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Inside Retail

Inside Retail (Apr 5th, 2017)

With this first edition of Inside Retail, we’re launching coverage of a rapidly evolving industry at a time when consumer shopping habits are making monumental shifts. Lately, more people are spending their extra money on restaurants and travel instead of clothing and accessories. And they are turning to online channels and away from in-store browsing to make their purchases.

The result has been a bloodbath for retailers, especially mall-based stores, that rely heavily on foot traffic. At least nine major retailers have already filed for bankruptcy this year, and analysts say the death of a good segment of this industry has only just begun.

Meanwhile, other retailers are thriving by ramping up their online strategies, employing unique in-store experiences or offering discount merchandise. Here, we’ll cover the ebbs and flows within the retail industry as its story unfolds.

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This in the retail industry, consistency is in high fashion. While many retailers are filing for bankruptcy amid declining sales, retailers like Home Depot (HD) and Ross Stores (ROST) are showing modest but consistent growth. Now, those retail stocks are demanding a premium. Generally, investors are willing to pay top-dollar for stocks with high growth potential. But in the volatile realm of retail, companies that can simply show any amount of reliable growth are favored, like TJX Cos. (TJX) and Lowe’s (LOW). “You are looking for the peace of mind that comes with not having to worry about a double-digit decline,” Simeon Siegel, an analyst with Instinet, told The Wall Street Journal. – WSJ

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Payless ShoeSource officially filed for bankruptcy Tuesday with a restructuring plan that closes 400 stores in the U.S. and Puerto Rico. Payless said it wants to strengthen its balance sheet, reorganize its debt and “invest in specific areas that Payless believe will provide sustainable growth, including omnichannel expansion, product and inventory initiatives, and international expansion in Latin America.” Payless has about 4,400 stores in more than 30 countries. So far this year, nine major retailers have filed for bankruptcy including electronics retailer HHGregg, Gordmans Stores, BCBG Max Azria and Limited Stores. – WAPO

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Bed Bath & Beyond (BBBY) has quietly dropped Ivanka Trump merchandise from its website, joining a growing list of retailers not selling the brand. Bed Bath & Beyond sold Trump-branded diaper bags and lighting fixtures. The product line's removal was first noticed by Grabyourwallet.org, which reports on companies with connections to the Trumps. A Bed Bath & Beyond representative confirmed to Grabyourwallet.org that the housing wares retailer no longer carries Ivanka Trump products, although another company official later clarified that the merchandise was still sold in some stores. Bed Bath & Beyond has scrubbed its website of the products. Ivanka Trump’s brand was dropped from Nordstrom (JWN), Belk, Kmart, Sears (SHLD), Burlington Coat Factory and Neiman Marcus. Stores that still carry the brand include Bon-Ton (BONT), Dillard’s (DDS), Lord & Taylor and Bloomingdale’s.– BUSINESS INSIDER

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Walgreens Boots Alliance (WBA) has slapped the Federal Trade Commission with a deadline for its proposed $9.7 billion takeover of Rite Aid (RAD). Walgreens is trying to win regulatory approval to create the largest U.S. pharmacy chain, but has faced some resistance. The deadline requires the FTC to either block or approve the merger in about three months. Importantly, the FTC cannot rule before then, allowing for the Trump administration to fill the commission, which has three out of five seats empty. Walgreens is banking on new commissioners being more in favor of the merger, and at the same time it wants to ensure a regulatory decision will not be delayed. – NY POST

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Lululemon Athletica (LULU), under duress of a lowered outlook, has vowed to pay more attention to its color selections to correct the problem. “We should have been bolder with the color assortment,” CEO Laurent Potdevin said on an analyst call. The athletic apparel company recently said it now forecasts same-store sales decrease in the first quarter, with expected revenue of between $510 million and $515 million in the first quarter. Fourth quarter revenue increased 12 percent from the year-ago period to $789.9 million. Lululemon stock plunged more than 23 percent last week, with shares down 27 percent the past year. – RETAIL DIVE

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Kroger (KR) has a new strategy to compete with Wal-Mart (WMT) and Target (TGT) – expanding its grocery offering to include home goods, kitchen appliances and apparel. The massive stores, called Kroger Marketplace, are very similar to Wal-Mart and Target, only with a heavier focus on the food selections. Of Cincinnati-based Kroger’s 3,000 locations, about 120 are Marketplace stores, which the company calls among its “primary growth formats in the future.” Kroger reported sales grew 5.5 percent in the third quarter to $27.6 million, just above the Street view of $27.4 million. Still, Kroger shares are down more than 22 percent the past year. – BUSINESS INSIDER

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