TIME Brands

Fast-Fashion Apparel Giant H&M Opening More Stores as Profit Soars

Shoppers And Retail Economy As German Investor Confidence Jumps
Pedestrians carry Hennes & Mauritz AB (H&M) branded shopping bags in Mannheim, Germany, on Tuesday, Jan. 20, 2015. Bloomberg—Getty Images

Swedish retailer says its profit leapt 17% in 2014, plans 400 new stores

Hennes & Mauritz AB, more commonly known as H&M, has announced plans to open 400 new stores in 2015, a move that comes after the Swedish retailer reported profit leapt 17% for the latest year. Here are the most important points from the retailer’s latest earnings report.

What you need to know: H&M, a major powerhouse in the world of retail, is accelerating store opening plans in 2015 and intends to open an additional 400 stores on top of the 3,511 locations it already operates. In 2014, H&M opened 379 new stores. The new store openings for this year will mostly occur in China and the U.S., although H&M said it will debut in several new markets this year, including South Africa, India, and Peru.

The U.S. is the company’s second-largest sales market after Germany, and an important growth market. H&M opened 51 stores in the U.S. last year — that’s more than any other market outside China, where 86 stores were added. Sales in the U.S. leapt 26%, among the better-performing markets for the year ending on Nov. 30, although H&M’s sales grew broadly across all major markets.

H&M is a fast-fashion purveyor that turns around trend designs quickly, taking away business from teen-focused retailers and other rivals that take a longer time to respond. Sales growth in the U.S. has far outpaced those reported by Gap, for example, while teen retailers such as Abercrombie & Fitch have seen their businesses suffer a bruising decline as tastes have changed in favor of H&M and rival Forever 21.

The big number: Profit for the full year after taxes totaled 19.98 billion Swedish kroner ($2.4 billion in U.S. currency), up 17% from a year ago. H&M gave an early indication that sales growth will continue to remain strong early in 2015, with sales up 15% in December and expected to rise 14% in January.

What you might have missed: H&M also unveiled a plan to launch a new beauty concept with an initial debut in about 900 stores and online beginning this fall. The new concept will comprise of a range of make-up, body care, and hair care items, and will replace H&M’s current own-brand cosmetics line. H&M didn’t say much about the line, or why it was changing its strategy in beauty, although the move is the latest step by the apparel chain to diversify its product range.

H&M last year debuted a sport-focused line, and also expanded the amount of shoes it sold in some of its stores. Sportswear, which has been an increasingly popular apparel trend that has boosted results for Nike and Under Armour in the U.S., has lured H&M, Forever 21, and other rivals that haven’t traditionally focused on that category. For example, H&M’s U.S. online store lists 124 items for women under sportswear, selling a range of clothes meant for the gym or even to be worn more casually, and not necessarily for athletic purposes. That’s a dominant trend in retail today, as yoga pants take the place of jeans for everyday wear (in one of many examples).

This article originally appeared on Fortune.com.

TIME animals

Americans Could Spend $703 Million on Their Pets This Valentine’s Day

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Dog wearing tiara Getty Images

Nothing says "I love you" like a diamond collar

The candy and flowers industrial complex that is Valentine’s Day had gone to the dogs. Literally.

One in five Americans will take their pets into consideration on Feb. 14, according to a new study by the National Retail Federation, a trade association. Out of a total of $18.9 billion spent on the holiday, consumers will drop $703 million on their furrier companions, the group forecasts.

While the figure at first appears staggering, the retail group points out that consumers will just spend $5.28 on their pets on average.

But even though opting for heart-shaped Milkbones suffices, nothing says I love you like splurging for that diamond dog color Fluffy’s been eyeing.

TIME E-Commerce

EBay Plans to Cut 2,400 Jobs and Unload Enterprise Business

The shake up comes as the e-commerce giant makes peace with investor activist Carl Icahn in prelude to a planned spin off of PayPal later this year

EBay plans to cut 2,400 jobs and unload its business unit that helps retailers manage their online shopping operations. The news came as eBay made peace with investor activist Carl Icahn by naming one of his allies as a board member. Here are the key points about the shakeup Wednesday and the company’s fourth-quarter earnings.

What you need to know: EBay confirmed reports from last month that it would eliminate thousands of jobs by saying it would slash its workforce by 2,400 positions, or 7%. The restructuring comes ahead of the company’s pending spin-off of online payments service PayPal into a separate, publicly-traded company.

Additionally, eBay said it may also part ways with its Enterprise unit, which works with online and brick-and-mortar retailers. The company said it may sell the business or hold an initial public offering after determining that it does little to lift sales in its core online marketplace. The decision is a major u-turn for eBay, which had previously invested heavily in enterprise, most notably by paying $2.7 billion four years ago for GSI Commerce, which fulfills orders for retail partners.

Meanwhile, eBay also patched things up with Icahn, the company’s largest shareholder and a thorn in its side by giving his ally, Jonathan Christodoro, a board seat. The two sides have reached “a standstill agreement” that also calls for PayPal to adopt certain corporate governance provisions post spin-off.

The big number: News of the job cuts, potential sale of the Enterprise unit s and strong quarterly financial numbers sent eBay’s shares up about 2.5% in after-hours trading.

EBay posted fourth-quarter revenue of $4.9 billion, up from $4.5 billion during the same period last year. Fourth-quarter profits were also up, rising 10% to $936 million, or 75 cents per share, from $850 million during 2013’s fourth quarter. Full-year revenue rose 12%, from $16.1 billion in 2013 to $17.9 billion this past year. For the full year, eBay posted a loss of $41 million after seeing $2.9 billion in profits in 2013.

What you might have missed: EBay’s payments unit — which is mostly PayPal — continued to show the most growth of any of the company’s segments. The payments unit generated $2.2 billion in revenue in the fourth quarter, representing an 18% gain year-over-year, while full-year revenue increased 19%, to $7.9 billion.

The Marketplaces segment still generated the largest revenue stream, though, bringing in $2.3 billion in the fourth quarter — up an anemic 1% year-over-year. That unit saw revenue increase 6% on the year, to $8.8 billion. The Enterprise segment, which is now in limbo, generated $443 million in the fourth quarter and $1.2 billion across 2014.

CEO John Donahoe, who is due a big payday when he leaves the company after the planned spin-off, called 2014 “a year of unexpected events and distractions” in a statement. He also bragged about PayPal’s results while promising better things for both that unit and what will remain of eBay. “EBay, while facing challenges, continues to be a great business and is focused on stabilizing performance and engaging its core customers,” he said.

This article originally appeared on Fortune.com

TIME Body Image

Target Is Launching a Plus-Size Fashion Line Women Actually Might Want to Wear

"It's good to know that a brand is listening"

In August, blogger Chastity Garner wrote a compelling takedown of Target — announcing her decision to boycott the retailer for failing to offer its popular designer collections in plus sizes.

That boycott is coming to an end.

On Wednesday Target announced Ava & Viv, a new fashion brand designed specifically for “the plus-size woman who loves fashion.” The line, designed by Target’s in-house team, offers clothing in sizes 14W to 26W and X to 4X and will be available online and in stores come mid-February.

The retailer invited Garner and two other plus-size bloggers to its Minnesota headquarters to sample the line. “It looks beautiful on my body type and my shape,” Garner says in a video chronicling their visit.

In spite of its far from perfect relationship with plus-size fashion — Target’s site displayed plus-size offerings on maternity models and described a plus-size dress as “manatee gray” (the “normal” dress was “dark heather gray”) — its strategy thus far with the Ava & Viv line could actually teach other retailers about how to better approach selling plus-sized clothing.

First of all, Target is emphasizing that the clothing line will make trendy design choices a priority.

“This guest is really a fashion-forward woman who happens to be a plus size,” merchandising SVP Stacia Andersen told Women’s Wear Daily. “When we put out pieces that stand out a little more, items that are more chic, more trend-driven and more statement in nature, they tended to perform.”

Even though though the plus-size demographic makes up 37% of U.S. consumers, it only makes up 15% of the clothing industry’s sales because most labels don’t design for the lucrative market, Fast Company reports.

And when they do design plus-size clothing, the available styles are rarely fashion forward.

“I am horrified by some of the clothes I find in the stores,” stylist Sal Perez explained told New York Times when explaining her difficulties in trying to dress Rebel Wilson for her role in Pitch Perfect 2. “I don’t know anyone who enjoys wearing polyester.”

Actress Melissa McCarthy decided to launch a fashion label after interacting with six different designers who wouldn’t dress her for the Oscars.

Target is also selling the clothing at a reasonable price point, between $10 and $79.99. This is a striking contrast to stores like Old Navy, who recently came under fire for charging more for plus-size items.

Marie Claire contributing editor and plus-size blogger Nicolette Mason joined Garner to sample the line and also shared her thoughts in Target’s video.

“It’s good to know that a brand is listening,” she said.

TIME Retail

Shoes Are Getting More Expensive

Leather Shoes
Men's shoes in the Dolce & Gabbana seasonal holiday window in New York City on Dec. 11, 2013 Ben Hider—Getty Images

Leather prices rise amid a cattle shortage

The cost of footwear in the U.S. rose 2.8% in the past year, according to new government data, an increase that’s likely due in part to the rising costs of leather.

The data from the Bureau of Labor Statistics comes as the U.S., which is one of the world’s biggest producers of cowhides, currently experiencing a record shortage of the animal. The U.S. Department of Agriculture estimates that the current U.S. cow population — about 95 million — is at its lowest level since the department began keeping track in 1973.

The high cost of cattle feed and the nation’s drought have contributed to the declining cattle population, Quartz reports.

TIME Retail

Teen Retailer Wet Seal Files for Chapter 11 Bankruptcy

Teen Apparel Retailer Wet Seal To Shutter Over 300 Stores, Lay Off Nearly 3700
Paper covers the windows at a closed Wet Seal store on in San Francisco on Jan. 7, 2015. Justin Sullivan—Getty Images

Mall-based, teen-focused peers have faced challenges as mall traffic has weakened and teens turn to larger rivals such as H&M and Forever 21

Teen retailer Wet Seal has filed for Chapter 11 bankruptcy, a move that comes shortly after the women-focused purveyor announced it would close two-thirds of its retail locations.

“After careful consideration, the Board of Directors unanimously concluded that filing for Chapter 11 was the appropriate course of action for the company,” said CEO Ed Thomas.

Wet Seal and other mall-based, teen-focused peers have faced challenges as mall traffic has weakened and teens turn to larger rivals such as H&M and Forever 21. Those peers have done a better job matching current fast-fashion trends, quickly churning out designs that have caught the attention of teens and young adults.

Wet Seal has long struggled to compete. The retailer has booked annual losses and falling sales the last two years and was projected to do so again in 2014. Earlier this month, it announced a plan to close 338 stores and layoff 3,695 employees.

On Friday, Wet Seal said it would continue to operate its business as “debtors-in-possession” under the jurisdiction of the U.S. Bankruptcy Court for Delaware. In connection with the case, Wet Seal has negotiated an agreement with investment bank B. Riley, which has provided a $20 million loan that can be used, along with cash on hand, during the Chapter 11 case and can be utilized for vendors. Some financial accommodations are also expected to come from Wet Seal’s current lender, Bank of America.

The last few months have been especially troubling for the retail sector, with the holidays often a make-or-break period for the weakest players. Delia’s and Deb Shops both filed for bankruptcy protection late last year, while media reports have also indicated that electronics retailer RadioShack could be preparing to file for bankruptcy protection by next month.

This article originally appeared on Fortune.com.

TIME Retail

Target Will Pull Out of Canada After Failed Expansion

File photo of members of the media touring Target Canada's pilot store in Guelph, Ontario
Members of the media tour Target Canada's pilot store in Guelph, Canada on March 4, 2013. Geoff Robins—Reuters

The retailer is to book a massive $5.4 billion charge in the fourth quarter to reflect the loss from the investment.

Target said Thursday it will exit the Canada market, a recent expansion that has resulted in billions of losses and a move that will lead the retailer to book a massive $5.4 billion charge in the fourth quarter to reflect the loss from the investment.

The exit from Canada comes after Target moved aggressively to open over a hundred stores quickly in the market, but was criticized almost immediately for doing a poor job of replicating its American shopping experience. Though sales have been rising, the division remained deeply unprofitable.

“Personally, this was a very difficult decision, but it was the right decision for our company,” said CEO Brian Cornell. Cornell joined Target last year and wasted almost no time in angling to fix the retailer’s woes in Canada, flying up to that nation during his first week on the job as he aimed to learn as much as he could about the business before the latest holiday season.

But Target has decided it will fully retreat from the market, a move that signals the retailer’s top executives couldn’t justify further investing in the business with the hopes of eventually making money. In fact, Cornell said the company was unable to see a realistic scenario that would have gotten Target Canada to profitability until “at least 2021.”

The move, while likely to catch many on Wall Street off guard, has clear justification. Though sales for the first nine months of fiscal 2014 leapt 90% to $1.32 billion, the segment’s loss swelled to $627 million for earnings before interest and taxes. Losses for the business totaled $941 million in 2013, $369 million in 2012 and $122 million in 2011. With that business mired in the red, Target’s overall profitability was severely challenged.

Target Canada has 133 stores across the country and employs about 17,600 people. The stores will remain open during the retailer’s liquidation process. As a result of the move, Target is expected to report about $5.4 billion of pre-tax losses on discontinued operations for the fourth quarter of 2014, driven primarily by write-downs for the company’s investment, along with costs associated with the exit from that market. Cash costs to discontinue the Canadian operations will be $500 million to $600 million, most of which will occur in the company’s fiscal 2015 or later.

As a result of the move, Target will turn all focus to the U.S. market, where sales have been rising, albeit modestly as the retailer faces stiff competition for a slice of consumer spending.

This article originally appeared on Fortune.com

TIME Retail

Online Marketplace Etsy Is Going Public

Etsy signage at the Brooklyn Beta conference in Brooklyn, N.Y. on Oct. 12, 2012.
Etsy signage at the Brooklyn Beta conference in Brooklyn, N.Y. on Oct. 12, 2012. Bloomberg—Getty Images

Etsy could bring a little bit of Brooklyn hipster to the public market this year

Etsy, the online seller of handmade crafts and vintage goods, is planning to go public as soon as this quarter with plans to raise $300 million, sources told Bloomberg News.

If the Brooklyn-based site rakes in that amount of cash, it would be the biggest New York tech IPO since 1999. The last time a New York-based tech company garnered that kind of a valuation was the dot-com boom when high valuations benefited listings from TD Waterhouse Group and Barnesandnoble.com, the e-commerce spinoff of the bookstore chain.

Etsy was started by painter and carpenter Rob Kalin in 2005. The multi-talented artist was looking for a way to sell his hand-built goods and started the online exchange. The company now has nearly 26 million items listed on its site–anything from vintage champagne coups to handmade dog collars.

Etsy, which has been valued at more than $1 billion, brings in its profits by charging sellers 20 cents to list products and then takes another 3.5% commission from each item sold. It also generates revenue from advertising and payment procession. In 2013, the site reported $1.35 billion in gross merchandise sales, according to its website.

Goldman Sachs and Morgan Stanley are working with Etsy on its IPO, and the company is likely to file a prospectus this month with more financial details, sources told Bloomberg.

An Etsy spokeswoman declined to comment.

This article originally appeared on Fortune.com.

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TIME LGBT

Tiffany & Co. Jewelry Ad Campaign Features Its First Gay Couple

Tiffany & Co.

Latest major fashion company to depict same-sex couples

Jeweler Tiffany & Co. is featuring a same-sex couple for the first time in its advertising history.

The two men depicted in the “Will You?” campaign are a real-life couple, CNN reports. The campaign was shot by fashion photographer Peter Lindbergh and features six other couples.

The ads are meant to broaden the 178-year-old jeweler’s portrayals of marriage, Tiffany & Co. said. For example, another pairing shows a couple with their child during their wedding, a nod to people who have children outside marriage.

“Nowadays, the road to marriage is no longer linear,” a company spokeswoman said in a statement. “True love can happen more than once with love stories coming in a variety of forms.”

In recent years, several other major fashion companies have also featured same-sex couples, including Gap, Banana Republic and J. Crew.

[CNN]

TIME Retail

Nike to Sell Back to the Future 2 Shoes This Year

106 & Park LIVE
Nike's "Back to the Future" sneakers Getty Images

Self-lacing ability with "power laces" technology

Nike will release this year a line of Marty McFly’s self-lacing, light-up sneakers from Back to the Future Part II, a 1989 sci-fi film in which characters time traveled to 2015.

Tinker Hatfield, the Nike designer who created McFly’s shoes for the film, confirmed at a conference last week that the Nike team is planning to release the sneakers sometime this year, though they don’t have an exact date yet, according to Nice Kicks, a sneakers news site. This year also marks the 30 year anniversary of the original Back to the Future movie.

The shoes will be an upgraded version of the 2011 Nike MAG, a limited-edition replica of McFly’s sneakers. The new footwear will feature “power laces,” in which motorized rollers in the shoe’s sole sense weight and tighten the laces when someone steps into the shoes, according to Nike’s patent.

[Nice Kicks]

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