US shoppers hunt for bargains
Friday 10 April 2009
Abercrombie & Fitch, the all-American clothing chain that opened its first London store in 2007, lost one-third of its sales in March, as it refused to cut prices and watched as customers fled to cheap, discount stores.
The retailer has been leading the hold-outs who argue that slashing prices would devalue their brand, even as rivals are piling on incentives to keep cash-strapped consumers coming to their stores.
The bargain-hunting trend was visible again yesterday as the top US retail chains announced their sales estimates for last month, providing new hope to investors who believe the US economy is emerging from its period of free-fall. Overall sales were still lower in March, but the declines were less steep, and more than half of the companies reporting put out figures that beat analyst expectations. Some even raised profit forecasts for the period, sending retail shares broadly higher.
Consumer spending accounts for more than two-thirds of US GDP, so the monthly retail sales reports are seen as a vital barometer of the economic climate.
Yesterday's figures showed that the winners and losers of the conflagration on the high street are beginning to emerge. Abercrombie's sales were down 34 per cent on March 2008, missing forecasts by 10 percentage points. Similar mid-market fashion names were also suffering, with Gap sales down 8 per cent and American Apparel losing 11 per cent.
High-end chains are having a particularly tough time. Neiman Marcus, which includes Neiman Marcus stores and Bergdorf Goodman, lost 30 per cent of its sales of a year ago, and the upmarket department store Saks was off 23.6 per cent.
Only discounters posted stand-out results. Wal-Mart, Costco and TJX – owner of TJ Maxx – all reported sales gains on March 2007. Carol Meyrowitz, TJX's chief executive, said the company's success was the result of giving struggling customers "a great value proposition on fresh selections of great brands", and two consecutive months of above-forecast sales prompted her to raise the company's profit guidance for the year.
The better competition for other discounters meant that Wal-Mart, the largest retailer in the US and the one chain to have consistently outperformed since the recession began, missed forecasts in March.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...