Archive for the 'Retail' Category

Living in a Fairy Tale and Diamond Prices Post-Crash

Posted on September 15, 2009, 10:15 pm. Closed

Via Bloomberg – “Diamonds Post-Lehman Have No Aura as Buffett Can’t See Recover“:

Jon Bridge, whose family has sold jewelry in Seattle for 97 years, said he grew so accustomed to rising sales that he faced more crises on the boards of charities. That changed in October, as the co-chief executive officer of Ben Bridge Jeweler choked down dinner in his home office and pored over reports showing a 20 percent decrease in sales, the most he had seen.

“This wasn’t just a bubble, this was a balloon, a hot-air- balloon explosion,” said Bridge, a great-grandson of the founder of the 75-store chain, owned since 2000 by Warren Buffett’sBerkshire Hathaway Inc.

Bridge blamed easy credit and inflated incomes for exacerbating the bust.

“We were living a fairy tale for the last 10 years or so, and you can’t do that,” Bridge said.

The chain has closed three stores in the past year. Buffett’s other jewelry-store company, North Kansas City, Missouri-based Helzberg Diamonds Shops Inc., has shut 19 stores this year, reducing its total to 233.

Buffett, 79, told Bridge employees not to expect a quick recovery. The billionaire investor, who receives a mailed copy of Ben Bridge’s weekly sales, met Bridge and other executives for lunch in May at Chandler’s Crabhouse on Lake Union, north of downtown Seattle.

“We are deeply in this — in a recession — and it’s going to take a long time to get out of it,” Buffett said over his usual meal of steak and a cherry-flavored Coke, according to Bridge. Buffett didn’t respond to e-mailed questions.

When we’ve been living in a fairy tale for the past decade, where consumer spending has been funded entirely by debt, this statement by Jon Bridge is an indication of the serious troubles still ahead of us.

Steve & Barry’s: It’s cheap. It’s chic. Is it worth it?

Posted on July 14, 2008, 8:56 pm. Closed

“It’s cheap. It’s chic. Is it worth it?” That’s the question a fashion article in The News & Observer asks regarding a $9 little black dress from discounter Steve & Barry’s. The story observes not even Walmart has a dress for that kind of price.

The reason why I’m even delving into the subject of female fashion is because Steve & Barry’s has recently filed for Chapter 11 bankruptcy and news stories have reported that Sears is interested in either the whole company or in just a selection of some of the brands.

Getting back to the original question, I think it could apply just as well to the company. A bankrupt company can certainly be had on the cheap. I’m willing to trust that its fashions are fashionable. You have celebrities like Sarah Jessica Parker and sports stars like Venus Williams and Stephon Marbury on record as backers of the store. But is Steve & Barry’s worth it?

Well, in the fashion article, the author deems the $9 little black dresses she tried on definitely worth the money. She even thought about getting two dresses and some other stuff while she was in the store. This point definitely stuck out to me as a big positive. I think most shoppers know they can’t expect a lot for a $9 dress, and when the store and clothing surpasses those expectations, shoppers will keep coming back and buying more.

Right now, there are reportedly 276 stores open. An article from Business Week leads me to believe that what got Steve & Barry’s into trouble was a focus on unreasonable and unsustainable growth. The article suggests that Steve & Barry’s could have been in a better position today than bankruptcy if it had not pushed for opening nearly 300 stores — almost ten times the number of stores it had five years ago — in such a relatively short time. “If the company had focused more on design and quality at super-low prices … instead of the number of stores, perhaps it could have found itself in a different position today.”

After learning a little bit more about this discount fashion retailer, I’m starting to believe that an acquisition by Sears (SHLD) would be worth it and also would be yet another indication that Sears is serious about becoming a retailer. As if trying to prove that it wants to be a retailer, Sears today named Craig M. Israel, a veteran retail executive, as senior vice-president and president of apparel, responsible for men’s and women’s clothing as well as the children’s and cosmetics divisions.

If the largest problem with Steve & Barry’s was simply that it focused too much on growth, I feel that Eddie Lampert and Sears management could turn Steve & Barry’s and its brands into a much more profitable enterprise.

More Bad News: CFO Survey Says Economic Recovery Not Expected Until Late 2009

Posted on March 12, 2008, 10:34 pm. Closed

According to the most recent Duke University/CFO Magazine Global Business Outlook survey, which asked more than 1,000 CFOs from a broad range of global public and private companies about their expectations for the economy, the economy doesn’t sound too healthy.

Optimism among chief financial officers in the United States has plummeted, with three-fourths of the CFOs saying the economy is either currently in recession or will be at some point during 2008. Nearly 90 percent of CFOs say the economy will not rebound until 2009. They expect inflation will increase to 3 percent this year.

We also had three major clothing retailers with weak reports: Talbots reported a loss on Wednesday, while American Eagle Outfitters and Men’s Wearhouse reported lower earnings. It seems to me that people are wising up a little and choosing to save more of their money by putting off new clothing purchases.

And yet another story on a crisis in the financial sector. This time its overseas: “Irish banks may need life-support as property prices crash.” There’s talk of nationalization of some banks as the property slump over there is leading to a wave of defaults.

Things still don’t look good here in the U.S. or in the rest of the world.