Mr. Poser: Primarily I am focusing on a lot of the athletic specialty retailers right now heading into back-to-school. But I do look at pretty much everything that is going on, just to make sure we keep a well-rounded view of the whole thing.
TWST: How is the business faring in this difficult economy?
Mr. Poser: It looks like the comps and everything coming out of Q2 are not good,
but we are looking really for the retailers to control what they can control.
We're not necessarily looking for the comps right now, just because traffic is
so bad. We want to see companies keep their inventories lean, get their
conversions up, control their expenses well without hurting the brand of their
retail operation and do the best they can to try to have compelling product in
those stores. But there is very little of that in the marketplace these days.
Many retailers are keeping a lot of powder dry in their open-to-buys, so when
things do improve they can attack it. So I think a lot of the comparable store
sales, especially of companies that haven't guided the good or the bad, is more
indicative of U.S. analysts' estimates than it is actually of how business is
these days. You can control your comps if you want to promote heavily, but if
your inventories are clean and you promote heavily, you're trading comp sales
for earnings dollars, for margins. So if your inventory is clean, there is no
reason to promote, to drive traffic, because all you'll do is continue to get
the consumer used to buying on sale. I think everybody is acutely aware of what
happened last year with Saks (SKS) and how aggressive they got, how they have
sort of killed their luxury customer. And I think people have realized that if
they further train their consumer to shop for sale, it could be the end of
retailers.
Tickers included in this excerpt: DECK, DKS, FL, GCO, HIBB, SHOO, SKX, SOVL, TOT
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