Hi All,

In the midst of revealing the January unemployment rate which rose again last month to 7.6%, the highest since 1992 and the announcement that Macys will layoff 7,000 employees in their regional consolidations the January monthly sales results were released for US retailers. Yes, sales continued dismal but they could have been a whole lot worse!

In fact, Wall Street was pleasantly surprised. Amazing how everyone here is looking for a bright spot in a downbeat economy.

January '09 results might have come as a welcomed surprise but this is just the 1st installment of a very challenging year ahead. Traditionally January is the least important barometer of future sales trend. This year, the decease in the sales of gift cards for Christmas did impact January sales with fewer customers out there redeeming them. However, it is crystal clear that retailers at every income bracket face the same dilemmas for the balance of 2009;

Ø How to excite & entertain the customer in a effort to get them to buy something other than groceries and necessities

Ø How to keep inventories inline and under control

Ø How to wean the customer off deep reductions and get them to buy now not wait in anticipation of the markdowns

The "winners" of comp sales results continue to be the short list………….

o Wal-Mart +2.1% The world's largest retailer made a comeback and beat Wall St. forecasts. They benefitted from consumers' focus on necessities and finding less expensive options.
 

o Aeropostale +11% This teen retailer continues to outpace their competitors with fashion basics that look great and are priced right.

o The Buckle +14.7 As outlined last month, their success is rooted in offering unique, trend-right assortments in key categories appealing to young women & men in denim, apparel, accessories and footwear.

o Hot Topic +6% A "niche" teen retailer with locations in malls nationally appealing to the music/pop culture customer in apparel and accessories.

The "losers" dominated January comparable sales results. However, for many, sales did drop but results were better than expected….

Specialty stores:

Gap (US stores) -18%
Old Navy -34%
Banana Republic -22%
Chico's -10.9%
Limited Brands -9% *Beat Wall St. expectations.

Teen retailers:

Abercrombie & Fitch -20% * Beat Wall St expectations.
American Eagle -22.0%

Department stores & Mass merchants:

Macy's – 4.5% *Beat Wall St. expectations.
J.C.Penney -16.4%
Target -3.3% *Better than Wall St expectations.
Kohl's -13.4% * Beat Wall St expectations.

Luxury stores once again took the biggest hit, with the demise of the "IT" handbag and weakness in apparel & fine jewelry;

Neiman Marcus -25.8

Saks -23.7

Nordstrom -11.4

Children's retailers saw mixed results:

Gymboree +4% Drive sales via value key items.
Children's Place -11% Disappointed Wall St. with a higher than expected negative sales result.

All reports point out that the consumer is not shopping: they're focused on surviving. But better than expected results prove that the customer must be shopping…Right??

But their habits have been altered; they are trading down to less expensive items, brands and stores. The aspirational customer formally at Saks or Neiman Marcus has discovered the price / value quotient of famous designer's secondary lines in apparel, accessories & cosmetics being offered at Kohl's, Target & Wal-Mart or perhaps discovering it's chic to shop at drug store chains like Walgreen or CVS.

Others have stepped up to the challenge of looking stylish for less as they scour vintage and consignment shops or track down the best values at department stores. The "fashionista" of past is quite adaptable as she takes on a new persona & re-invents herself as the "recessionista" of today This is the true definition of the popular American .expression "Whatever works!".

Wishing you all a lovely Valentine's Day celebration cause not matter what the economists say ….. Romance is recession proof.

Cheryl