Retail Bulletin

RAPAPORT…
Retailers Report Poor June Activity

Retail stores in the United States reported a slow June, with three of the country’s top retailers seeing declines in same-store sales for the month. Jewelry products proved to be the weaker sellers for retailers in June. The drop is reportedly due to consumer fatigue from the season’s uninspiring fashions, high gas prices and the weak housing market.

For the five weeks ended July 7, Saks Incorporated reported a 3.9 percent drop in total sales to $237.6 million, and comparable store sales 5.6 percent lower. For the first five months to date of Saks’ fiscal year, sales rose 15.4 percent to $1.27 billion. Comparable store sales increased 13.7 percent for the five-month period.

Saks noted that its weakest sellers in June were jewelry and women’s bridge apparel, while its strongest were men’s apparel, accessories and shoes; women’s contemporary and designer sportswear; handbags; and fragrances.

Fine jewelry was also among the softer products for JCPenney, which reported a 1.5 percent drop in same store sales in June. But total sales at JCPenney increased 1.4 percent for the five week period ending July 7, boosted by a 10 percent rise in online purchases.

Macy’s reported a 1.9 percent drop in total sales to $2.3 billion for the five weeks ending July 7, while same-store sales sank 2.7 percent. The company had predicted same-store sales to be flat, or down 2 percent, in June. For the year to date, Macy’s sales dropped 1 percent to $10.2 billion. Same store sales were also down 1 percent for the year so far.

According to Thomson Financial’s, 12 retailers beat their same-store projections in June, while 16 missed estimates.

Richemont Sales Up

Luxury retailer Compagnie Financière Richemont SA’s first quarter sales rose 9 percent to $1.74 billion (€1.27 billion), thanks partly to high demand for watches. At a constant exchange rate, sales rose 15 percent for April through June 2007, but a weak dollar proved a drag on the total.

Richemont, whose brands include Cartier, Montblanc and Piaget jewelry, reported gains in China, Russia and the Middle East. Sales across the Asia-Pacific region rose 20 percent, Europe’s sales rose 13 percent and sales in the United States rose 3 percent. Japan’s sales fell 3 percent.

Amazon Beats Street Estimates

Online retailer Amazon.com pleased many on Wall Street after hours last month, by reporting strong profits as the Dow gave up 226.47 points on July 24. In after hours trading, Amazon shares gained 14 percent to $78.99 at 5:20 p.m. New York time. Amazon’s second quarter revenues rose 35 percent to $2.9 billion, while profits rose 254 percent to $78 million for the period ending June 30.

As of presstime, Amazon was poised to release a statement on jewelry sales, although the company does not break out product categories on its financial report. The company did conclude that electronics and jewelry both performed well in the second quarter.

Tiffany Executive Exercises Stock Options

Under a prearranged trading plan, James N. Fernandez, chief financial officer for the jewelry retailer Tiffany & Co., exercised options for 20,000 shares of common stock, the Associated Press reported last month, citing a Securities and Exchange Commission filing. Fernandez reported to the SEC that he exercised the options for $14.98 apiece before selling 15,000 shares for $55.26 apiece. A 10b5-1 trading plan, permitting a company executive to proceed with a sale even if he or she has material nonpublic information, was the basis for the stock sale, the AP reported.

Just prior to the AP’s story, an article posted on marketwatch.com stated that Tiffany & Co. shares had backtracked by 29 cents, and had closed at $56.22. The story cited Konik’s reiteration of an outperform rating and $68 price target. Konik noted that Tiffany’s shares were up 8 percent since June 1, and he contrasted this performance with a 3 percent drop in shares of Coach Inc. and an 8 percent plunge in shares of Nordstrom.

PPR Sales Up

PPR posted second quarter revenues of $6.6 billion (€4.8 billion), a figure 18 percent higher than one year ago. Same-store sales rose 6 percent for the period ending June 30.

For the company’s first half, sales rose 11 percent to $12.6 billion (€9.2 billion), while same store sales rose 6 percent. PPR purchased a majority share (62 percent) in Puma, helping to increase the bottom line. Excluding Puma, both revenues and same-store sales rose 6 percent for the Paris-based retailer.

Gucci sales rose 8 percent to $1.15 billion (€836 million) and same-store sales rose 14 percent during the quarter. For the first half of 2007 Gucci sales rose 9 percent to $2.5 billion (€1.8 billion) and same-store sales rose 15 percent.

Fashion and leather goods sales were particularly strong in the quarter, with sales rising across all regions: North America, 14 percent; Europe, 12 percent; Asia Pacific, 22 percent; and Japan, 12 percent.

The repositioning of the watch business continued during Gucci’s first half, as two new models Signoria and Pantheon had their launch at the Basel show in April. All geographical areas experienced increased sales, particularly in North America by 16 percent and Asia-Pacific by 20 percent.

LVMH Sales Up

LVMH Moët Hennessy Louis Vuitton (LVMH) released solid growth figures for the first half of fiscal 2007. The Paris-based luxury retailer experienced sales growth of 6 percent to $10.2 billion (€7.4 billion) and saw profits rise 2 percent to $1.1 billion (€834 million).

Watches and jewelry sales rose 17 percent to $532.5 million (€390 million). The newly expanded TAG Heuer high-end products performed well in all markets, according to LVMH. Other strong performers were Zenith’s Defy sports line, Dior Watches’ Christal range and the Chaumet Liens and Attrape-moi collections.

“The Group recorded a further increase in its current operating margin to more than 19 percent. These results are even more remarkable given the significant negative impact of exchange rates in the first half of 2007,” said Bernard Arnault, chairman and CEO of LVMH.

Bergdorf Goodman Reaches Sales Milestone

Luxury emporium Bergdorf Goodman’s sales hit $500 million for the fiscal year that ended on July 28, 2007. Spokespersons for the Fifth Avenue store, which is part of the Neiman Marcus Group Specialty Retail Stores division, reported that a customer made a purchase around noon on July 19 that pushed the sales to this peak. They attributed the company’s record performance in the fiscal year to several factors, including an ambitious renovation starting in 1999 that involved redesigning every floor of the store, as well as the addition of the Bergdorf Goodman restaurant on the seventh floor overlooking Central Park. Further factors cited by president and CEO Jim Gold included “aggressive product and service strategies along with an intensive capital investment . . . and the commitment and support of our vendor partners.”