Sale Shopping. Early Markdowns Please Fashionistas, Hurt Investors. Second City Style Fashion Blog

October 15, 2007 • Shopping


Weak September sales combined with a larger-than-planned inventory
are forcing upscale retailers like Seattle-based Nordstrom to cut prices in many departments.

"We are taking immediate action to bring inventory levels in line," President Blake Nordstrom said in a statement. While the reductions will please shoppers, the price cut will hurt investors. Nordstrom, after bucking the national retail trend most of this
year, is now experiencing soft sales
because of a jittery economy caused by rising fuel costs and problems
with the housing market.

Diane Daggatt, managing director of institutional sales for
Seattle’s McAdams Wright Ragen, said many of Nordstrom’s problems were
weather-related, and the economy finally may be pinching the clothing
retailer. Daggatt said aspiration shoppers — those with the taste of affluent shoppers but not the income — are "not trading up now."

"Sales are coming in soft, as expected," said Ken Perkins, president
of RetailMetrics LLC, a research company in Swampscott, Mass. "It was a
perfect storm, a combination of abnormally warm weather, high food and
energy prices, a continued sluggish housing marketing and tight credit."

Perkins added that if sales don’t pick up, stores could be forced to
slash prices to get rid of inventory and make room for holiday
merchandise that will start to flow into stores this month. However, holiday sales don’t look promising, according to a national retail research organization.

The NPD Group is predicting consumers will start holiday shopping
later this year, and impulse buying will be down. Yet NPD also found in
its September survey of nearly 2,000 people that just 5% of
consumers say they planned to spend less this year.

Other struggling retailers include:

  • Target, which said same-store sales increased a slim 1.2% because of weak apparel sales. Analysts had expected a 2.2% increase.
  • Macy’s Inc., which posted a 2.7% drop in same-store sales, worse than the 1% projection.
  • J.C. Penney, which suffered a 4.6% drop in same-store sales, worse than analysts’ 0.1% forecast.
  • Gap, suffered a 7%  drop, worse than the 4.6% Wall Street expected.
  • Limited Brands Inc., which had a 4% drop in
    same-store sales, worse than the 1.5% forecast. The clothing
    retailer lowered its third-quarter earnings guidance, saying it may not
    earn a profit.


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2 Responses to Sale Shopping. Early Markdowns Please Fashionistas, Hurt Investors. Second City Style Fashion Blog

  1. asoom says:

    I haven’t been to the mall since I stopped working at bebe 2 months ago and I went yesterday, it was like the entire mall was on sale and it was different kinds of sales. That was the first time I saw Express not only had a whole bunch of clearance accessories but there was an additional 30% of the clearance price!
    Same thing at the Gap, their solid Tshirts were 4.99 and there wasn’t a line there or anything, as if it wasn’t a big deal!

  2. Lauren - SCS says:

    Yes, it’s getting ugly out there. I have never seen sales this early on fall items. I don;t think the weather helped much either.

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