes and fits. Skinny jeans for boys and girls are $17.99. Shake it Up, the new collection from the Disney Channel’s D-Signed brand, consists of fashion tops, leggings, screen prints and jackets inspired by Ashley Tisdale’s Sharpay character from the “High School Musical” series. Customization and personalization of items for b-t-s includes Paul Frank stationary and notebooks, where kids can color the iconic monkey to their liking.

“B-t-s is the second biggest season” next to Christmas, in terms of sales, said Mark Snyder, chief marketing officer at Kmart. “Our customer is compressing the frequency of her trips and saying she’s being more thoughtful and deliberate in what she’s choosing.”

Kmart is trying to leverage social networking in the b-t-s arena. “Selena Gomez has 4 million followers on Facebook,” Snyder said, referring to the actress, whose Dream Out Loud collection is sold exclusively at Kmart. “With the celebrity deals you put together today, you negotiate with them to tweet and do Twitter parties. In the old days it was, ‘How many appearances can you make?’”

Kmart’s silver bullet, according to Snyder, is layaway. “In this post credit-crazy world, it’s one of the things that will get the customer into the store, along with great prices. We grew layaway in 2009 by 3 million families.Layaway is growing in influence every year,” he said.

However, Amy Noblin, a retail analyst at Weeden & Co., said retailers are adopting a more conservative tone with regard to b-t-s. “The economic data have been mixed. There’s a lot of uncertainty around pricing,” she said, referring to how higher cotton prices will impact consumer prices. “That’s the big wild card. Retailers are waiting to see what [their competitors] are going to do with pricing. Certain retailers have been able to deflect some increases to the spring. The price increases will be bigger in the second half of the year. The more cotton-exposed categories are up more.”

For example, Noblin said graphic T-shirts are up $2 to $5, hoodies up by $10 and there are more high-priced denim stockkeeping units offered in the category. “You’re going to see more promotions that help mask the price increases,” she said.

Denim will be important, as always, with styles ranging from “the skinniest leg through boot cut to straight leg to a slightly wider flare,” said Tana Ward, senior vice president and chief merchandising officer for American Eagle Outfitters Inc. “It’s not really about one fit.”

American Eagle’s b-t-s offerings have more of a rocker influence with the marketing message “We the People,” edgier graphics on T-shirts and crop tops. Pre-planned promotions start as early as this week and will continue throughout the season. Ward said American Eagle continues to see more visitors online.

“To truly win b-t-s, J.C. Penney is reaching a new and younger customer through unique digital experiences,” said a J.C. Penney Co. Inc. spokeswoman. “We want to be part of their online social circle through virtual tools that enable them to express their personal style while getting involved in a worthy cause.”

That includes using mobile devices, QR codes, MS Tags and location based check-in this b-t-s season. Penney’s is leveraging the popularity of haul videos, which blend video blogging and a fashion show-and-tell, with a Haul Nation contest on its Facebook page. Teens can upload their haul videos for a chance to win a trip to New York City.

Stardoll, a new brand for b-t-s based on Stardoll.com, is bowing at Penney’s. With more than 100 million users worldwide, Stardoll.com claims to be “the world’s largest fashion and dress up games community for girls.” Penney’s is capitalizing on the popularity of girls designing and dressing personalized “MeDoll” avatars by using those style trends to create Stardoll clothing and accessories, such as five-pocket jeans, $23.99, and floral flounce tops, $17.99. The retailer is also launching its largest-ever online cause marketing campaign to benefit kids’ after-school programs, a spokeswoman said.

Sears is introducing a new juniors brand called American Star. Mix and match related separates feature trendy looks with an “uptown bohemian” feel, a spokeswoman said, adding, “It’s an inspirational collection for us.” Superstretchy jeans and jeggings come in a range of washes and fits this season and jeans have details such as “bling” on the back pockets.

“We do see a trend in increased shopping in September as many kids check out what their friends are wearing, take note of those trends and return to the stores or go online to purchase additional, key items,” she said.

Monday, July 18, 2011

Mexx Brand On Auction Block?

Liz Claiborne Inc., the owner of Juicy Couture and Kate Spade, is making presentations to private-equity firms to sell its money-losing Mexx brand, said two people with knowledge of the matter.

Leonard Green & Partners, Sun Capital and Golden Gate Capital are among the firms that have explored a possible acquisition of the Mexx business, said the people, who asked not to be identified because the talks are private. Mexx is Liz Claiborne’s largest division and accounts for about a third of its revenue.

Final bids will be due in a few weeks with a sale probably completed around early September, said one of the people. Liz Claiborne is seeking to maintain a small stake in Mexx, which has stores in Europe, Russia and Canada, the person said.

The Mexx business may fetch about $100 million, said the person. Liz Claiborne will also try to require any buyer to put in as much as another $100 million to cover debt and capital requirements, said the person.

Jane Randel, a Liz Claiborne spokeswoman, declined to comment on the company’s progress in studying alternatives for Mexx. Liz Claiborne is pursuing its goal, stated April 28, to reduce its exposure to Mexx by various means, she said.

“There are no timelines at this point, but we continue to pursue our previously stated goal of break-even operating profit for the global brand by the end of 2012,” Randel said.

A spokesman for Sun Capital declined to comment. A representative for Golden Gate couldn’t be reached for comment and a spokesperson for Leonard Green didn’t immediately return calls.

Since 2007, Chief Executive Officer Bill McComb has sought to create freestanding, profitable operations for Mexx, Juicy Couture, Lucky Brand and Kate Spade. In 2009, he brought in Thomas Grote, former president of Esprit, to run the Mexx division and revive its sagging sales in Europe.

Liz Claiborne said first-quarter international sales fell 9 percent due to declining retail and wholesale revenue in Mexx Europe. The company has posted losses in each of the past 14 quarters and the share price has sunk more than 80 percent in the past four years.

New Chairman To Head Zara's Parent Company

Inditex will today enter a new era.

The parent company of Zara, Europe’s largest apparel retailer, will today see a change in management when chairman and founder Amancio Ortega, dubbed “the inventor of the Zaravolution,” steps down and hands the reins to Pablo Isla, who had been the group’s chief executive officer and deputy chairman since 2005.

But while the 75-year-old immensely secretive and low-key Ortega may be stepping down, he is hardly out — especially since he still controls the majority of the company’s shares. “Nothing has changed. He still controls the company and he still has a lot to say — and nobody doubts that he will say it,” said Sofía Vázquez, a reporter for La Voz de Galicia, a regional newspaper in the north of Spain, which is the company’s home base.

“Amancio is making another smart move, preparing for the future with similar logic and the same intelligence he has always used to run the company, but I think he’ll remain very close by,” added Linda Heras, international development director of Roberto Verino, a high-end apparel label and geographical neighbor.

Inditex operates 5,154 stores in 78 countries, with net profits of 1.73 billion euros, or $2.29 billion at average exchange, for the 2010 fiscal year on sales of 12.5 billion euros, or $16.5 billion. With eight chains led by Zara, Ortega’s empire has a workforce of roughly 100,000.

Under Isla’s watch, Inditex rolled out more than 2,800 stores with the top priorities being expansion in Asia and Eastern Europe, as well as growing e-commerce.

Pending shareholder approval, Isla will receive a hefty block of shares, worth 13.7 million euros, or $19.6 million at current exchange, as “a welcome gift” from Ortega, a company source confirmed.

About his succession, Isla said, “It is not a drastic move and there won’t be any major changes. I feel enormous responsibility and motivation to strengthen Inditex, and it’s the right moment. The transition will be smooth and very natural.”

Outside Inditex’s corporate inner sanctum, little is known about Ortega except that he’s the richest man in Spain — and the seventh richest (up two notches over last year) in the world, with a net worth of $31 billion, Forbes reported in March. His fortune includes Inditex stock — he has maintained a 59.3 percent stake in the company since it went public in 2001 — and luxury real estate projects in the U.S., Florida in particular, and in such major European cities as London, Paris, Lisbon, Berlin, Madrid and Barcelona. He has additional investments in banks, gas and tourism and owns a horse-jumping circuit and a soccer league.

Ortega is not much for fanfare and personal public relations is not in his DNA. He’s been quoted as saying, “Talk about my company, but not about me,” and he rarely appears in public.

One of the few to penetrate company walls is avant-garde Spanish artist Alicia Framis, whose filmed performance “Secret Strike — Inditex” (2006) chronicled a day in the life of Zara. “Inditex employees were very involved in the film,” Framis said. “Everybody wanted to be a part of it — except Amancio Ortega.”

Ortega’s is a rags-to-riches story. In the early Sixties, he came up with the idea of making basic garments like housecoats and underwear cheaper than anyone else. Production took place on his kitchen table, and the first item cut from cardboard patterns was a quilted pink robe with blue piping. In 1975, he opened his first store here, selling bathrobes for about 50 cents each.

Working from the age of 13 in local men’s wear shops, he had little formal education. “I couldn’t work and study at the same time; it’s that simple. My university was my profession. I wanted to be a different kind of impresario, one with a social conscience,” he told Covadonga O’Shea, onetime director of Spain’s prestigious fashion magazine Telva, in an authorized biography published in 2008.

“His success has not changed him,” O’Shea said. “His values are the same; he’s humble, affectionate, generous, and he loves the people he works with.”

Ortega lives with his second wife, Flora Pérez Marcote, in an apartment in La Coruña, an unpretentious seaside town about six miles from Inditex’s headquarters in the industrial zone of Arteixo. He doesn’t speak English and, according to an employee, “he’s approachable and into everything. He lives the product,” she said.

It remains to be seen how involved Ortega will be in the company he founded, now that Isla is taking over. But the next generation of the Ortega family already is involved: The founder’s youngest daughter, Marta Ortega, was last fall brought into company headquarters, and although she has no concrete job, department or title, she’s in on all major decision making. An Inditex spokesman said her arrival and the pending management succession are unrelated, however. “She will continue her training program, a mix of creative and commercial activities, within the group and, logically [as Ortega’s daughter], she’ll have a role but so far she isn’t officially involved in the company. We don’t know anything about her future.”

Prior to Isla’s promotion, Marta Ortega was considered the heir apparent, and she’s been well groomed for it. With a degree in business administration from London’s European Business School, she speaks four languages — including English, French and Italian — and to date has interned for company stores in London and Paris, with office stints in Asia and Barcelona.

In private, she is an accomplished equestrian, taking part in international competitions with rider-boyfriend Sergio Alvarez Moya — and as socially shy as her father.