TIME american apparel

American Apparel to Cut Stores, Trim Workforce

American Apparel's Board Removes Controversial CEO Dov Charney
Andrew Burton—Getty Images An American Apparel store.

Troubled retailer also warns it is running low on cash

American Apparel is planning to cut expenses by $30 million by closing underperforming stores and laying off staff, but warned it may not be enough to run its business in the near future.

The unprofitable retailer has recently angled to reposition itself as a more responsibly-run company under the direction of CEO Paula Schneider, who took the helm in January. Schneider last month unveiled plans to grow the brand to a $1 billion business by focusing less on sexual innuendo and instead caring more about merchandise. But Schneider has conceded the company has very little cash to play with to undergo this pivot.

American Apparel’s most recent press statement is a reminder of this conundrum. The retailer warned that even if it boosts revenue and cut costs, “there can be no guarantee that the company will have sufficient financing commitments to meet funding requirements for the next twelve months without raising additional capital.” It also warned there is no way it can be sure it can raise such capital.

The cost-cutting moves will occur of the next 18 months and include a smaller work force to reflect the smaller store footprint. American Apparel wouldn’t say how many jobs or stores would be affected. The California-based retailer operated 239 stores in 20 countries and employed about 10,000 people as of the end of March.

American Apparel, which touted its plans for the fall season from a merchandising perspective, also lamented that the company continued to deal with number of legacy issues left behind under the management of ousted founder and former CEO Dov Charney, who has been busy suing the company.

“Today’s announcements are necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees and return the business to long-term profitability,” Schneider said.

TIME Walmart

Why Walmart’s CEO Wants His Staff to Be Like Han Solo

2013 Bloomberg

He wants store workers to shed the retailer's bureaucracy

Walmart’s CEO Doug McMillon wants his 2.2 million employees to summon their inner Hans Solo, Chewbacca, and Princess Leia to fight the evil empire of stagnation and help the world’s largest retailer resume faster growth.

Speaking on Friday to 14,000 store workers and investors at Wal-Mart Stores’ annual shareholder meeting in Fayetteville, Ark., McMillon said the retailer’s No. 1 enemy, ahead of rivals, was its own bureaucracy, and he called on store workers to take more initiative on their own.

“The truth is the real villains are lurking within the company,” said McMillon. “Our real villains are things like bureaucracy, complacency, a lack of speed, or a lack of passion.”

Walmart’s operating income only rose 1% last year, while in the U.S., its biggest market by far, comparable sales are growing again, but only modestly. So in the last few months, Walmart has announced a series of steps ranging from raises to less Celine Dion on the PA system to new training as it looks to motivate workers, improve customer service and how stores look, and reduce worker turnover. (Walmart U.S. CEO Greg Foran told Wall Street analysts that turnover is already down, and job applications are up.)

“We can be like scrappy rebels in Star Wars, fighting an insurgency against the galactic empire,” he said, apparently unaware of the irony of the world’s largest company by far, with 2014 sales of $482 billion, one seen by many as the empire that needs to be fought against, is trying to position itself as the underdog.

Proposals by dissident shareholders, including one in favor of a $15 per hour starting wage and another in favor of an independent chairman, were defeated, no surprise considering the Walton family, whose late patriarch Sam founded the company in 1962, owns 51% of shares.

McMillon’s plea for staff “to overcome bureaucracy and mediocrity” echoes efforts at arch-rival Target [fortune-stock symbol=”TGT”] to tame its own bureaucracy, which it did earlier this in part by cutting thousands of jobs at its headquarters, and re-motivate staff.

He recently removed one layer of store management and gave U.S. store workers more say in how their store operates and what it stocks.

“We’ve got to make this business simpler and faster,” McMillon said.

TIME Wal-Mart

Wal-mart Names a New Chairman, Keeps the Job in the Family

Walmart's Black Friday Starts Strong in Bentonville
Gunnar Rathbun—Invision for Walmart

Rob Walton’s son-in-law Greg Penner will take on the role

A person bearing the “Walton” surname will no longer be chairman of Wal-Mart Stores for the first time in the company’s history.

But that doesn’t mean the world’s largest retailer isn’t keeping the role in the family.

At Walmart’s annual shareholder meeting on Friday in Fayetteville, Ark., before a crowd of 14,000 people, the company announced that Rob Walton, the 70-year-old chairman and son of founder Sam Walton, would step down after 23 years, ceding his place to his son-in-law Greg Penner, effective after the meeting ends later today.

Rob Walton, who succeeded his father as chairman, will stay on as a director, and be one of three Waltons on the board, along with his brother Jim, and son-in-law Penner, a former Goldman Sachs [fortune-stock symbol=”GS”] analyst who later took on top jobs at walmart.com. Penner, 45, is married to Rob’s daughter Carrie.

More: Check out Wal-Mart on the new Fortune 500 list

The announcement comes despite pressure from some investors clamoring for an independent chairman, arguing that a chairman who is not a member of the family would improve corporate governance at the largest company in the world, according to the Fortune 500, a particularly important consideration as Walmart deals with a U.S. probe into allegations it violated anti-bribery laws overseas.

But given that Walton family owns 50.9% of company shares, any outside proposals opposed by the clan have virtually no chance of getting through.

According to a Reuters report, Walmart has tried to quash the push for an independent chairman coming from about 25% of shareholders. Similar proposals were submitted to a shareholder vote in the last two years but this year, Walmart asked the Securities and Exchange Commission to exclude the proposal, and was turned down.

The company in any case dismisses that idea that its board lacks independence: its lead director is independent, as are 11 of 15 members (one director, former Coke CEO Doug Daft, is not standing for re-election, shrinking the board size by one slot from 16 after the meeting), said Walmart spokesman Randy Hargrove. What’s more, Walmart separates the roles of chairman and CEO.

The nomination of Penner continues a changing of the guard at Walmart: last year, Doug McMillon, 48, was named as CEO. The board has in recent years added Yahoo [fortune-stock symbol=”YHOO”] CEO Marissa Mayer and Instagram CEO Kevin Systrom to shore up its tech credentials as it develops its e-commerce muscle. (For a profile of McMillon, please read this Fortune piece.)

“This demonstration demonstrates Walmart’s commitment to long-term succession planning,” said Rob Walton.

Walmart’s U.S. comparable sales growth has resumed, albeit modestly, and its e-commerce is growing, though at a more modest pace than McMillon wants. At the company’s annual powwow in Arkansas this week, with thousands of stores works in from around the world, the company has announced a slew of initiatives to motivate employees and improve its overall performance.

TIME Target

Target Just Quietly Announced its Next Designer Collaboration

It's all about plaid

While you’re finally busting out your finest summer wear, Target already has its sights set on fall with its latest designer collaboration.

The retailer will team up with high-fashion designer Adam Lippes for an exclusive partnership featuring all-things plaid, from limited edition Diet Coke bottles to home goods and fashion ensembles. Target tapped Lippes to design a line of more than 50 items inspired by buffalo plaid.

“Plaid has been a defining element of style for every generation, and we felt it would be the perfect centerpiece for this design moment: it can be both fun and fashionable,” said Kathee Tesija, an executive vice president for Target.

MORE: Read more about Target on the new Fortune 500

It’s a surprising aesthetic for a designer who is better known for his luxe minimalism and eccentric details than all-American buffalo plaid.

Products will hit the shelves this August through October. Hopefully, stores will be ready for the demand to avoid the problems that plagued the Lilly Pulizter collaboration this spring.

TIME Last Week Tonight

Watch John Oliver Use Free Lunch to Remind Fashion CEOs That Sweatshops Are Bad

Extremely cheap meat, anyone?

On Last Week Tonight, John Oliver turned his gimlet eye on fashion (a.k.a. fun you can buy).

Americans buy roughly 64 items of clothing per person per year, according to Oliver. That fashion habit comes thanks to the low prices available at fast-fashion retailers like H&M, Zara and Forever 21 — nationwide outfitters that, according to Oliver, allow “Midwestern tweens to dress like fortysomething alcoholics attending the funeral of a Tel Aviv nightclub owner.”

But there’s another dark side to cheap clothing, according to Oliver. When H&M sells a dress for $4.95 — which Oliver notes was 7¢ more expensive than a DVD of Ghosts of Girlfriends Past — and yet the CEOs of H&M and Zara are some of the richest men in the world, it’s clear something is awry. On Last Week Tonight, Oliver took fast-fashion companies, including Walmart and Gap, to task for the fact that sweatshops and child labor are still commonly used to manufacture high-street clothing.

Then, for a lesson in manufacturing oversight, Oliver kindly sent extremely cheap lunches of indeterminate origin to the CEOs of fashion companies that employ cheap labor.

Read next: John Oliver: ‘Thank F–k There Weren’t Camera Phones’ When I Started Out

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MONEY Advertising

The True Purpose of Heineken Light’s New Money-Back Guarantee

Heineken Light

It's easy to make a promise when you're pretty sure no one will ever take you up on it.

Heineken Light just introduced quite an impressive-sounding guarantee, in which customers will get their money back if they think that it’s not the best-tasting light beer on the market.

The new guarantee is being promoted with a couple of commercials featuring Neil Patrick Harris. The humor in the one 15-second spot embedded below stems from the fact that Harris isn’t quite sure how anyone would actually get a refund.

“Not me, I won’t” give you your money back, the actor and Oscars host says in the commercial. “Someone will give you your…” he stammers and then stops, before clarifying, “someone at Heineken, I’m guessing,” while looking around bewildered. In other words, he has no clue how the money-back guarantee would work in real life. Ha!

If you’re interested, have a look at the ad yourself:

What’s funny in a different way about this commercial is that the ad brings to light how virtually no consumers understand the nitty-gritty of money-back guarantees—mainly because almost no one ever gets their money back from them.

It’s easy for Heineken to make this promise concerning its product, because people simply “won’t return the beer — too much hassle and humiliation,” Kit Yarrow, consumer psychologist and frequent Money.com contributor explained via email. “The whole point of the ad is to make a big statement about quality/taste — guarantees are one of the strongest possible ways to demonstrate confidence. Heineken cleverly reduced the ‘huckster’ quality of a money-back guarantee by adding a dribble of irony and self-mockery through Neil Patrick Harris’ delivery.”

Money-back guarantees have been around for decades. An old Journal of Retailing study succinctly sums up a few of the key reasons why stores and manufacturers roll them out, especially when it comes to newer, higher-end products:

Such a guarantee may increase a retailer’s profits. They may increase the sales volume by encouraging shoppers to try new products. In addition, they may allow the retailer to charge higher prices because the reduction in risk from the product’s being a poor match with their tastes may increase a consumer’s willingness to pay.

Overall, these guarantees tend to provide far more benefit to retailers than they do for consumers. They’re the “commercial equivalent of a date pulling out his or her wallet with no intention of paying,” as a colleague at Time.com once put it.

It’s not just retailers and product manufacturers that make use of money-back guarantees as a means to instill confidence and drum up business. A small Canadian newspaper just introduced a money-back guarantee for subscribers, while a pastor in Pennsylvania recently told his congregation that he’d be happy to give donations to the church back to anyone who doesn’t feel blessed.

“We’ve never had one person ask for their money back, which means that God is true to his word and that we’re seeing the blessings of God being poured out in people’s lives,” said the pastor, Robbie McLaughlin of Hope City Church in Harrisburg.

It’s hard to say how many people take companies up on their money-back guarantees because this information is rarely shared with the public, if it’s tracked at all. Walmart introduced a much-heralded fresh produce money-back guarantee in 2013. But as one retail insider noted, it’s somewhat of an empty promise, because the likelihood of anyone employing the guarantee for a refund is small: “How many customers are going to return to Walmart and stand in a customer service line to return a $3 produce item?”

Some money-back guarantees come with substantial fine print, as well as loopholes that can make it extra difficult to get your money back. For instance, a MousePrint.org study on the money-back guarantees highlighted how Federal Express’s promise was undercut by a line of fine print explaining the “guarantee can be suspended, modified or revoked at our sole discretion without prior notice to you.”

One of the best-known money-back guarantees comes from Hampton Hotels, which has had such a guarantee for more than a quarter-century, and which claims to have given away “millions of dollars in free room nights” over the years to guests who weren’t fully satisfied with their stays. Even with those refunds factored in, the company says the guarantee has been great for business. One reason is that most people with complaints “merely wanted the management to know about the problems,” according to a company press release celebrating the guarantee’s 25th anniversary, and they didn’t actually ask for their money back. Most importantly, the guarantee has served as “key driver of incremental business for the brand, with about 75 percent of all hotel guests aware of the offer and about half reporting that it has some influence on their hotel choice.”


5 Secrets Stores Don’t Want You to Know About Their ‘Deals’

Customers shop at the J.C. Penney Co. store inside the Glendale Galleria shopping center in Glendale, California.
Patrick T. Fallon—Bloomberg via Getty Images Customers shop at the J.C. Penney Co. store inside the Glendale Galleria shopping center in Glendale, California.

Want to know the real reasons they can offer such great prices?

Who doesn’t love a bargain? The highlight of a shopping trip can be scooping up something with a slashed-through price or a big “sale” sticker on the shelf.

But stores have gotten increasingly sophisticated about shoring up their profit margins in a climate where people just aren’t spending the way they used to, so those discounts and deals aren’t always what they seem. Here’s how five big chains make you think you’re getting a steal.

JC Penney: Department stores have learned that, to push customers’ buttons, they have to offer whopping discounts. But what some of them do to make the math work is to actually raise prices before a sale, so markdowns are pretty similar to the original, non-sale prices. When JC Penney backed off its failed “no discounts” approach in 2013, CEO Mike Ullman told investors that being competitive “means initially marking up our goods to sufficient levels to protect our margins when the discount or sale is applied.”

To be fair, JC Penney isn’t the only discount store that practices this sleight-of-hand. A CBS affiliate in California investigated Kohl’s with hidden cameras and found that some prices were marked up by as much as $100. “One twin sheet set was listed at 50 percent off the original price of $89.99. But inside the plastic zipper, the earlier price tag shows $49.99, indicating the current sale is only $5 savings from the original tag,” the report says.

Outlet stores: While people have the perception of outlet stores as a great place to snag a deal on a designer coat with a crooked seam or last season’s hot fashions, the truth is that today, outlet stores pretty much operate as their own separate brands. The vast majority of stuff in those stores never so much as touched a rack at the name-brand version of the store. An anonymous outlet buyer tells LearnVest that as much as 90% of outlet merchandise was never made to be sold at a non-outlet store. Not only can this lead to lower quality in outlet-only merchandise, but it also means the so-called full price basically is a made-up number.

T.J. Maxx/Marshall’s: A recent Fortune magazine investigation looked at how parent company TJX Companies’ highly secretive business practices make customers at these sister brands feel like they’re on a “treasure hunt” while raking in the profits. Like outlet stores, these brands profit by having name-brand clothes made especially for them. Those Ralph Lauren sweaters? Odds are they never saw the inside of a Ralph Lauren or department store. (The article mentions Ralph Lauren specifically, but they’re not the only one.) The stores also stock trendy items designed to sell out quickly and often don’t carry very many of the really high-end items shoppers seek out, creating a sense of urgency for customers to snap up something they like before it’s gone.

Wal-Mart: Wal-Mart’s reputation is for the lowest prices anywhere, but customers who don’t shop around could actually find themselves paying more for their everyday purchases. Since discount retailers constantly tweak their prices, a customer who shops on auto-pilot rather than comparison-shopping could find themselves paying more for an item that used to be the better deal. Case in point: A 2012 Bloomberg Industries study found that rival Target edged out the self-proclaimed low-price leader. “Prices at Target were 0.46 percentage point cheaper than Wal-Mart this month. That means for every $100, Target was 46 cents less expensive,” the report says. Of course, this particular study is a few years old, and 46 cents isn’t a lot of money by any stretch, but this example goes to show how a store’s slogan is still no substitute for shopping around.

Target: The blog Consumerist has a whole tag dedicated to pricing discrepancies at the nation’s second-biggest discounter, full of reader-submitted photos of things like “value packs” of multiple items that actually cost more than buying two or more of the items separately would cost. This “deal” on disposable diapers offers a $5 gift card if customers buy two packages, but a sharp-eyed reader noticed that the promotional price per package was actually $2.50 more than the regular price sticker still on the shelf. And while buying bigger quantities usually means a lower unit price, coffee drinkers at this Target would be better off buying two smaller 12-ounce bags instead of an ostensibly more economical 24-ounce bags.

Read next: The Easiest Way to Deal With Annoying Online Shopping Returns

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MONEY Travel

Say ‘Buh-Bye!’ to Skymall: In-Flight Catalog Files for Bankruptcy

Tchotchke retailer Skymall and parent company Xhibit Corp. have filed for Chapter 11 bankruptcy protection.

MONEY Shopping

Customers Desert 3 Big-Name Retailers

Some very high-profile retailers were either part of this week’s bankruptcy news or having to admit some very expensive mistakes.

MONEY Shopping

Why All Those Great Holiday Deals Aren’t Really Great Deals

deflated balloon saying "Sale Now On"
MONEY (photo illustration)—Kutay Tanir/Getty (string); Adrian Turner/Alamy (balloon)

Sale prices are faker than ever this holiday season, as retailers openly admit that no one buys items at the ridiculously inflated "regular" or "suggested" amounts listed on price tags.

When seemingly everything is always on sale, is anything really on sale?

That’s a question that any savvy, value-oriented shopper must ask from time to time—and especially during the annual holiday shopping season frenzy, when it’s routine to see entire stores discounted by 40% or 50%. When such markdowns are a dime a dozen, who is foolish enough to actually buy anything at full price?

The answer could very well be no one. Something called “price anchoring” is a widely employed tactic in the retail world. Basically, the concept involves the establishment of a high price anchor, which locks into place a perception of value. You’ve probably seen tens of thousands of these anchors, in the form of “list,” “regular,” “original,” “suggested,” or “compare to” amounts shown on retailer websites or price tags. Anchor prices are set intentionally high, not with the idea that consumers will actually pay the inflated prices, but so that the retailer can create the perception of a tremendous deal when the item is inevitably placed “on sale.”

For example, picture a sweater listed with an original price of $100. When it’s placed “on sale” for $50, that seems like quite a deal—a far, far better deal than if the original price were listed at $55 or $60. All along, however, the store selling these sweaters has been planning on getting around $50 apiece for them, and it would probably make a profit even if it sold them for $25 each—which the store surely will during after-Christmas sales.

There’s nothing new about price anchoring. What is new—and pretty darn galling among consumers who expect more pricing transparency—is that in today’s promotion-heavy retail world, “original” prices appear to be getting exponentially more inflated. What’s more, retailers aren’t even pretending that a single customer ever paid its “regular” or “original” prices for anything.

In a new New York Times column, Farhad Manjoo wades into this murky world, trying to figure out how shoppers can evaluate whether or not a deal is a deal when seemingly everything is presented as one. What he reports, among other things, is that this season in particular has seen an “explosion of less-than-stellar deals advertised on the web,” in which there’s really nothing special about all but a very few of the sale prices available on Black Friday and other supposedly amazing days for bargains.

While nearly all retailers engage in the practice of inflating list prices more or less with the sole purpose of making discounts seem more impressive, a Macy’s spokesperson openly admitted that it came up with its original prices “based on many different factors, including the cost of the item, overhead, benefits we offer … as well as our ability to offer the item at a lower price during sale events.” Macy’s also pointed out some fine print on its website alerting shoppers of the following:

“Regular” and “Original” prices are offering prices that may not have resulted in actual sales, and some “Original” prices may not have been in effect during the past 90 days.

Holiday season sales and discounts are presented as being very special, but in fact there’s often nothing special about them—because in all likelihood, the only purchases occur when these items are “on sale.” If a price exists that no one ever pays, it shouldn’t be referred to as a “regular” or “original” price. It could be described by another term: a fake price.

There was a lot of discussion about the topic of fake pricing back in early 2012, when J.C. Penney tried to shake up its business model, in which more than 99% of its sales were below list price, and items were routinely marked down by 50% or 60%. J.C. Penney’s attempt to get rid of such extreme discounting and offer fair prices from the get-go failed miserably, at least partly because shoppers are compelled to buy more when retailers use the ruse of inflated price anchoring. And now we’re left in a situation in which sales are ubiquitous, both sale and original prices are arguably more meaningless than ever, and it’s never been more difficult to tell when a deal is actually a deal.

To some extent, shoppers seem to be aware of all of this. Some of the reason that Black Friday purchases were down this year is that the majority of consumers felt that Black Friday sales are meaningless because they assumed—rightly so—that there would be “more sales throughout the holidays.”

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