It had been a red-hot year for Claire's until the fourth quarter. During the first, second and third quarters of fiscal 2005, comps grew 11%, 10% and 9% respectively over the same quarters in fiscal 2004. Still, the accessory and jewelry retailer's same-store sales numbers for the fourth quarter (ended Jan. 29, 2005) weren't too shabby, posting a 5% increase over the same period a year earlier. For the entirety of fiscal 2005, the company saw an 8% increase in comp-store sales.
"We acted quickly by canceling some orders, and moving up some planned markdowns," Schaefer continued. "So we lessened the impact of excess inventory. However, increased promotional activities, primarily in January, affected revenues, margins and net incomes."
According to Schaefer, the dip in traffic "wasn't attributable to any significant mistakes on our part in terms of inventory selection. We had no major misses. Our results were attributable to mall and store traffic levels below expectations, and the lack of a hot item to drive traffic, like initials were last year. Also, there was competition from electronic products such as iPods, which fall outside our inventory universe."
During fiscal 2005, Claire's added a net of 49 stores to its total, including 30 Claire's North America, 17 Claire's Europe, and 25 Claire's Nippon; it closed 18 Icing by Claire's, which are former Afterthoughts stores that the company acquired in 1999, and which serve a slightly older demographic than Claire's pre-teen and teen customer base.
"Our revitalization of Icings by Claire's has been a success, and now it's time to pursue new store openings," Schaefer asserted. "We want to move quickly, but we're constrained by the scarcity of appropriate real estate, though we will open stores as opportunities arise."
Claire's currently operates about 2,840 stores in the U.S., Canada, the British Isles and continental Europe. Claire's also operates 150 stores in Japan as a JV with Japanese retailer Aeon Co. Ltd.; 57 stores in the Middle East and Turkey under an agreement with Al Shaya Co. Ltd.; and four stores in South Africa under similar agreements with the House of Busby Ltd.
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