Silverman Consulting & Retail Services’ Post

The Hot Sale Going on at Department Stores: Their Shares Private buyers might have more stomach for the struggling retail sector than jaded stock investors. They do, however, own valuable real estate, well-recognized names and wide customer bases—things that investors without the glare of quarter-to-quarter scrutiny think they can squeeze more value out of. Macy's and Nordstrom are the subject of such take-privates right now. Markets aren’t quite convinced these deals will materialize: Macy’s shares are changing hands at about $18 a share, well below the $24 that ARKHOUSE and Brigade Group offered. The prospective buyers even said they may raise that offer if they like what they see during due diligence. Nordstrom’s shares rose as much 18% in the days following Reuters’ report that the Nordstrom family is considering a take-private. The company’s stock is now up 6.7%. Some skepticism is warranted. Both targets were the subject of such take-private efforts in 2017, and neither succeeded because investors had difficulty lining up financing. Interest rates today are much less favorable. One thing potential acquirers do have working for them, though, is just how cheap department stores are today. Shares of Macy’s and Nordstrom trade around a fifth of their respective forward-12-month revenues, while shares are valued at about a sixth of their forward revenues. Since 2010, revenue at listed department stores—Kohl's, Nordstrom, Macy’s and —has lagged behind inflation, collectively growing at an average compound annual growth rate of 0.4%. Sales at off-price retailers The TJX Companies, Inc., Burlington Stores, Inc. and Ross Stores, Inc., meanwhile, have eaten their lunch with average growth of 7.4% since 2010. Over the last decade, shares of Macy’s and Nordstrom have lost about 70% of their value. Is there even a public investment case for department stores? Many industry analysts say the business is in secular decline, losing share to off-price retailers such as T.J. Maxx and Burlington Stores, #ecommerce, and the #apparel #brands themselves, many of which have shifted to bypassing #departmentstores in favor of direct sales. Jinjoo Lee The Wall Street Journal

Here they grow again as The TJX Companies, Inc. Companies, Inc. confirms the expansion of their "treasure hunt" experience by over 1300 doors. Learn more: [Link to the article] #TJXCompanies #Retail #Expansion #value #fashion #shoppingandtheretailindustry

$3.8 billion CASH to go private! The Nordstrom family has teamed up with El Puerto de Liverpool to make this offer of $23 per share. The details: ▪️Financing would include rollover equity and cash commitments from the Nordstrom family and Liverpool, as well as, $250 million in bank financing ▪️Existing debt would remain outstanding The proposal is now being reviewed by a special committee of the board. As of 9:50 am EST, the stock price is at $23.20. Although we saw some glimmers of hope in Q2 earnings, there is still a lot of road to cover to turn things around. The interesting part to me is that of the 365 stores in operation – approximately 70% are Nordstrom Rack stores which shows the most promise. As of the 2023 annual report, the Rack banner (stores + online) only produced ~34% of net sales. You have the "full price" banner producing a disproportionate amount of sales. The decision is not so clear cut. Is it a good deal? Retail Dive 🔗 in comments. #retail #stores #omni #deals

ICYMI ... here are retail things we have been discussing this week on LinkedIn: 🛍️ August was a steady month for US retail, with growth in overall sales coming in at a respectable 2.5%.  Link: https://bit.ly/3XCjAFg 📈 Over the past 20 years, TJX has grown its revenue by 246.1% or by $38.6 billion in cash terms. It’s a retail winner. Link: https://bit.ly/3Xtx6uW 📦 With a bit of smart thinking, Amazon managed to simultaneously increase delivery speeds and reduce the cost to serve.  Link: https://bit.ly/3MV33aQ 🏀 It’s all change over at Nike. John Donahoe is out. Nike veteran Elliott Hill is in. But how long before the company gets back on track? Link: https://bit.ly/3MR6EGP 👕 Macy’s has launched its new menswear label, Mode of One. It’s a well-developed line, but in-store execution could be better. Link: https://bit.ly/3XBsW4k 👜 The FTC investigation into the proposed merger of Tapestry and Capri ignores the realities of the market. Link: https://bit.ly/4gMBn5J 💰 Dollar stores are not performing like they once did, but they are still opening new shops at a rapid clip. Link: https://bit.ly/3zv1EVd 👟 Foot Locker are investing more in stores – and it’s a good job as rivals like JD Sports are nipping at their heels. Link: https://bit.ly/3BoTHBi 🫙 Tupperware has filed for bankruptcy after not being able to revive the business. The world changed around the once iconic brand. Link: https://bit.ly/3BagvVF 🥫 The rise of private label in grocery isn’t just tied to lower prices, grocers and consumers are increasingly seeing other benefits. Link: https://bit.ly/4gBpZtk 🎄 Holiday hiring announcements are now coming out. Retailers have to balance servicing customers with protecting margins. Link: https://bit.ly/3XOJKGj 💵 Will prices at Shein and Temu rise if the Biden administration curtails their use of the de minimis exemption? Link: https://bit.ly/47CCO25 🕯️ Bath & Body Works is a master at refreshing ranges; it’s now embarking on more partnerships to drive growth. Link: https://bit.ly/4dhJMeh 📦 Over at Amazon’s Accelerate conference, the ecommerce giant is investing in AI and in new partnerships. Links: https://bit.ly/47BOLFs / https://bit.ly/4eb3XvK 🚫 Big Lots is closing stores, it’s hardly surprising when many of the ‘bargains’ they offer are more expensive than mainstream retailers. Link: https://bit.ly/3XRvht8 #retail #retailnews #economy #ICYMI #RetailICYMI

Come for the treasure hunt, stay for the shareholder returns. Last year, The TJX Companies, Inc., owner of MARSHALLS LLC, TJ Maxx & HomeGoods, and TK MAXX (Europe), generated over $50 Billion in revenue, more than Macy's and Nordstrom combined. This success was not generated from online sales but based on #BehavioralEconomics and applied human psychology, e.g., "bargains and the treasure hunt." The latest quarter was further proof of this resilience. Both TJX Cos. and Ross Stores, Inc. reported this week that comparable-store sales rose 3% in their quarters ended May 4 compared with a year earlier as inflation-pinched consumers sought out deals. This marks the seventh consecutive quarter of comparable sales growth for TJX and the sixth for Ross. Ross, whose consumers skew low-to-middle income, has been lowering prices to drive sales. TJX, with a higher-income clientele, has been able to raise prices selectively without much pushback. Bad times aren’t required for good times at these retailers—they were growing in 2021 when consumers were feeling flush. TJX, Ross and Burlington Stores, Inc. collective share of the #apparel and #footwear specialist market ballooned from 25% in 2019 to 31% last year. Off-price is likely stealing market share from home retailers, too. TJX’s HomeGoods business saw comparable-store sales rise 4% last quarter, while Ross Stores said the home category outpaced overall company growth. That contrasts with anemic home-related sales at retailers like Target and Beyond, the company that took on Bed Bath & Beyond’s website. Can off-price retailers keep growing? Weakness at other apparel brands suggests that they can. Recognizable brands such as Nike, lululemon, and Coach owner Tapestry have hit speed bumps on sales growth. Where there is unsold inventory, there are buying opportunities for off-price retailers. There could be a big wave of inventory from recent bankruptcies at EXPRESS and teen-focused rue21, as they close hundreds of stores. The wave of store closures also should help boost foot traffic at off-price retailers. Off-price historically has been the biggest beneficiary of apparel store closures. In addition to bankrupt retailers, Macy’s has announced plans to close 150 stores. UBS analysts estimate that more than 16,000 apparel stores could close over the next five years. This hasn’t gone unnoticed. TJX and Ross shares have appreciated 92% and 40%, respectively, over the past five years. They are now among the most expensive U.S.-listed apparel-industry stocks. They trade at forward-12-month earnings multiples that rival Nike’s and recently outpaced Lululemon’s. Off-price retail stocks aren’t cheap, but premium products never are. Well covered by Jinjoo Lee for the The Wall Street Journal

Financial results for four major retailers  Kohl's, Burlington Stores, Inc. , Dollar General, and Five Below in the second quarter of 2024 highlighted a range of performances and strategic responses. From growth and resilience to challenges and adjustments, their fiscal performances provide insights into how they are navigating the evolving retail environment. #Retail #BigBrands #consumers #sales #results #UPSDigital

At our agency, we refer to this channel as "premium value" - here is a great article written by our CEO back in 2017 https://lnkd.in/ge8sb2H9

https://lnkd.in/gFkVmUms #retail #departmentstores #stores #nordstroms #macys #neimanmarcus #dtc #ecomm #BOPIS #curbside #payment #ElPuertodeLiverpool #SpruceAdvisory #JoelBines To be or not to be - to be public vs. to be private. Renewed efforts to take the company private, prior attempt 2019, have a new partner in Mexican retail group El Puerto de Liverpool. El Puerto already purchased a 10% stake in Nordstrom in 2022. With El Puerto's strong retail/franchise experience (Gap, Banana Republic, Williams Sonoma and Pottery Barn), this latest effort may prove successful in Nordstrom's effort to reposition itself. Department stores continue to face challenges in meeting consumer expectations. With shoppers spending more time purchasing "on the go" via their phone, via various payment options and via varied delivery/pickup options, and less time browsing in store, department stores will continue to be pushed to keep up.

🔔 Big news coming out of the retail sector as the Nordstrom family explores taking their *iconic* department store private. CEO Erik Nordstrom and President Pete Nordstrom are looking to transition the 123-year-old(!) retailer from public to private ownership, setting up a special committee to weigh all potential bids. 🤔 Why does this matter to us? Any shifts in Nordstrom’s strategy - especially towards more online and direct-to-consumer sales - could seriously change our industry's landscape. 💡 This could be the start of a trend where big retailers seek more control over their operations by going private. Read more at CNBC: https://lnkd.in/gJg5HaZy #logistics #retailtrends #nordstrom #businessstrategy

Retail economy is moving towards BMSM - Buy More, Save More. Consumers are becoming value conscious and prioritizing savings in their purchase decisions.