Anemic growth is still a gain--even if the holiday season was the weakest in 5 years (up just 3 percent according to the NRF.) But try telling one of the CEOs at last night's Financo dinner that they should look on the bright side and you might get a glass of wine spilled over your head.
The bottom line is that while slow growth is a sign that consumers are still spending (moderately), when that growth is made by competitive pricing, it can kill margins and hit earnings. Welcome to the have-and-have-not story of retail in 2008. (Incidentally, this was my first time at the NY Post documented Financo dinner. I had a fun time sitting at a table with Richard Crystal CEO of New York & Co , Thomas Casey CFO of Blockbuster and Karen Katz CEO of Neiman Marcus.
The only Pollyannaish rhetoric I heard was from Saks' CEO Steve Sadove (not a fan of the press) and from Neiman Marcus' Chairman. While Sadove said that we are in a recessionary environment, he essentially said that the high-end consumer is only emotionally feeling a strain on spending and not actually in the dire straits that many gloomy forecasters say.
On a separate note, Financo banker Gil Harrison is hungry to get that buyout of Saks by Baugar group done. Both Sadove and Jon Asgeir Johannesson of Baugar Group were friendly and chatting though most of it seemed to be about the photo op and not deal-making.
Jon I asked Jan what deal-making environment is like right now and he said, frankly, that it is better overseas but still not good.
Business is VERY tough right now for Richard Crystal CEO of New York & Co . I chatted with him last night and he was very frank is taking about how tough the sales environment is now. Crystal said things are bad out there in the malls--and blamed the Federated-May merger with taking at least $8 billion in business away from the malls.
He also refuted the idea put forth by Saks CEO, Neiman Marcus mgmt and David Yurmans CEO that any stores are recession proof right now. (He also made more than a few jokes about finding a new job.)
Lord and Taylor's CEO also jokingly asked dinner goings to please call him with advice as he's never been through a recession before. He said he's glad that he's got real estate!
George Feldenkreis of Perry Ellis was also one of the few optimists about business - he says that while women aren't buying clothes, men still are.
Two other interesting nuggets:
(1) Warnaco's CEO Joe Gromek said he's a Retail Detail reader (who knew?)
(2) Carl Icahn and the CEO of Blockbuster were attached at the hip during the cocktail. (Icahn's remarks during dinner were well-documented in WWD today--he wants retailers to buy back their stock. Icahn seems to be circling retail for some activist targets.
Questions? Comments? firstname.lastname@example.org