Mr. Martin Brill

GLG News by Mr. Martin Brill, Managing Partner

GLG News is now G+ Insights

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Fierce Competition In Europe Is Changing U.S. Apparel Retailing

October 26, 2006

Analysis of:Retail Market Feels Fast Fashion Effect | www.wwd.com

European “fast-fashion” specialty retailers are increasing their presence in the U.S. and putting increased pressure on American specialty chains that cater to fashion conscious young women, to speedup deliveries of trendy apparel at affordable prices.

The highly sophisticated sourcing platforms developed by a number of European apparel chains are engineered to bring fresh fashion assortments to their stores on a weekly basis, which drive stock turns, increase market share and build store traffic.

Specialty retailers in the U.S., especially those targeting women under 30, are speeding up their supply chains by developing infrastructures and work-flow process’s that emulate European apparel chains such as Mango, H&M and Topshop.

Department stores and mass merchants are reacting to these changes in the competitive landscape by pressuring their apparel suppliers and direct sources to increase the regular flow new fashion assortments to the sales floor.

Liz Claiborne Reaches Outside The Industry For New CEO

October 23, 2006

Analysis of:Life After Charron: Liz Faces An Uncertain Future | www.wwd.com

William L. McComb – a Johnson and Johnson group chairman, with no apparel manufacturing, or retail experience – will succeed Paul Charron as Liz Claiborne’s new chief executive officer next month.

In an earnings slump for the past year and a half and operating in a very tough retail environment, the multi-brand apparel giant’s new boss will be facing a very steep learning curve.

Trudy Sullivan, the Liz’s highly regarded president, was in the running for the job, but was passed over; leading to speculation that she will soon leave the company.

This year, four top executives have left the company and if Sullivan leaves, McComb will have to count on a weakened executive staff and Paul Charron, (who will consult for one year) to get him up to speed on the intricacies of global manufacturing, and apparel specialty retailing.

With a dearth of top executive talent available within the industry, look for more executives with a background in consumer product’s or corporate finance to ascend to the CEO spot at a number of major apparel companies in the coming year.

The Biggest Trend In the Apparel Industry? Private Label Brands

September 26, 2006

Analysis of:JCP unveils intimate apparel boutiques | www.retailingtoday.com

• JC Penney’s creation of its latest private label brand of intimate apparel, Ambrielle, is emblematic of the most significant trend in apparel retailing.

• In their concerted attempt to promote exclusivity and drive margins, department stores and mass merchants are devoting more floor space to private labels, at the expense of major multi-brand manufactures.

• Earlier this year, Wal-Mart significantly cut the size of its orders on Levi’s Signature brand, to free up “open to buy” dollars for its own private labels.

• Major apparel makers acknowledge that the trend of direct sourcing by their biggest accounts is accelerating at a rapid pace.

• Multi-brand apparel makers like Liz Claiborne and the Jones Apparel Group are countering the private label trend by selling directly to consumers by way of their specialty retail stores and online sales platforms.

• Apparel manufacturers distributing more than 25% of their production to any one retailer are in serious jeopardy of significant hits to their top and bottom line’s – without warning.

Luxury Apparel/Accessory Brands Contiue Dramatic Growth

September 12, 2006

Analysis of:PPR's Stellar 1st Half: Gucci Group Propels 27% Surge in Profits | www.wwd.com

• Negative macro-economic factors have had little impact on the leading global luxury brands
• Top European and American luxury brands continue to deliver dramatic sales and earnings growth.
• Gucci and Louis Vuitton remain the star performer’s in the “upper luxury” segment
• Coach's earnings rose 33% for the quarter confirming the strength of their  “affordable luxury” brand positioning.

Jones Apparel Group Must Improve Its Strategic Business Plan

August 17, 2006

Analysis of:Jones Plots Future After Calling Off Sale | www.wwd.com

CEO Peter Boneparth is under pressure to grow revenue and increase earnings at the Jones Apparel Group and must improve the company’s strategic business plan to achieve this goal.

The company needs to re-evaluate its portfolio of brands, especially the moderate sportswear segment.

Improved cash flow, better inventory management and continued cost cutting must be on the front burner.

The Nine West Division needs to improve operating results soon or be sold.

Who Will Win The Tough BTS Season In 2006?

July 20, 2006

Analysis of:B-T-S: Back to the Seventies | www.wwd.com

Only a few teenage specialty retailers will hit their sales plan for BTS (third quarter).

Major discount and department stores will run even more aggressive BTS apparel sales than last year.
 
Well executed fast-fashion merchandise plans and sharp price points will be the purchase drivers at the expense of basics.

A Gloomy Back-To School and Fall Outlook For Apparel Retailers

July 17, 2006

Analysis of:Rising Interest Rates, Fuel Costs Hurt Retail Sales | www.wwd.com

• Apparel and accessory retailers will take a conservative approach to inventories this fall, as multiple economic factors held down consumer spending in June.
• Rising interest rates, higher gas prices (which are likely to go higher) and a slower housing market are all doing their part in making consumers feel less secure as the back-to school season is about to kick-off.
• Department stores will begin to promote back-to school and fall merchandise earlier than ever, creating margin pressures, which will trickle-down to the specialty store segment.
• Major apparel manufacturers will take a “double-hit,” as orders from mass merchants and department stores are down-sized and the demand for mark-down money (to cover promotional activity) becomes more severe.

Federated Flexes Their New-Found Muscle At Suppliers Expense

June 14, 2006

Analysis of:Federated Vendors Hit With 5% 'New Store Allowance' | www.wwd.com

• Federated Department Stores showed little regard for their vendor’s 2006 earnings, by announcing a questionable, and retroactive 5% “new store allowance” for 400 newly converted May Company stores.
• With very few options at their disposal, suppliers are likely to accept this “one time” charge rather than walk away from Federated’s business entirely.
• Although the conversion of the May stores doesn’t fit the industry’s classification of a “new door,” Federated flexed their new-found muscle and told their vendor’s that this charge would apply to orders that were already written to cover operational costs.
• Vendor’s already hurt by the closing of about 60 doors after the acquisition, view this move as highly objectionable and privately worry about further chargeback tactics by the retail giant.

Influential Fashion Emporiums are Alienating Petite Customers

June 1, 2006

Analysis of:Where's the Petite Department? Going the Way of the Petticoat | www.nytimes.com

• Reporting declining sales, executives at Neiman Marcus, Saks Fifth Avenue and Bloomingdale’s have eliminated, or drastically scaled back their petite departments, which sell clothes to women 5’4’ or smaller.
• This was done although sales in the U.S. of petite clothing have grown (Nordstrom and Macy’s report brisk sales) to $10 billion which is $2 billion more then the entire women’s jean business.
• According to the U.S. Department of Health and Human Services, the average American woman’s height is slightly less than 5”4’.
• The strong emotional response from petite customers at Saks, with many vowing to stop shopping in there completely, has executives “reconsidering” their decision.
• What must these stores do before they lose their petite customer base?

 

Goldman Sachs To Advise Eddie Bauer On Sale

April 26, 2006

Analysis of:Eddie Bauer on the Block | www.wwd.com

Potential bidders for Eddie Bauer include strategic and private equity firms. Bids are expected before May 1st. by strategic players such as VF Corporation and Liz Claiborne. Private equity companies mentioned as interested are Kohlberg Kravis &Co. and Texas Pacific Group. The hiring of Goldman Sachs as as financial advisor points to a quick sale of the company.

Coldwater Creek Thinks Outside The Box

April 20, 2006

Analysis of:Coldwater Creek Tests New Day Spa Concept | www.wwd.com

Coldwater Creek is not waiting around to reach mature status in 2009 (450 to 500 stores by 2009/10) to find a new vehicle that will leverage their brand equity. While Chico's, their strongest direct competitor, has chosen to develop new retail store brands to sustain corporate growth, Coldwater Creek's day spa concept will intensify their relationship with their customer base and increase lifetime value with a high margin business.

Major Stores Reduce Inventory and Their Vendors are Hurting

April 20, 2006

Analysis of:Wall-Mart Roils P&G, Levi Strauss With Plans to Trim Inventory | www.bloomberg.com

Mass merchants headed by Wal-Mart and leading department store chains such as Federated, are reducing inventories and the impact is being felt by the largest apparel manufactures and consumer products companies. The objective for these retail giants is to increase shareholder value by reducing working capital needs, increase stock turns, and provide greater flexibility to develop private brands.

The apparel industry has moved to off-set this changing paradigm (as well as merger-driven store consolidation) by developing specialty retail stores for various brands, online sales and expanding their global reach through joint ventures. In order to perpetuate wholesale growth, major suppliers are facing the daunting challenge of complying with the demands of their largest customer’s, while achieving their profitability and growth forecasts.

Wal-Mart's Mixed Brand Perception Issue

April 18, 2006

Analysis of:Wal-Mart's N.Y. Plan: Retailer Pushing Effort To Build in 5 Boroughs | www.wwd.com

Despite its everyday low prices and improved apparel assortments, Wal-Mart is seen by many as a large corporate entity that cares little for the welfare of their employees and the retail communities they enter.

Perceived as paying  poor wages and benefits to disadvantaged employees

Forces suppliers into selling at unreasonably low prices

Difficult for independent local retailers to survive.

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