MARKET WATCH: It’s a Glorious Morning, But Retailer Numbers Don’t Look So Good

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• October 13 2008
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It’s Monday morning and the DOW at the moment is up 575 points, so obviously all our problems are solved. Just kidding. But at the very least, the coordinated international approach to beginning to manage some of the issues of bank solvency is working to reduce irrational panic. I’m guessing we’ll have an announcement from the U.S. Treasury shortly that they are doing much the same thing the Europeans did. If there is no such announcement, we might have the arbitrage moment from hell, as money flows out of non guaranteed banks in the U.S. to guaranteed banks in Europe.

But stabilization of the banking system (which won’t happen overnight no matter what) is only one issue. We have what I am afraid I’ll have to call the ongoing recession, and stabilizing the banking system, while critical and necessary, won’t solve that.

Zumiez, Abercrombie & Fitch, Bebe Stores, and Chicos have all recently release some numbers on sales and I thought a brief review might be useful.

Abercrombie & Fitch reported on October 9 that total sales were down 7% to $275.4 million for the month ended October 4. Comparable store sales were down 14% with Hollister down 20% (492 stores). Interestingly, direct to consumer sales (internet) were only down 5% (but that’s only $20.9 million in total sales). Their Abercrombie & Fitch comparable store sales (351 stores) were down 7%.

On October 9, Bebe Stores reported that sales for the quarter ended October 4 declined 0.7% to $157.3 million. Their same store sales decreased 10.8%. They also noted that average finished goods inventory per square foot was down 13.5% compared to the same quarter in the prior year. I’d call that good inventory management.

Chicos, on October 9, reported that its five weeks sales for the period ended October 4 fell 9.3% to $159.5 million. Comparable store sales were down 15.6%. For 35 weeks ending the same date, sales fell 7.9% to $1.091 billion and same store sales fell 15.9%.

Zumiez, as has already been reported in Transworld Business, had their sales for the five weeks ending October actually rise by 4.8% to $33.6 million. But their comparable store sales were down 9.0% compared a sales increase of 13.9% in the same period a year ago.

Of the four, only Zumiez didn’t warn about or reduce its earnings estimates.

If you’d like more information, try the following phone numbers. These are prerecorded messages that expand in a couple of minutes on the information in the press releases. I tried taking notes, but they talk pretty fast. I wonder if they talk slower when the news is better.

Zumiez 866-862-7693
Abercrombie 800-395-0662
Bebe Stores 877-232-3757
Chicos No number given.

Jeff Harbaugh is a consultant for the action sports industry and works with companies to identify and focus on critical business issues and opportunities fundamental to the bottom line. For more information, visit www.jeffharbaugh.com.