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Retail Roundup: Sainsbury Beefs up Apparel, JCP Poised to Clean up in a Post Sears Era, and More

Rivet's 2020 Denim Circularity report takes a deep dive into how the global denim industry is plotting its circular future amidst a worldwide pandemic.

This week it’s the tale of a grocer crossing over into fashion, one department store finds a lifeline at the expense of another, a wayward retailer tries to update its operations, and another stands its ground even as it sheds investors.

Britain’s Sainsbury beefing up fashion quotient

The supermarket chain is looking to cut into apparel retailers’ bread and butter with a larger assortment of clothing that goes beyond basics.

Bloomberg reports the retailer is diving into fashion to separate itself from discount chains like Aldi and Lidl, and focusing on trendy pieces it produces close to home. The upmarket selection includes skinny jeans and leather jackets.

Sainsbury’s apparel sales are almost 1 billion pounds ($1.29 billion) and the retailer ranks as the U.K.’s 10th largest clothing retailer by value. In 2016, the store’s clothing revenue grew by 4 percent.

“Sainsbury’s poses an increasing threat to the high street,” Kantar Worldpanelfashion analyst Glen Tooke told the publication. “There was a stigma about buying your clothes in a supermarket five or ten years ago, but that’s going, if not gone.”

Morgan Stanley: Sears is all washed up

J.C. Penney’s new appliance showrooms could clean up if Sears were to shutter.

That’s the prediction from Morgan Stanley, which drafted a note about what it sees as the inevitable end for Sears.

The financial services firm was quoted in The Street as saying: “[Sears] one- and two-year credit default swaps imply the market is pricing a high profitability of default over the next 12 to 24 months. If Sears files for bankruptcy this year and subsequently liquidates, JCP could be a major beneficiary.”

The note goes on to say that J.C. Penney, which is bullishly rolling out its new appliance showrooms in 600 doors, would likely take a bath during Sears’ liquidation sales, but the prospects there after would be positive.

Starboard Value leads investors exiting Macy’s

Reuters lists the investors that have recently sold shares in the retailer, which include 3 million from Starboard Value, 2 million from Renaissance Technologies, and 1.27 million from Ridgeworth Capital Management.

For Starboard, the shares represented roughly 1 percent of Macy’s shares. The hedge fund’s SEC filing last week disclosed the development took place in March. Starboard’s exit had been foreshadowed by the fund’s criticism of Macy’s refusal to separate its retail and real estate businesses.

Though Macy’s is creating cash flow with the closure of 100 locations and various other small deals, Reuters reports Macy’s is unwilling to put more stores on the block only to lease them back because the chain sees it as debt.

The retailer’s Q1 earnings report showed it received $96 million in cash in real estate transactions and booked $68 million of real estate gains, of which $47 million were related to the sale of its downtown Minneapolis property.

Starboard CEO Jeffrey Smith has been quoted as saying the fund paid too much by investing in Macy’s too early.

Reuters reports he said, “Sometimes you don’t get the timing right.”

Land’s End CEO eyeing stores, e-commerce makeover

In his inaugural interview with the La Crosse Tribune in Wisconsin, Jerome Griffith, the new CEO of Land’s End, previewed how he plans to stitch together the company’s legacy with the demands associated with the future of retail.

Unlike the brand’s recent past directions that saw forays into more fashionable assortments, the new CEO plans to focus on Land’s End customer by staying true to what the brand’s known for: “great quality, very good value and service-oriented.”

On the plus side, Land’s End, which has its roots in catalogs, now does more than a $1 billion per year online, which comprises 87 percent of the company’s business. On the negative side, Griffith said, the company’s approach to business is stuck in the 90s. Going forward the retailer will begin to address ways to make the consumer journey easier like one-click checkout, easier returns and a more responsive mobile site.

Adding stores to its 11-location fleet is also on the table, as Griffith eyes the success of e-tailers like Warby Parker’s push into physical locations.

“We have a $200 million-a-year retail business, mostly in Sears but many Sears stores are closing. Our customer likes to shop. The customer that shops online and in the store buys (more than) only online,” he said.

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