Fun Times at Other Industry Retailers

At almost the same time Abercrombie & Fitch (owner of Hollister), Tilly’s, The Buckle, and Genesco (owner of the Journeys chain) released, in early June, 10-Qs for their quarters that ended April 30^th.

I was going to do my usual thing and review each one separately.  But I was busy, too much time passed and honestly, there’s so much sameness to what our industry’s retailers are saying that I wasn’t sure anybody would want to read four separate reports.  Hell, I didn’t even want to.

So what I’ve done is gone through the 10-Qs and collected a few observations and some summary data.  It is, I think, enough.

What are the trends?  At best, mediocre financial results.  Caution in store openings.  A difficult economic environment and reduction in foot traffic in malls.  And they are all generally busy omni-channeling.  Not much new is there?  So let’s look at a few numbers and get this over with.

Abercrombie & Fitch reported a 3% sales decline from $709 to $685 million.  Comparative store sales were down 4%.  Gross profit margin fell from 62.1% to 58%.  New income improved, if you want to call it that, from a loss of $63.2 million in last year’s quarter to a loss of $39.6 million in this year’s.  However, the improvement is almost entirely due to their having a bunch of write offs last year that they didn’t have this year.  Taking those write offs into account, operating income was a loss $52.3 million in last year’s quarter and $54.9 million in this year’s.

The company expects to open 15 stores this fiscal year (10 of those will be international) but will close up to 60 in the U.S. as leases expire.

Tilly’s sales were unchanged at $120 million.  The gross profit margin fell from 30% to 27.1%.  Comparative store sales fell 4.1%.  Net income went from a profit of $1.28 million to a loss of $2.75 million.  They noted a “downward trend in traffic” and that they would “slow the pace of new store openings.”

The Buckle experienced a 5.7% decline in sales from $271 to $243 million.  Comparative store sales fell 11.1%.  Online revenue actually fell 2.8%.  The gross margin fell from 41.9% to 38.9%.  Net income fell 31.2% from $33.6 to $23.1 million, but at least these guys made a profit.  Their U.S. stores rose from 463 to 468.  The era of gangbuster store openings seems to be over- at least in this country.  But if you’re not opening many stores, and online revenue isn’t growing, why is Wall Street going to love you?

Genesco, the owner of the Journeys as well as other brands, had a decline in revenue from $661 to $649 million.  However, most of that was due to the sale of the Lids team sports business.  Journeys actually grew its revenue 6% from $278.6 to $294.2 million.  Genesco reduced the cost of sales and, as a result, the gross profit margin rose from 49.4% to 50.8%.  Meanwhile, comparative store sales rose 1% and net income was actually up from $9.9 to $10.4 million.

Nobody is exactly killing it, everybody has the same problems, and they mostly seem to be trying to do the same things.  Strong balance sheets, expense control, inventory flexibility and a focus on the bottom line continue to be what it’s all about.

See why I didn’t want to write this four times?