Luxury retailers resilient, forecasts bullish

NEW YORK, Tue Aug 14, 2012 – Affluent shoppers shrugged off anxiety about the global economy that cast a pall over the luxury sector in the spring, leading Estee Lauder, Michael Kors and Saks to issue bullish sales forecasts.

Consumers showed a willingness to pay for high-end handbags and designer gowns and anti-aging creams despite fears earlier this year that rocky stock markets and worries about the euro zone financial crisis and the global economy would dampen luxury spending.

“We have not seen any change in traffic in the full price channel,” Michael Kors Holdings Ltd. CEO John Idol said on a conference call on Tuesday.

Kors raised its full-year sales and profit forecast and said it expects same-store sales, a key retail measure, to rise 30 percent.

Kors and Saks Inc. also each offered fewer markdowns than expected.

At the same time, consumers continued to travel, snapping up Estee Lauder Cos. Inc.’s beauty goods at its airport stores, and flocking to department stores to buy Michael Kors eyeglasses and watches.

More broadly, the government reported U.S. retail sales increased in July for the first time in four months as demand rose broadly for everything from cars to electronics. That signaled consumers could drive faster growth in the third quarter.

Citi cuts retailers on lower high-end consumer spend

NEW YORK, Wed Jun 27, 2012 – Citi Investment Research & Analysis downgraded retailers Macy’s Inc., Nordstrom Inc. and Saks Inc. to “neutral” from “buy,” citing contraction in spending by high-end consumers.

April-May comparable sales at high-end department stores fell 3 to 4 percentage points from a year earlier, Citi said.

Confidence among high-end consumers slowed to 80.7 in May from 86.0 in April, the brokerage wrote in a note.

High-income consumers, who account for about half of spending in the United States, will likely be hurt by a volatile stock market, it added.

“We are incrementally more concerned about the health of the consumer, given the softening U.S. economic outlook and declining consumer confidence,” Citi analysts said.

The brokerage said it expects slowing same-store sales to pressure Macy’s repurchase program, and cut its price target on the retailer’s stock to $37 from $49.

Aggressive investment will limit upside for Nordstrom, Citi said, lowering its price target on the stock to $52 from $63.

It also cut its price target on Saks to $11 from $14 and said it expects weakness in the women’s designer apparel to likely weigh on its same-store sales growth.

Macy shares were down nearly 2 percent in premarket trading. They closed at $34.20 on the New York Stock Exchange on Tuesday. Shares of Saks fell about 3 percent in premarket trading. They had closed at $10.03 on Tuesday on the same exchange.

Nordstorm’s stock had closed at $48.62 on Tuesday.

Carlos Slim boosts stakes in New York Times and Saks

NEW YORK ― Billionaire Carlos Slim Helu has increased his stakes in newspaper company New York Times Co. and luxury retailer Saks Inc.

Through the fund Inmobiliaria Carso S A, Slim bought 553,000 Class A shares of New York Times on Aug.18 at prices ranging from $6.83 to $7.09 per share, according a regulatory filing.

The purchases increased Slim’s stake in the company, which publishes its namesake newspaper as well as the Boston Globe, to 7.3 percent from 6.9 percent.

Slim, Saks’ largest shareholder, bought 620,000 Sakes shares on August 18, giving him a total of 26.24 million, or a 16 percent stake in the upscale department store chain’s shares. In early 2010 he held 25.62 million Saks shares.

Shares of New York Times and Saks rose about 4 percent on Tuesday.

Slim, with a fortune estimated at about $74 billion, was named the world’s richest man by Forbes magazine in March for the second year running.

The 71-year-old Mexican tycoon has a reputation for having an eye for a bargain. He recently sold a stake he had accumulated in oil services company Bronco Drilling for a healthy profit.

New York Times repaid a $250 million loan to Slim on August 15, about five months earlier than expected.

Slim still holds warrants to buy 15.9 million Class A common shares of New York Times. The warrants expire on Jan. 15, 2015.

Shares of New York Times are down nearly 36 percent this year.

Saks’ shares are off 35.6 percent from 52-week highs hit in February on fears the stock market volatility and Wall Street layoffs could prompt luxury shoppers to pull back.

Saks last week forecast sales at its stores open a year or more would rise by a mid-to-high single-digit percentage in the second half of its fiscal year, which includes the holiday season. It said the current state of the stock market and the economy warranted caution in its planning.