Holiday profit seen higher as U.S. stores limit deals

Crisp Selling

The New York-based apparel maker pursued a “very crisp and very direct” approach in selling holiday items in department stores, Jackwyn Nemerov, an executive vice president at Ralph Lauren, told analysts on a conference call in November.

Coach Inc.’s gross margin will widen by more than 0.2 percentage points to 72.4 percent in the three months ended Dec. 31, analysts estimate. The margin at Macy’s, the second-largest U.S. department-store chain, may be little changed at 40.9 percent.

Falling costs, including a 16 percent decline in cotton prices this year, are helping apparel sellers. VF Corp., which sells Wrangler jeans at retailers from Wal-Mart Stores Inc. to Gander Mountain Co., expects to post its highest-ever quarterly gross margin in the fourth quarter, Chief Financial Officer Bob Shearer told analysts in October.

‘Better Environment’

“The industry is better positioned this year with the easing of apparel cost pressures,” Michael Niemira, chief economist for the International Council of Shopping Centers, said yesterday in a telephone interview. “That should help their margins. To that extent, it’s a better environment for the retailer.”

The Standard & Poor’s Retailing Index rose 0.1 percent to 643.8 at 9:44 a.m. in New York and had gained 23 percent this year through yesterday. The broader S&P 500 gained 0.1 percent today.

Sears Holdings Corp. cut inventory levels after last year’s holiday season left it with a glut of unsold clothing. The Hoffman Estates, Illinois-based operator of Kmart and Sears stores said it lowered domestic inventory by $972 million year- over-year as of the third quarter ended Oct. 27. That’s excluding its Sears Hometown and Outlet Stores Inc. unit that was spun off into a separate company in October.

Chief Merchandising Officer Ron Boire said on the company’s Nov. 15 earnings call that there is more room to boost inventory productivity using information gleaned from its loyalty program to better tailor assortments.

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