Shoe Business Roundup: Holiday Sales & Store Closings

Shoe Business Roundup: Store Closures and
Will mall-goers be ready to shop for spring styles if it still feels like winter?
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New year, new business models?

That appears to be how companies are attacking 2015.

Major retailers from Macy’s Inc. to J.C. Penney Inc. in the last week have announced rounds of store closures.

Additionally, C. Wonder shuttered the remainder of its stores and juniors’ retailer Wet Seal is rumored to be headed toward bankruptcy.

Such moves seem to counter an overall strong holiday season for many retailers.

What’s happening?

According to executives and analysts, retailers and brands are aiming to keep balance sheets in check and prosper this year.

Macy’s announced a series of initiatives that consolidated its merchandising and marketing teams from Bloomingdale’s and Macy’s stores into one, introduced highly localized teams to buy according to weather and customers, and plans to shutter 14 Macy’s locations in 2015.

The moves, according to the company, will save $140 million annually. The firm also announced holiday sales: comparable sales were up 2.7 percent and the company reiterated earlier guidance.

“Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones. We must continue to invest in our business to focus on where the customer is headed — to prepare for what’s next,” Terry Lundgren, Macy’s chairman and CEO said in a statement.

Meanwhile, J.C. Penney announced holiday season comparable store sales were up 3.7 percent from the previous season. On the heels of the strong holiday, the company also said it would close 40 stores.

Footwear powerhouses aren’t immune.

Steve Madden Inc. pre-announced disappointing holiday sales. The company said sales would be flat for fiscal year 2014 and comparable store sales at retail slipped 2.3 percent. The firm said it now expects diluted earnings per share to range from $1.75 to $1.76.

Despite the holiday miss, analyst Camilo Lyon at Canaccord Genuity was confident the fourth quarter was the bottom for the contemporary women’s brand, which has struggled to keep up with the athleisure trend in the business.

“We believe spring product is materially better than last year and more on-trend with current fashion. Also, we believe trends in warmer weather markets are improving. Any hint of positive spring trends from management will be received well. As such, our view is that 2015 will be a year in which retail comps will turn positive followed by a re-acceleration in the core wholesale footwear business,” Lyon wrote in a note.

But it’s not all bad news this week.

Deckers Brands Inc. is expected to post robust holiday sales, thanks to Ugg Australia. Sam Poser, an analyst at Sterne Agee, said despite generally warmer weather, Ugg sales did well in stores and online.

“Online sales from both Ugg.com and other sites such as Zappos and Nordstrom.com are said to have performed very well,” Poser wrote in a note. “UGG stores appear to have performed well. We are forecasting comp store sales of negative .8 percent. We would not be surprised if that forecast proved conservative.”

Additionally, Poser said he was optimistic about sneaker sales for Nike Inc., the Jordan brand and Skechers Inc.

Cowen Group luxury retail analyst Oliver Chen said he was also positive on some holiday news and wrote: “In our view, deeper promotions, fewer weather disruptions, improving traffic to end December, and lower gas prices are likely driving strength.”