Growth and Caution Dominate 2010 Plans at Investors' Conference

Growth is back in style, according to the retail executives who presented at the 12th Annual ICR Xchange investors’ conference, held Jan 13–14 at the palatial St. Regis Monarch Beach Resort & Spa in Dana Point, Calif.

Rue 21 announced ambitious plans to build 100 stores at the conference. Others forecast resuming expansion plans shelved during the Great Recession. As executives outlined their plans, analysts gathered at the conference were split on what an economic recovery will look like for the fashion business.

Marshal Cohen of market-research firm The NPD Group forecast 2010 will be a good year for fashion retailers because consumers are filled with pent-up demand for clothes after living with a highly austere budget for more than one year.

Analyst Richard Jaffe of financial services firm Stifel Nicolaus said 2010 would not feel like a recovery. “It’s going to be a tough year,” he said. “It’s a zero-sum game with the pie shrinking slightly.”

If there are any common themes spanning retailers’ different plans for 2010, they seem to follow these guidelines: Consumers are still looking for a deal, there is a lot of money to be made overseas, and the lessons of cost cutting and prudent planning learned during the economic downturn will not be forgotten. What follows are some of the highlights of the prominent retailers and companies who gave investors a peek at their 2010 plans.

Rue 21 Chief Executive Bob Fisch seemed to summon memories of a more bullish market when he spoke on Jan 13. His company, based in Warrendale, Penn., successfully filed an IPO in November. He told investors Rue 21 will be building 100 stores in 2010. Long-range plans include opening more than 500 stores, thereby doubling the company’s current fleet of 534 Rue 21 stores.

Rue 21 stores serve tweens and teens with affordable, stylish clothes with an eye to pop culture and speed-to-market service. For example, only six days after music icon Michael Jackson died in 2009, Rue 21 stores were well-stocked with Michael Jackson T-shirts, Fisch said.

The value retailer carved a niche for itself in a highly competitive market by expanding in places underserved by high-profile retailers. Up to 60 percent of Rue 21 locations are built in small towns with populations of fewer than 50,000, Fisch said. Opening in underserved markets has helped the retailer make deals with landlords and cut other costs. “We’re never going to [earn] the highest dollar per square foot,” Fisch said. But he guaranteed his stores will earn the highest profit per square foot.

Everett, Wash.–based Zumiez Inc. plans to start the New Year with a schedule for slow growth, according to its president, Richard Brooks.

“We can easily get to 800 stores,” he said during the company’s Jan. 14 ICR presentation. “But we changed the estimate to 600 to 700 stores. We can grow organically.” The active-sports retailer currently maintains a fleet of 377 stores.

The choice of a slower-growth model seemed to be rooted in strategies for surviving the Great Recession. Brooks told investors that his company made it through tough times by cutting store inventory and making deals with its vendors to aggressively bring down costs on merchandise.

A new direction in non-denim categories will be key for Joe’s Jeans’ 2010 growth, according to the Los Angeles brand’s chief executive, Marc Crossman.

In his Jan. 13 presentation, Crossman said 2010 sales for his company’s non-denim business could grow to 14 percent of its revenue. Joe’s Jeans launched several product categories of non-denim categories—such as woven shirts, jean leggings and T-shirts—this year.

Joe’s also plans to open more branded stores this year. Crossman said his company will be particularly aggressive in opening outlet stores. Joe’s currently maintains two full-price stores and four outlet stores.

During his Jan. 13 ICR presentation, Guess? Inc. President Carlos Alberini said his company plans to resume retail growth in 2010. The profitable company runs a global fleet of 1,186 stores, and it plans to open more stores, including more boutiques under the nameplate G by Guess. The Los Angeles label also plans to rebrand Guess by Marciano, although Alberini did not specify how many Guess by Marciano stores the company will open this year.

Guess aims to build more of its stores internationally. Northern and Eastern Europe are considered regions brimming with opportunity for the denim-based label, which has become very popular in Italy in the past decade. The company also plans to increase its wholesale business in Asia in 2010.

International growth will drive expansion plans for New York–based Warnaco, according to its chief executive, Joe Gromek. Half of its earnings comes from international sales; eventually it will get 54 percent of its sales from its international business, Gromek predicted.

Its Calvin Klein label represents 75 percent of its business. Warnaco plans to expand much of its Calvin Klein sales through opening stores and wholesale businesses in underrepresented areas of developed overseas economies and also in newly affluent emerging economies. “Much of the growth will be in our own retail. We control our destiny here,” Gromek said.

Expansion in Asia will be an important driver of VF Corp. Eric Wiseman, the chairman of the $7.6 billion juggernaut, spoke to ICR on Jan 14. In 2009, the Greenville, S.C., company hired 952 people in Asia.

Also in 2009, for the first time in its history, the business of VF Corp.’s outdoors and action-sports labels, which include Orange County, Calif.–based Vans Inc., passed its denim business as the anchor of the company. Outdoor and action-sports brands accounted for 38 percent of VF’s revenue. Wiseman also noted in his presentation that business may be hard in 2010. “We will grow in 2010,” he said. “But it won’t be consistent across the business.”