Very happy holidays, maybe
November 10, 2003,
First, the good news. Retail analysts and retailers alike are anticipating a strong holiday selling season.
"We're already starting to see an improvement in the overall trend now; it may get even better. Every indicator says it will," said Paul Fitzpatrick, senior vp, Macy's West.
Macy's private label programs — Hotel and Charter Club — are running strong and are expected to get stronger, he told HTT. DKNY is getting stronger, and the Ralph Lauren business "is turning around." Tommy Hilfiger is good, and Macy's sees further opportunity with the brand's expansion of its younger business. Calvin Klein continues to perform well.
"The whole utility thing firmed up from the Pillowtex problem," Fitzpatrick said. "Everything is in place with private label [supplied by] Springs and Down Lite. Inventories are in good shape."
At Saks Department Store Group, home is "well ahead" this year — and "next year should be no different," said Howard Winkler, senior vp, home.
"We're looking for increases. But you've got to be out there with product. Beyond lifestyle you have to offer fashion trend merchandising. We'll launch the second Jane Seymour collection — a more casual lifestyle — in January," Winkler said.
While Brylane Lifestyle Group sees good opportunities ahead, president Steve Goldberg remains wary about the general economy. "I think next year will continue to be the same challenging environment we're in now. We've seen nothing material to lead us to believe anything will change," he said.
Some in the supplier community are regarding 2004 with equal caution.
"Although the numbers for the third quarter do indicate that the economy is 'recovering,' by no means do we see an overall strength in the retail sector," said Allen Josephson, national sales manager, American Dawn Inc. "Most retailers are scratching it out to put single-digit increases up on the board."
"We're going to plan the first quarter relatively unchanged from last year," said Kevin Kennedy, president and coo, Glenoit Consumer Products. "With continued price compression, everyone is going to have to continue to cut costs. You can't rely on unit sales to do the job any longer."
The most pressing concern for many suppliers at the moment is the skyrocketing price of cotton, which is already leading some overseas manufacturers to turn down lower cost orders in favor of richer game.
"I think business will be fair, but cotton prices are going up and up, and so will all of our prices in the coming year. It's time for a better economic cycle, so it's just a matter of hanging tough," said Shay Zamir, vp merchandising at Divatex.
"There have been some pretty significant increases," noted Louis Rudy, president, Louisville Bedding. "We've seen anywhere from 10 to 20 percent. The situation is so fluid right now that a quote is good for only 72 hours."
"It's going through the roof," said Peter McCabe, executive vp, Biederlack of America. "And that may be the big determining factor during the first quarter. He who hesitates is lost, and if a supplier hasn't bought cotton, loaded up for bear and locked in his price, I don't know how he's going to pass along the incredible price increases he's going to need just to cover his costs."
The question, noted Jai Li Textile's Towner Lapp, national sales manager, "is whether retailers will absorb this situation into their price structures, or will we have to instead?"
Town and Country Living is planning to swallow "as much as we can," said David Beyda, chairman. "We're fortunate that we forecasted [the added costs] so that we're covered. But if the market keeps driving the prices up, we'll need to address it again."
Despite the cotton quandary, several suppliers said they are already experiencing an uptick in business.
"This year was much better than 2002, and the second half was better than the first," said Avi Cohen, ceo, Veratex. "Overall, it's just time to open up."
Thomasville is "extremely optimistic" about business going into 2004, said Milt Mitler, vp. "We closed this year more than 15 percent up. We see a similar increase for next year."
"We're clearly more bullish about the first half of 2004, and are planning for an increase of five to seven percent. We see it as part of the on-going recovery with low interest rates, a stabilized work force and people having a better mindset," said Patrick McCullagh, president, W-C Designs .
Scala International has seen more orders coming in with more frequency than normal, "so I sense a real mood shift." said president Chip Scala.
"We are suddenly seeing more attention placed on the home and we have been getting good ad placements and presentations we never got before as a result," said Bert Shlensky, president and ceo of Sure Fit Inc.
Other vendors are still experiencing a post-Pillowtex bounce.
"Suppliers are looking for new terry resources with the demise of Pillowtex, and that makes us bullish for the first half of next year," said John Cafaro, cmo, Karsten America.
"A general movement exists right now in the retail community as to how they will deal with the supply void post-Pillowtex. It means that [retailers] will be spending their former Pillowtex budgets to identify more fashionable and interesting products, which hopefully will translate into more sales for the rest of the suppliers in the business," said Gregg Haft, president of Haywin Textile Trading Co.
But nobody is expecting 2004 to be a cakewalk.
"Demand will be there in the next six months of the year, but the issue is that supply is going to be tight because there has been a little more reaction than pro-action in our business lately," said Keith Sorgeloos, president of Home Source International.
"As suppliers it's easy to be good, but it's hard to be great— and you really need to be great to succeed these days," said Gary Walfish, president, Lawrence Home Fashions.
"Retail should improve, but there won't be a dramatic change," said Carl Goldstein, senior vp, S. Lichtenberg. "We're in uncharted waters — we're dealing with an economy that has no inflation, the lowest interest rates in 40 years, and an unemployment rate of over six percent."
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See the August 2017 issue of Home & Textiles Today. In this issue, we look at the Top 50 Retailing Giants Report, plus Manufacturing: Made in the USA gaining ground; International: Portugal ramping up exports; New products: NY Now home textiles introductions; Outlook: Commentary from H&TT's editors; and Planning: Trade show calendar.