Women's Apparel Remains Favorite of Mall and Lifestyle Centers, New Concepts in the Works
|Lane Bryant Side-By-Side New Concept Store|
A slew of bullish earnings releases issued by leading apparel retailers in the month of March reveals continued strength in this important sector. Reuters underscored the growth projected by retailers in the 'rag trade,' reporting 2006 sales in the U.S. apparel industry were approximately $295 billion and that "womenswear is the most lucrative segment." The Gap, Limited Brands and Charming Shoppes make the top ten list for total revenues in the apparel sector, while Coldwater Creek and Talbots rank in the top ten for revenue growth.
CoStar reviewed the growth projections provided by Charming Shoppes, CATO, Coldwater Creek, Talbots, and Ann Taylor for this report. In aggregate, these companies are opening approximately 465 stores in the coming year, all have secondary brands or stores in growth mode, most have made a concerted effort to remodel existing stores, and all experienced a 5% or more growth in net sales over last year.
The big question is, can all these retailers meet their growth projections when they generally all share the same site requirements and target the same customer and location demographics -- middle-upper income markets for locations in malls or lifestyle centers with national tenant anchors?
With 37.6 million square feet of mall and lifestyle properties under construction in the U.S., and at least 32% of that space available for lease, some believe there is more than enough space to accommodate this growing sector.
Earlier this month, CoStar reported that women's apparel retailers had already announced plans to open more than 250 stores, including Limited Brands plans to open 35 Victoria's Secret and 32 La Senza stores in 2007; GAP will open 45 new Banana Republic stores; Chicos FAS will open 55 to 60 new Chicos stores, 55 to 60 White House/Black Market stores, and 20 to 25 Soma stores.
Charming Shoppes Plans Continued Growth in the Plus Size Apparel Segment
Bensalem, PA-based Charming Shoppes, Inc., owner and operator of more than 2,378 retail stores in 48 states under brands Lane Bryant, Fashion Bug, Catherine's Plus, and Petite Sophisticate Outlet recently announced that it would be adding 90-100 new stores to its portfolio in fiscal 2008. The primarily plus-size women's apparel retailer recently presented at a Bank of America conference and stated that the average American woman wears a size 14, and that plus size apparel continues to outpace the overall women's apparel market. These statements, if true, support the company's goal to achieve $4 billion in sales by growth in retail, catalog and Internet sales. Charming Shoppes reported for fiscal 2007 a 7% increase in net sales over the previous year in its retail store segment, with Catherine's Plus and Lane Bryant stores performing best.
Last year, the company charged ahead with growth in two new formats; outlet stores and a Lane Bryant intimate apparel side-by-side store. In the earnings press release, Dorrit J. Bern, Chairman, Chief Executive Officer and President of Charming Shoppes, Inc., said, "Our customer has strongly embraced our Lane Bryant Outlet and Lane Bryant intimate apparel side-by-side store concepts, and the further expansion of these concepts is underway." 127 Lane Bryant Outlet and Petite Sophisticate Outlet stores were opened last year; and the company plans to open another 10-15 Lane Bryant Outlets this year. The 55-60 new store openings planned for the Lane Bryant brand this year will primarily be focused on the larger 7,000 square-foot store format that will accommodate an expanded selection of intimate apparel. The company continues to migrate away from preferring mall locations for Lane Bryant, citing that a 50% balance between stores located in malls and stores located in strip or lifestyle centers is desired by 2010. Growth among Charming Shoppes' other brands will be relatively stagnant; Fashion Bug plans to open 10 stores, relocate as many as 25 stores, and close as many as 22 stores, while Catherine's Plus plans to open 10 stores, relocate up to 15 stores and close up to 10 stores.
In an interview, Gayle Coolick, director of investor relations for Charming Shoppes, said the company's relocations are usually a result of leases coming due, creating an opportunity to move to a newer, better nearby location that will boost traffic to stores. Coolick also said that although stores chosen for closing are underperforming stores, this is usually not a result of a poor location choice, and instead other factors have come into play, such as losing an anchor tenant in a center.
"The consumer is in fairly good shape as far as spending goes, and there are a lot of compelling reasons for the customer to buy fashion this year," Coolick commented.
CATO to Open 90 Stores in the Coming Year
Charlotte, NC-based The Cato Corporation, owner and operator of 1,276 stores in 31 states under brands "Cato" and "It's Fashion!" announced that it will open 90 stores during the coming fiscal year. The women's apparel retailer, which carries junior to plus sizes, reported a 5% increase in sales over the previous year and plans to close only 1.1% of its store base this year via 15 underperforming stores, compared to 26 closed last year.
Cato brand stores are absent only in the New England and Northwest areas of the U.S. and site requirements include a 3,500 to 6,000 square-foot space with at least 40 feet of frontage; a trade area population of at least 20,000; preferred co-tenants are national discount anchors and/or grocery anchors. "It's Fashion!" is the company's Junior, Junior Plus, Young Men's and Children's chain, and site requirements include a 3,000 to 4,000 square-foot space with at least 32 feet of frontage; a trade area population of at least 25,000; and the same preferred co-tenants as Cato stores. Currently, there are only 200 It's Fashion! stores in 14 southeast states. Cato's corporate website has a section dedicated to real estate; where you can access the contact information for all real estate representatives in your region.
Coldwater Creek to Open 65 Stores, Continues to try its Hand in the Spa Business
Coldwater Creek, Inc., a women's apparel retailer with 239 stores across the country, recently reported fiscal 2006 results and new store guidance for the coming year. Coldwater Creek is first a catalog retailer, but has grown its store base significantly in recent years, specifically growing 37% last year with the addition of 65 stores. Financial highlights for fiscal 2006 include a 46.1% increase in retail store segment net sales and surpassing a $1 billion sales mark milestone for the company.
Coldwater Creek plans to open another 65 retail stores, and three 'Coldwater Creek, The Spa' stores. The company launched the spa concept last year, opening six locations. The hope was to achieve success in this launch by appealing to the existing Coldwater Creek customer in existing markets. The company did not meet the anticipated financial goals for the launch, but is taking another stab at it this year by modifying the concept a bit. This time, the three Coldwater Creek spas will be opened adjacent to new Coldwater Creek apparel stores in existing market, with a side-by-side store format, so that customers can wander between the stores without having to exit the space.
For the 65 Coldwater Creek stores, expect to see 12 stores in the first quarter, 11 in the second quarter, 36 in the third quarter, and six stores in the fourth quarter. The company prefers lifestyle center locations, anticipating that two-thirds of the new stores will be located in lifestyle centers, with the remainder in malls. According to CoStar's database, Coldwater Creek's store size averages 5,500 square feet and prefers upscale retail locations. Coldwater Creek describes its customer as a professional, educated woman, 35-60 years of age that has more discretionary income than free time.
Talbots Continues Expansion with Acquisition of J. Jill Brand
In May 2006, Hingham, MA-based Talbots, Inc. completed its acquisition of the J. Jill brand. J. Jill compliments Talbots' customer base well, as both target the working, educated, middle-to-upper class income, 35 years of age or older woman with children. The difference is style; Talbots is known for classic styling and J. Jill is set apart by an artistic style. Largely due to this acquisition, Talbots has reported a 44.5% increase in net sales over the previous fiscal year. During 2006, Talbots opened 50 new Talbots stores and 34 new J. Jill stores, bringing the total store count to 1,368 stores in 47 states, the District of Columbia, Canada and the U.K.
For 2007, Talbots has slowed new store growth and is instead focusing on operating improvement in the brands to achieve desired financial results; however, expect to see the addition of 40 Talbots stores and 30 J. Jill stores. Talbots has several store formats including Talbots Misses, Petites, Kids, Accessories & Shoes, Woman, Mens, the Collection, and Superstores. Talbots' store size ranges from 2,200 for a single concept to 9,000 square feet or more for superstores that feature three or more concepts. J. Jill stores average 2,800 to 3,300 square feet in size. Both brands call for an upscale lifestyle center or mall in markets with matching demographics to the targeted consumer.
Ann Taylor Forging Ahead with Growth at Ann Taylor Loft Stores, New Concepts on the Horizon
New York City-based Ann Taylor Stores Corp has fueled rumors by announcing during its fiscal 2006 results this month that it will be launching a brand new concept Fall 2008. Details were not divulged; the only official statement by the company on the subject has been that it is a "very attractive untapped opportunity in the market" where "enormous growth potential" is anticipated. The company has recently introduced beauty, bath, and body products to some stores and in a recent interview with Women's Wear Daily, Ann Taylor President and CEO Kay Krill is quoted "We'll be talking about several strategic growth initiatives, but we feel beauty is really an exciting and big one for us...now we are taking [the beauty business] to a whole new level...we are trying to find meaningful ways to grow the business." Although the references are in relation to further bring the beauty product line in to existing stores, perhaps it will be the base of the new concept.
Ann Taylor operates 869 stores in 46 states, the District of Columbia and Puerto Rico under the Ann Taylor, Ann Taylor LOFT, and Ann Taylor Factory store brands. Real estate plans for the coming year will expand the company's square footage by 8% via the addition of 60 LOFT stores, 10 to 15 Ann Taylor stores, and 10 Ann Taylor Factory Stores. The focus is on new store growth in LOFT stores, the segment that has produced the best financial results for the company. In continuance of a plan to rebrand Ann Taylor stores since 2005, the company will update 90 additional Ann Taylor stores during fiscal 2007. Ann Taylor LOFT, which caters to the value-conscious professional woman willing to pay "upper-moderate" prices, has an average store size of 5,900 square feet. Ann Taylor stores compete in the "better" priced category, catering to the relatively affluent career woman, those stores average 5,200 square feet. The Ann Taylor Factory store originally started at the clearance priced outlet stores, but the company has reported that it has changed all of those stores over to a full-price format; Factory stores average 8,400 square feet in size.
New York & Company to Open up to 55 Stores; Continues to build Jasmine Sola Brand
New York City-based New York & Company, Inc. has plans to open 50-55 new stores this year, following its recent full year earnings release where a 5.5% increase in net sales over the previous year were posted. The ladies apparel retailer caters to the 25-40 year old segment, offering fashion, value-priced clothing and accessories in a traditional mall setting. New York & Company says the new stores this year will add 210,000 square feet to its square footage, which equates to an average of 4,000 square feet per store. In addition, as part of a continued effort to optimize and update stores, the company will remodel 25 to 30 stores this year and close nine underperforming stores.
New York & Company purchased the Boston-based retailer Jasmine Co. in summer 2005. Operating under the Jasmine Sola brand, this concept is a higher-priced, trendier brand also selling women's apparel, accessories, and footwear. Expect to see five new Jasmine Sola stores this year, which will bring store count to 24. In preparation for faster growth of Jasmine Sola in the coming years, New York & Co. is in the process of building the leadership team for the brand and will be opening a new distribution center in the New York area that should support the Jasmine Sola brand to the point of 100 stores in size.
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