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Check Out Line: Sears cautions on fourth quarter

Check Out Sears Holdings’ dismal holiday sales and its fourth-quarter profit warning.The company,which owns its namesake and Kmart stores,said same-store sales in the United States fell 3.5 percent in the key holiday period. The result? Sears is now saying its fourth-quarter profit could be less that half of what it earned a year earlier.Sears’ troubles follow a long line of depressing sales and profit warnings from retailers, as a tottering economyforces US consumers to cut their spending. These normally free-spending folks are nowbuying only what they need (and maybe some electronics).And though consumers will spend, 2008 retail sales are forecast to rise at their slowest pace in six years.But Sears saw this coming. The company warnedin November, after reporting a 99 percent drop in its third-quarter profit,that credit trouble and housing issues could further erode its earnings.One might remember howChairman Edward Lampert railed at the media and analysts at that time for underestimating the company.The market will be listening for whathe has to say this time?(Photo: Reuters)Also in the basket:US retail in a state of anarchy as consumers retreatUS retailers seen closing stores, paring growthBlue Nile fourth-quarter revenues up 24 percentBain Capital to buy Bright Horizons for $1.3 billionWal-Mart small format grocery stores to rival Tesco - Financial Times

Check Out Line: The battle for Kellwood

Check out Sun Capital’s push to take over Kellwood.After having a takeover offer rebuffed by Kellwood management, private equity firm Sun Capital is going straight to shareholders.Sun Capital began a tender offer to buy all outstanding shares of the company for $21 each. Kellwood shares closed on Monday at $16.51.'This refusal to discuss a potential transaction has forced us to take our offer directly to Kellwood’s stockholders,” said Jason Bernzweig, vice president of Sun Capital, in a statement.Sun Capital, which already owns about 9.9 percent of Kellwood’s shares, also said that if an agreement is not reached with Kellwood in the near term, it will nominate its own slate of directors for election to Kellwood’s board.It also said its $21-per-share offer price will be reduced to $19.50 if Kellwood does not terminate its $60 million tender offer for its 7.875 percent senior notes due in July 2009.Also in the basket:Retail sales unexpectedly declined in December Williams-Sonoma holiday same-store sales fall European stores see slowdown, shares hit (WWD)American Eagle plans $250 million to $275 million in capex

Inflation hurting consumer spending, index shows

High gasoline and food prices and a US housing market that shows no signs of improvement are weighing on consumers’ wallets, with rising unemployment threatening to further slow spending, according to a consumer indicator.Deloitte & Touche’s Leading Index of Consumer Spending fell to 2.3 percent in the latest month, from a revised gain of 2.61 percent a month earlier, the firm said on Tuesday.'Increases in energy and food prices are reducing consumer purchasing power,” Carl Steidtmann, Deloitte chief economist, said in a statement. 'Higher inflation and unemployment are key risks for consumer spending capacity in the months ahead.”The index, which tracks consumer cash flow, is comprised of four components: tax burden, initial unemployment claims, real wages and home prices.While the tax burden was unchanged in November, the index found that growth in jobless claims rose from the year earlier. Rising inflation helped to keep growth in real wages close to zero for the month, but home prices and new home sales fell, Deloitte said.

Check Out Line: Watching the designers

Check out the designer free agent market - Big name talent istrading teams for big dollar contracts.No, it’s not the baseball free agency market. It’s the world of fashion design.Apparel maker Liz Claiborne hired Isaac Mizrahi away from Target Corp on Tuesday, naming him the creative director of the Liz Claiborne brand.The company hopes Mizrahi will revitalize the brand. But the move is a blow to Target, where Mizrahi helped pioneer the concept of designer fashion at mass-market retail chains.Like as the Yankees have been with baseball players, Liz Claiborne has been active in the designer acquisition market. On Monday, it hired designer John Bartlett to revamp the company’s men’s sportswear line for spring 2009.And last year, it named Tim Gunn, host of TV’s 'Project Runway,” as its chief creative director.Also recently, Gap Inc named New York designer Todd Oldham as the design creative director for its Old Navy chain.You can’t tell the designers without a scorecard.Also in the basket:At Ground Zero, optimism returns (WSJ, subscription required)Consumer prices see biggest rise in 17 years (Photo: Reuters. Mizrahi on the right.)

Pier 1 to the media: 'Stop saying the ‘R’ word

The most frustratingissue forhome decor retailerPier 1 Imports these daysisnt’the dauntingrebuilding effort it’s undertaking, or the skittishreal estate and credit marketswhich are undercutting consumer spending.For them it’s the media and it’s role in spreading word that a recession may be on the horizon, Cary Turner, Pier 1’s Chief Financial Officer said at the Cowen and Co. consumer conference in New York.'The biggest frustration we have is the media. They continue to want to keep talking about the ‘R’ word,” Turner said.Although the current salesenvironmenthas been harsh for home decor retailers â€“ Williams-Sonoma reported disappointing holiday salesand slashed its outlook, while Bed Bath & Beyond warned of a weaker-than-expected fourth quarter â€“ things have been looking up for Pier 1 lately.Last week it said December sales at stores open at least ayear rose 7.5 percent - its strongest December in six years. And analysts said last month that Pier 1 was starting to show evidence of a turnaround after it cut costs and posted a narrower quarterly loss.But despite making noticeable strides, Pier 1’s turnaround has a long way to go, according to Turner.The company needs 'to recapture that treasure hunt feeling,” Turner said. 'Traffic is a little down.”

Stores with no fitting rooms. How retailers navigate Saudi Arabia

US retailers looking to set up shop inSaudi Arabianeed to prepare themselves for somemajordifferences - including the fact the there are nofitting rooms.As growth slows at home, some US retailers are looking at overseas markets, includingSaudi Arabia,to augment US sales.But to enter Saudi Arabia they need to work with a partner.And that partner can explain to a retailer how they should tweak their business to make it acceptable to the local Saudi Arabian market, said Peter Gross and Vishal Jain of Fawaz Alhokair Group. Fawaz Alhokair brings US brands, like Nine West and Gap,to Saudi Arabia.Jainsaid the typical Saudi family has five children, and 50 percent of the population is under 15 years old. That means there isa voraciousappetitefor youth and baby goods, and a retailer opening storesin Saudi Arabia would expect to stock more clothes for children than they would in a typical store in the United States.How about those racy US ads showing generous amounts of cleavage and torsos? They will need tobetoned down for Saudi Arabia, the executive said. Instead, retailers can expect their ads to show clothes on silhouettes.Gross said stores in Saudi Arabia do not have dressing rooms because women, who wear long black robes and cover their heads in public,will not undress in public, where all the workers in retailer stores are men.Instead, they will try on their clothes at home.And while they may not be able toflaunt their new fashions on the street,women are eager to flaunt them in the privacy of their own homes, among friends and family, Grosssaid.And what else sells well in Saudi Arabia?Handbags andshoes - twoitems Saudi Arabianwomen can show off in public.(Photo: Reuters)

War and Monkeys at the ICRXchange

At the annual ICRXchange for consumer companies held in the beach town of Dana Point, California it’s always jarring to see buttoned-down big city analysts and fund managers look like fish out of water while schmoozing with laid-back apparel company heads in the bright sun.But even more comical was the sight of an animated, energetic Dov Charney, chief executive and founder of trendy retailer and clothing maker American Apparel, giving an evolutionary lesson to suits andproclaiming himself to be a 'monkey.”The dinosaurs in his business, he explained to the rapt crowd assembled around him, are Hanesbrands and Fruit of the Loom, suggesting that his underwear designs are far more hip.'I’m a monkey - and the rats are behind me,” he said, referring to those who copy his designs.His comments prompted one fund manager to label Charney 'a character,” something the controversialCEO - whose leadership at American Apparel has been marked by accusations of sexual misconduct - may well have heard before.Also overheard at the two-day conference, Quiksilver President Bernard Mariette being asked if the company was contemplating acquisitions - this one day after the action sports apparel maker announced a bigger-than-expected quarterly loss due to its unwieldy Rossignol division, which it bought in 2005.'You got any money?” Mariette asked to laughter all around.Lastly, it feels like war at the ICRXchange. The requisite swag this year is an oversized camouflage backpack, which makes the attendees look like they’re shipping off for a deployment.But maybe the battle analogy is not too far off, given the current state of retail in the United States.(Photo: Reuters)

Check Out Line: More housing woes

Check out the plunging housing starts in December.The bad news for home goods retailers got worse on Thursday as the Commerce Department announced a sharper-than-expected 14.2-percent decline in US housing starts, pushing them to their lowest level in more than 16 years.'Builders are in trouble. They have a lot of inventory. They decided to cut back on their starts and that’s going to crimp the GDP,” said Robert Brusca, chief economist, Fact and Opinion Economics in New York.What is bad for builders is also bad for retailers like Home Depot and Lowe’s, which have been rocked by the housing crises. Other retailers have also felt the pinch as the sluggish US economy has hurt spending.'Demand for merchandise for the home will continue to be negatively impacted by the weak housing market,” Rosalind Wells, chief economist for the National Retail Federation, said earlier this week.Some analysts have argued that the home-related stocks have fallen so far that they are bargains at this point, even if it will take some time for them to recover.Gary Balter, analyst at Credit Suisse, lifted Home Depot, Lowe’s and Bed, Bath & Beyond to 'outperform” on Monday.But the numbers today show it could take extra help for the housing crisis to work its way out. Perhaps a construction charity? How about 'Habitat for Home Depot?”Also in the basket:Will he hit or Miz? Mizrahi joining Liz sets industry abuzz (WWD)Brewer S&N enters talks with biddersWarnaco expects to meet or beat ‘07 forecast

Not your ordinary washing machine

Most of us are happy if our washing machine just cleans clothes adequately. But LG Electronics, hoping to innovate its way to higher sales, has come out with a washing machine that it says can cut down on allergies.The South Korean company’s newest steam washer has a cycle that reduces common allergy triggers such as dust mites and pet dander on fabrics by more than 95 percent. The use of steam allows the wash cycle to reach the appropriate temperature necessary to break down allergens, it said.The front-load washer (shown in wild cherry finish) was certified asthma and allergy friendly by the non-profit Asthma and Allergy Foundation of America.'We see it as a very meaningful consumer benefit,” John Weinstock, marketing vice president for the US arm of LG’s appliance division, told Reuters.LG has been marketing its washers and refrigerators in the United States for about five years, and says high-tech features have helped it gain sales in spite of the nation’s housing slowdown. US appliance unit shipments, a key sales indicator, fell 6.3 percent in 2007, the Association of Home Appliance Manufacturers said this week.LG captured the No. 1 market share position in front-load laundry in terms of revenues during the second quarter of last year, and Weinstock said it has held on to that spot.The added convenience of the allergy-fighting machines will cost: the LG steam washer retails from $1,399 to $2,699, depending on features and finishes.

Check Out Line: Breeden gets seats on Zale board

Check out the new board members at Zale.Richard Breeden, the former SEC chairman turned activist investor, and his partner James Cotter, were named to the board of the struggling jeweler, which saw same-store sales fall 9 percent during the holiday season.Their firm, Breeden Capital Management, has amassed more than an 18 percent stake in Zale, and as the term 'activist investor” implies, don’t expect Breeden and Cotter to be patient board members.'We believe that there are major opportunities for Zale to strengthen its profitability and its market value. We are excited to join with the board and the Zale management team in pursuing those opportunities with vigor and immediacy,” Breeden said in a statement released by Zale.Breeden has said in regulatory filings that he believes Zale’s stock is undervalued and that he might initiate a major transaction at the company.The jewelry sector has been pretty cold lately, hit by the slumping US economy. Wonder if the board discussions at Zale are about to get heated.Also in the basket:Retailers sink into the doldrums (WSJ, subscription required)Retailers go green to cut costsPerformance Food to be bought for $1.3 billion Tiffany sets additional $500 mln stock repurchase(Photo: Reuters)