Three Smart Retailers Turning the Recession Into Sales Gold
Savvy specialty retailers are really starting to see their recession-era strategies pay off. Fourth quarter reports show Chico's (CHS) and Limited (LTD) posting impressive increases in sales and profits. And while TJMaxx (TJX) saw net income take a hit of 15.3 percent, sales did rise 6.6 percent.
Here's what they're doing right.
Chico's gets chic in all sizes
At Chico's, Operation Frump-to-Fab continues apace. As such, team Chico's watched net sales grow 9 percent to $475 million, while comps pushed up 1.1 percent. Chico's other chains, Soma Intimates and White House|Black Market, had comps increase 1.2 percent and 0.9 percent, respectively. Chico's deserves kudos for continuing to think thin â€" in its operations and silhouettes.
Limiting growth was a tough but necessary initiative when Chico's hit retail maturity with about 600 stores in 2007. Paring down some of its short-term growth in exchange for staying profitable allowed the chain to rebuild its foundation based on strong customer service and direct-to-consumer sales.
The design team also worked to scale down its traditionally generous silhouettes. Contrary to popular belief, even plus-size women look leaner in clothing cut closer to the body. So while Chico's still churns out workhorses such as its silk shirt/jacket, the slimmer fit makes them instantly more modern (and flattering). Chico's even jumped on the skinny cargo trend, churning out well-executed comfy utilitarian chic.
Limited's sexy social media
Limited soared through the fourth quarter on double-digit increases in both profits and sales. Sales edged up 12.8 percent with comps on the rise at 10 percent. Victoria's Secret witnessed a 15 percent boost in its comps while Bath & Body Works' comps climbed 6 percent.
Victoria's Secret is clearly leading the charge for the Ohio-based retailer proving that "very sexy" does translate to sales. But Limited execs invested in a social media strategy for the intimates brand that's turning Facebook fans into gold.
Among the 8 million or so devotees of VS's Facebook page, there are plenty of guys not afraid to comment or "like" the most recent news, photos, and discussions, not to mention gawk at the scantily clad models. That's also made them brave enough to shop the stores, or the site.
Limited also played it smart with hookups -â€" parlaying the quest for extravagantly sensuous bridal underpinnings at Victoria's Secret into a full-on wedding and events shop under its eponymous flag. The two brands now cross-pollinate promotions on Twitter and Facebook.
TJMaxx isn't maxed out yet
The numbers don't tell the full story for TJMaxx. The country's largest off-price retailer reported net income falling 15 percent. But that's the cost of shuttering an underperforming division. Though A.J. Wright stores are closing, TJMaxx saw more people shop its namesake stores as well as its Marshalls and HomeGoods discount stores in the fourth quarter.
So the retailer is planning to open more stores -- expanding to more than 4,300 from its current 2,700 in the U.S., Canada and Europe -- but keep the focus on stateside growth. In another lean operating move, TJX plans to convert 90 of the closed A.J. Wright stores into TJMaxx, Marshalls or HomeGoods.
Image via Victoria's Secret
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