After a two-year recession left accessory and apparel retailers embroiled in a battle for shoppers
Dallas Business Journal
Kerri Panchuk Staff Writer
”I still don’t think we are back to the place we enjoyed in 2008,” said Rod McGeachy, president and CEO of fashion accessory firm Tandy Brands Accessories Inc. (Nasdaq: TBAC). “But I do think the numbers are getting better than what they were in 2009.”
McGeachy added that retailers and companies like his, which profit from product orders from other retailers, are seeing “pent up demand.”
That recovery – although welcomed – is mostly statistical, he said. The increase in same-store sales “it’s not a real recovery just yet,” McGeachy said.
Real or statistical, the recovery is a welcomed change from 2009, when luxury retailer Neiman Marcus, for example, saw its April same-store sales drop 22.5 percent from the same period a year earlier. The retailer saw same-store sales grow 10.9 percent, hitting $301 million in the past month, up from $271 million a year earlier.
“I think it’s just that a rising tide lifts all boats,” said Milton Pedraza, CEO of retail analyst The Luxury Institute LLC in New York. “I think consumers last year went to the extreme in saving. Now, after the fourth quarter, they are starting to spend a little bit more. They were tired of being frugal.”
Pedraza said a bottoming out in the housing market, a stock market that seems to be maintaining its own and a general feeling that the economy is no longer bleeding jobs is fostering more consumer confidence.
Ted Vaughn, a partner at BDO Seidman LLP, said because companies like Neiman’s experienced significant drops in prior year sales, 2010 sales may look more dramatic on paper. Even so, Vaughn and other retail experts don’t doubt the pendulum is swinging in a more positive direction.
Not every retailer can credit the economy for a rise in April same-store sales.
Fort Worth-based leather goods and accessories retailer Tandy Leather Factory saw monthly same-store sales grow 11 percent, hitting $4.9 million, up from $4.4 million a year earlier.
“A lot of our sales growth (in April 2010) resulted from changes that we made,” said Jon Thompson, CEO of Tandy Leather Factory. “We changed the way we send inventory to our stores and handled our items.”
Thompson said the company focused more on maintaining a strategic sales mix while pushing aggressively for Tandy Leather stores to stock shelves with best sellers.
“We noticed a lot of stores were not ordering items that we thought they should have in stock,” Thompson said.
Once the corporate office focused on inventory selection, sales improvements took root.
Thompson said Tandy Leather tends to run contrary to market conditions.
When the market is down, Tandy Leather generally performs better than other retail outlets, he said. He said in tough economic times shoppers come to Tandy Leather stores to buy materials to make dog collars and other custom-made leather items.
These items, he said, are generally popular among consumers who are buying leather for the purpose of making other goods for them to sell in a distressed economy.
In the past, “when we’ve gone into a down market, we have seen this same type of customer come back to us,” Thompson said.
Despite improved demand, Plano-based J.C. Penney saw same-store comparables fall 3.3 percent in April. That was less than the 6.6 drop between the same periods in 2009 and 2008.
Earlier this year, J.C. Penney began feeling the lift of strengthening consumer confidence as same-store sales jumped 5.4 percent for March. J.C. Penney was not available to comment on what factors pushed sales higher in the first part of the year. The retailer’s March sales reflected strong performances in the children’s apparel and apparel segments, according to J.C. Penney sales reports.
But perhaps the biggest rebound in same-store sales happened at Neiman’s.
During the downturn Neiman’s “took the brunt of it” with wealthy shoppers curbing their discretionary income, Pedraza said.
Pedraza added that while high-end shoppers are the first to leave, they are also the first to come back.
But until retailers get to the fourth quarter, most are remaining cautious. There is momentum, Pedraza said, but he calls it “a tepid positive momentum.”