GLG News by Martin Brill

Implications: The entire department store segment is hurting right now, but those that improve their merchandising strategies , build their store brand though creative marketing and improve the shopping experience for their customers will emerge as market leaders once the economy turns around. Department stores must shop the market for fresh collections and new designers - and cut back on stale assortments form large manufacturers.

Analysis: When I survey shoppers on what Kohl's, J.C. Penny, Bon-Ton, or Macy's stands for, I often get a blank stare or some version of "I don't know." While discount shoppers often mention "great price's" and specialty store shoppers talk about "unique merchandise" department store consumers are, at best, vague about image of the store in which they just made a purchase.

While most department stores have cut back on opening seasonal orders from big brands like Jones New York, Nine West, and Liz Claiborne, the fact remains that smaller contemporary brands and new designers with an "edge" to their collections, are rarely part of the mix. Every year, top management from the largest manufacturers meet with department store executives to develop an annual plan which includes items such as forecasted volume, gross margin guarantees, allocated square footage and advertising allowances. Unfortunately, after these deals are cut, (and private label brands are allocated funds and space)very little "open to buy" is available for smaller brands that could bring the much needed element of surprise and innovation to the selling floor. 

Department Stores must work harder at conveying to consumers what their brand really stands for in the  overcrowded retail marketplace. This is a long-term process that requires vision, skill and a top flight marketing department.

Many successful specialty stores have worked hard at making the "total shopping experience" for their customers a priority. Department stores that want to win the battle for customers hearts and wallets, had best take notice of what it takes to pull this off (think service) and maybe they can make shopping for fashion fun again.

Implications: Discount stores are not the only sector holding up well in what has been described as the worst retail apparel environment in the past twenty years.   Innovative specialty chains that know their customers well are moving forward with fresh assortments and new product categories that speak to their customer’s wants and needs.

Analysis: Before you write off the whole retail apparel sector for the rest of the year, I recommend you spend a little time investigating a few gems that are doing quite well, thank you.  While many CEO’s are telling investors that low consumer confidence and a looming recession are to blame for reduced traffic and lower comparative sales in their stores, they have to answer as to why their some of their competitors are thriving in the same environment.   Here is a short list of some specialty apparel retailers that are performing well right now:
Guess – The Marciano brothers successfully transformed the brands business model from that of a department store vendor to a global retail powerhouse in only six years.  
J. Crew – Under the guidance of ultimate merchant Mickey Drexler, has grown with its customer and bounced back from being a dying brand to a multichannel success story.  
Urban Outfitters Inc. – All three brands (Urban outfitters. Anthropology and Free People are all registering positive comps.  
Aeropostale – Has been winning the highly competitive teen segment with compelling, trendy products at affordable prices.  
H&M – The European “fast fashion leader” is performing well in the U, S. and around the world.  
Lululemon – This relatively new Yogi inspired chain, featuring superior performance exercise clothes, is performing well and expanding rapidly thanks to superior customer service.
 
 What do these winners all have in common: Although each brand has its own operating model, what they have in common at the top, are passionate and extraordinary retail apparel merchants, providing a unique vision focused on the wants and needs of their customers.  

Implications: Middle income consumers are trading down from department stores such as Kohl's,  Bon-Ton and Macy's to off-price retailers and discounters like TJX and Ross Stores, Wal-Mart and Costco.  Missy apparel retailers and brands targeting "boomers" are suffering more than most in this economic downturn. Aeropostale, Urban Outfitter's, J. Crew and H&M are thriving at a time most specialty retailers, catering to younger shoppers, are reporting negative comps.

Analysis: Consumers continued to buy apparel In February, but as their confidence and sense of wealth diminished, bypassed traditional department stores and better women's specialty stores such as Chico's, Coldwater Creek and Talbots. Our consumer survey's show these women spending more on fashion at off-price retailers like T. J. Maxx and Marshalls and looking for bargains on commodities at Wal-Mart.

Although teen retailers like American Eagle Outfitter's and Wet Seal are loosing ground, the fickle trend conscious consumers in this segment are buying at Aeropostale, Urban Outfitters like it's 2006.

We have concluded that although business is soft overall (including luxury) that women  are becoming more resourceful by trading down and teenagers are becoming very selective.

Pent up demand for apparel may be a positive factor in the second half of 2008 but lacking "must have" items, we feel that women's apparel will continue to be the weakest apparel segment for the next twelve months.

Implications: In moving  from a key item merchandizing strategy to monthly "wardrobe building collections," will Old Navy  alienate of many of its core customers? Does Old Navy have the sourcing and logistics structure in place to execute a fast fashion delivery initiative without severe disruption of its supply chain? With no apparel retail experience in his resume, can Glenn Murphy, CEO of Gap Inc.,  properly evaluate the risks to customer loyalty,  inherent to radical merchandizing strategy shifts?

Analysis:

After sixteen months at the helm of a ship sailing in very stormy seas, Dawn Robertson is charting a new course for Old Navy, Gap Inc's. largest brand. With a new design and merchandizing team in place and designer Todd Oldham installed as creative director, Old Navy previewed some of its new collections today in New York.

Merchants, typically, have a much easier time building a merchandizing concept  from scratch than repositioning a brand with a large core customer base. For sure, Old Navy has poorly executed its low price-point key item strategy, but the $6.8 billion specialty chain runs the risk of shocking their core customers with fashion collections that center around jackets and related separates. Does Glen Murphy, the newly installed Gap Inc. CEO, fully understand the risks to customer loyalty that dramatic merchandise assortment shifts bring to the table?
 
Binging fashion apparel quickly, from concept to retail store has been proven successful by European fast fashion player like H&M, Zara and Topshop, but it took many years for these companies to refine their logistics  and locate factories that can move fast without compromising quality. Does  Mr. Murphy truly understand  the financial ramifications of a logistical breakdown at the height of a selling season in the world of fashion?

The first new monthly collection at Old Navy will be in store this March and I for one will be keeping a close eye on comparative store sales and hoping for the best.

Implications: While the very upper retail segment continues to perform well, off-price retailers and mass merchants will benefit most from a deteriorating economic outlook. Department Stores and Specialty Retailers must manage inventories skillfuly, in order to suvive the tough season ahead.

Analysis:

If you are like me and want to avoid crowded isles and long checkout lines while shopping for holiday apparel gifts this year, I would recommend a trip to a local department store or specialty retailer for a truly tranquil experience.

October comparative retail sales at stores like TJX ( Marshall's and T.J. Max) and Target were up 3% and 4.1% respectively but mid-level department stores turned in lackluster results. Kohl's was off a disappointing -3.8% as was Macy's -1.5, Nordstom -2.4% and J.C. Penny -1.8%. The rest of the segment was in the minus column, with the exception of Saks +10.6% and Neiman Marcus +8.5.

Most of the leading specialty retailers such as American Eagle, Chico's, Victoria's Secret and Ann Taylor were considerably down from last year and the trend (despite heavy promotions) is likely to continue. Even "affordable luxury brands like Polo Ralph lauren and Coach are cautioning investors about a soft forth quarter.

Chairman Bernake 's "somewhat optimistic" outlook certainly seems out of step with most shoppers this season, especially middle class consumers who are beginning to react to the well chronicled economic pressures of 2007.

Implications: 1.In department stores, it is very rare that the most expensive line in a department ever does well. 2. It is unlikely that the typical Kohl's customer ever heard of Vera Wang. 3. Kohl's advertising campaign on this brand does not speak to their moderate customer base. 4. Vera Wang's designer line will not suffer and she will make some very nice short term money until Kohl's management recognizes its strategic mistake.

Analysis:  For many years, moderate department stores such as Dillard's, have been unsuccessful in adding more upscale brands to their merchandizing mix and it's no secret that Macy's is having a tough time converting former May Company customers to their higher price points.

Vera Wang would have had a better long term chance of success  by licensing her name to a an apparel manufacturer and created a contemporary sporstwear line to be sold to upscale specialty and department stores. I am amazed that the management at Kohl's was not asute enough to research past failed attempts by their competitors to sell lines at higher price points than their core customers were accustomed to.

It would seem prudent for Kohl's to montitor sales results closely on this brand and if, as I suspect, it under performs cut bait quickly and focus more on the needs and price points that make sense to their core customers.

Implications: The Abercrombie & Fitch brand is percieved as edgy, sexy and contemporary American fashion, making it a perfect candidate for European expansion. The company is growing its top line by inceasing square footage in the U. S. as comp store sales have been generally flat. The London store concept was based on the unique New york flagship store on fifth avenue and will be the model for the new stores throughout Europe.

Analysis: The tremendous success of Guess by Marciano in Europe and the Pacific Rim has demonstrated that young contemporary fashion rooted in American style is very appealing as a growth vehicle and the next logical step for Abercrombie & Fitch. The brands overtly sexy graphics, and high quality products make it a natural for youthful  European consumers seeking to emulate an American sense of fashion.

The company's growth has been legendary, but productivity in stores open at least one year is slowing and there is a not an infinite universe for the company to build new stores in the U.S.

Now that the concept has been successfully tested in London this template needs to be be replicated throughout Europe and eventually in Asia if the company is to continue its growth trend.

Not all American brands translate well for the European customer, especially those in the boomer segment but A&F seems to have the basic ingredients to thrive as a global powerhouse.

Implications: With almost flawless execution of their global retail strategy and powerful brand extensions, Guess continues its dramatic growth in revenue and profit. Offering no excuses about the weather, high gasoline prices and a soft housing market, Guess reported that U.S. same-store sales for their first quarter grew 13.6 percent awhile total company earnings increased 71.9 percent. Wholesale revenues at Guess grew 77 percent, in spite of the brands rapid expansion of their own retail stores and growing Internet business. The experienced and talented upper management of the company was able to change the business model from a wholesale department store resource to a leading global retail brand in six years. Guess is established as a fashion leader in the “contemporary” fashion segment and its well merchandised product assortments uniquely position the brand for further global expansion.

Analysis:  

How do you go about transforming a medium sized jeans manufacturer that is barely surviving, into a $1.5 billion global multichannel brand in six years? For an answer you might want to talk Paul and Maurice Marciano, who along with two older brothers, founded Guess about twenty-five years ago.

From the start, Guess had a unique contemporary point of view, with sexy, highly engineered premium jeans at the core of the collection. They sold their products through better department stores and upscale boutiques, but grew weary of what they considered to be unreasonable demands for allowances and markdown money from the big stores. To gain better control of the brands distribution and image Guess management decided to build some of their own retail stores and sell their products online through their website. Ten years ago these initiatives were considered very risky for an apparel brand that seemed to be at the mercy of the big department stores – after all they were now becoming competitors with their prime customers. In spite of some veiled threats from the department store channel, the brand remained a presence in contemporary departments across the country and continued to perform well.

By 2001, the company felt as if they had reached a crossroad in and decided to reinvent themselves as a global retail brand with wholesale playing a much smaller role. After fifteen straight quarters of earnings growth, the company outdid itself by posting a staggering 71.0% in earnings growth on a consolidated basis. Same store sales in North America were up 13.6% and operating margin for the company improved 240 basis point to15.3%. What is so amazing is that results were up significantly in every business channel including Europe, Asia, The Middle East, North America and global wholesale.

It is no secret that the apparel industry is suffering from a dearth of top tier leadership with the vision, passion, determination and merchandising skill’s needed to turn ailing brands around in a very competitive environment. Paul and Maurice Mariano also brought an often overlooked element by apparel retailers seeking new leadership at the top: hard core apparel industry experience.

Guess is an outstanding example of a multi-brand, multichannel, global apparel company that has executed its ambitious business model at a level that is close to perfection and I wouldn’t be surprised (if the company’s management stay’s in tact), that revenue doubles, from $1.5 billion to $3.0 billion within the next five years.

Implications: Considered to be still in its infancy, You Tube and My Space are growing geometrically, with 267 million viewers combined in March 07’, verses 71 million last year. Freedom of expression, with humor as a trigger, is creating viral marketing phenomena in the world of fashion. Major brands such as Nike and Gap are creating content, specifically, to engage an audience to promote new products. Fashion marketers are experimenting with 10 second TV spots to drive targeted segments to these sites to view their content.

Analysis:  

In what seems to be a blink of an eye, free content websites such as My Space and You Tube have created what can only be viewed as an apparel marketers dream. These two websites (with many more to follow) are providing an easy way for brands, large and small, to reach targeted customers and prospects with online commercials and promotional videos for free. The sheer size of unique visitors to these sites has convinced iconic brands such as Polo Ralph Lauren, Adidas, Calvin Klein and Gap that they need to get on board with this concept quickly even if the have to figure it all out as they go along. New apparel companies that traditionally have had a difficult time getting their merchandise onto store shelves can now create a buzz around their brands with inexpensive videos and jump-start retail distribution and sell products on their own websites.

The most successful (and coolest) videos on these free websites combine two major elements: humor and consumer story telling. When a video is successful, the buzz explodes virally through multiple online touch points and of course, word of mouth.

Veteran apparel Marketers are still coming to grips with these new marketing phenomena, especially the hyper-speed at which a new brand or product message can reach a huge, targeted audience. With interactive technology evolving so quickly, no one knows exactly where all this is heading and how it will evolve over time, but one thing is clear: the future of fashion marketing has arrived like a bolt of lightening and in the famous words of Jimmy Durante, “Everybody wants to get into the act.”

Implications:

• Recent retail consolidation (such as Federated’s acquisition of the May Company) has compelled apparel wholesalers to accelerate development of direct to consumer strategies in order to gain greater control of their distribution channel.
• Wholesalers are on the lookout to acquire companies with the potential to develop into global retail “lifestyle” brands.
• Properly executed retail concepts have the effect of strengthening the brands wholesale business.
• As wholesalers direct to consumer business grows (Liz Claiborne is projecting to 40%) it will create a fundamental change in financial planning.

Analysis:

I am often asked “what trends are currently having the greatest effect on the apparel industry” and my answer is usually a long one. A good place to start is at retail consolidation and the resurgence of department stores with consumers. This is attributable to more sophisticated merchandising strategies and accelerated pace of private and exclusive label brands.

The advent of lifestyle niche specialty retail players such as Abercrombie & Fitch, Chico’s and American Eagle (fueled by integrated multichannel distribution) has changed the landscape at malls and lifestyle centers around the country. At the same time, European fast-fashion chains such as Zara, H&M and Topshop have drastically cut the product development lifecycle; bringing current fashion to their stores in weeks rather than months. Global retail expansion is growing quickly, especially in Europe and Asia and direct global sourcing of products by retailers from China, Mexico, Eastern Europe and Central America is operating more efficiently thanks to advanced Product Lifestyle Systems.

With all of these changes seemingly happening at the same time, the largest apparel wholesalers such as Liz Claiborne, V.F. Corp and the Jones Apparel Group are reacting by taking their best brands directly to consumers through their own retail stores and the Internet. Pioneered by brands like Ralph Lauren, Juicy Couture and Guess, the impact of “direct to consumer” on a wholesale brands business is generally positive.

Of course, the phenomenon of wholesalers becoming retailers will not come without some pain. The financial planning of these new hybrids will continue to be vexing to investors as these hybrids adjust to a shift in the timing of revenue. As the culture of these wholesaler/retailer companies change, division presidents will become nimble brand managers with the ability traverse the choppy waters of multiple distribution channels. Merchants and executives with strong retail merchandising and operational skills will be recruited and integrated into a new corporate culture to insure that the store’s and website’s of a wholesale brand deliver an extraordinary shopping experience that can compete on a level playing field with established niche specialty retailers.

Implications:

Industry speculation, fueled by CNBC, that Goldman Sachs was hired by Gap Inc. to “help explore options” was denied last week by the company’s founder and Chairman Emeritus, Donald Fisher. When contacted about Mr. Fisher’s comments, the investment banking firm declined comment.

Following the resignation of Paul Pressler last month, (who succeeded Mickey Drexler as CEO four and a half years ago) the company accepted the resignation of Gap President Cynthia Harris and replaced her with Marka Hansen who enjoyed moderate success as President of the company’s Banana Republic division.

Last week, Charlotte Neuville, who was hired a year and a half ago as the Gap’s Head Designer, abruptly left the company and a search is on for her successor.

The difficult task ahead for the company is to find a top-tier CEO who would be disposed to initiate yet another a turnaround effort in the glare of impatient investors’ scrutiny and be willing to embrace the freshly minted executive team now running the companies’ three major operating divisions. (Gap recently hired Dawn Robertson to turn the floundering Old Navy around and Banana is now being run by interim President, Jack Calhoun, who worked for Hanson as Banana’s Chief Merchant.)

Analysis:

The competitive landscape of “apparel specialty retail” has notably changed since Mickey Drexler repositioned the Gap from a “Levi’s only” chain, to a vertically integrated private label business and blanketed the country with stores that provided consumers with an alternative shopping experience to department stores. Along the way he also created the six billion dollar Old Navy, and repositioned Banana Republic from an inconsequential “travel and safari” boutique to an iconic brand appealing to upscale consumers in their thirties and forties.

As the competition from specialty retailers such as Abercrombie & Fitch, Urban Outfitters, H & M, J. Crew and American Eagle intensified, performance at the large multi-banded retailer began to experience diminished market share and declining same-store-sales. Inexplicably, Mr. Drexler was replaced about four and a half years ago by the recently deposed Paul Pressler, a former Disney executive with limited apparel merchandising experience. Since then, retail performance of GAP has gotten considerably worse, especially in the last two years.

Today Gap is at the proverbial crossroad and all indications are that a new CEO with a strong merchandising background and a sterling reputation as a turnaround expert will be recruited as soon as possible. Despite rumors that all or part of the company will be shopped to private equity; the Fishers’ and the Gap board are clearly moving the company forward as a public company.

Under this scenario, here are just a few of the critical issues the new CEO of Gap will be facing:

1. A new management team, not of the new CEO’s choosing has already been hired or reassigned to run the company’s three major brands.
2. Impatient and skeptical investors will likely scrutinize every strategic move the company makes to restructure the business and reposition the Gap and Old Navy.
3. The new CEO will need the board’s support to initiate dramatic change, just as Mickey Drexler was able to do in the late 80’s.

The biggest job ahead for the new CEO of Gap will be to transform the merchandise assortments at Old Navy and the Gap into relevant and unique offerings and to remake the image of both brands into compelling shopping destinations. On top of that, he/she must re-engineer the company’s supply chain to enable new fashion concepts to reach their stores more quickly.

As a privately held company, the job of recruiting a top CEO for Gap would have been a lot easier, but the company has chosen its course – and one can only wish them well.

Implications:

After failing to sell the company a few months ago, Peter Boneparth, CEO of the Jones Apparel Group, is moving forward with his “strategic plan” to cut costs, streamline pre-production operations and sourcing, strengthen the company’s wholesale brands and increase the retail presence of their retail stores which includes Barney’s.

In spite of these internal initiatives skeptical investors are wondering whether the company, can shake off the impact of Federated’s acquisition of the May Company and the severe loss of $12.3 million of operating profit from the Polo Jeans Company, (which was sold back to Polo Ralph Lauren).

Analysis:

The company believes it is headed in the right direction and is “seeing solid performance of their core apparel and footwear brands” but admit that they are “not immune from the many near-term uncertainties that continue to impact our distribution channel.”

Much like their close competitor, Liz Claiborne Inc., Jones is working hard to increase market share for their brands, provide exclusive brands for mass merchants and become less dependent on the few remaining department store chains that the need to work with. The most pressing issue’s for both companies is overcoming the impact of the wholesale channel consolidation, that is likely to continue and continued volatile consumer spending patterns.

Can Jones turn their negative earnings pattern around in 2007? Well, it looks like it may be more of a long-term proposition than the company would have you believe, but you can’t fault them for implementing a very aggressive strategic plan in today’s tough retail environment.

Implications:

European “fast-fashion” specialty retailers are increasing their presence in the U.S. and putting increased pressure on American specialty chains that cater to fashion conscious young women, to speedup deliveries of trendy apparel at affordable prices.

The highly sophisticated sourcing platforms developed by a number of European apparel chains are engineered to bring fresh fashion assortments to their stores on a weekly basis, which drive stock turns, increase market share and build store traffic.

Specialty retailers in the U.S., especially those targeting women under 30, are speeding up their supply chains by developing infrastructures and work-flow process’s that emulate European apparel chains such as Mango, H&M and Topshop.

Department stores and mass merchants are reacting to these changes in the competitive landscape by pressuring their apparel suppliers and direct sources to increase the regular flow new fashion assortments to the sales floor.

Analysis:

Trendy European apparel chains are much further along than their American counterparts when it comes to bringing fashion excitement, quickly and at sharp prices to their ubiquitous apparel assortments. Many (but not all) American retailers are reacting to this phenomenon by speeding up their merchandising and sourcing cycles.

With stores from "across the pond" like H&M, Topshop and Mango beginning to penetrate U.S. markets, many fashion savvy consumers are buying their apparel at stores that bring fashion more quickly and at sharper prices then the more established mall-based chains. These new competitors that are looking more and more like the future are already being emulated by some American retailers like Forever 21 and Charlotte Russe.

Department stores, which in the past would spend most of their open-to-buy dollars on up-front orders from large suppliers, have cut back on these commitments and are demanding that manufacturer’s provide frequent shipments of new merchandise, which, hopefully, with bring customers back to their store’s more frequently, stimulate more regular price sales, increase turns and trim inventory.

In their effort to be more on-trend and faster to market, mass merchants like Target and mid-level department stores like Kohl’s and JC Penny have applied increased sophistication to their exclusive private label brands.

It’s encouraging to see many American specialty retailers, department stores and mass merchants adopting and rethinking their sourcing operations in order to keep pace with the European fast fashion retailers, but those turning a blind eye to the new competitive realities of the global apparel market may well experience a sharp drop in market share and earnings.

Implications:

William L. McComb – a Johnson and Johnson group chairman, with no apparel manufacturing, or retail experience – will succeed Paul Charron as Liz Claiborne’s new chief executive officer next month.

In an earnings slump for the past year and a half and operating in a very tough retail environment, the multi-brand apparel giant’s new boss will be facing a very steep learning curve.

Trudy Sullivan, the Liz’s highly regarded president, was in the running for the job, but was passed over; leading to speculation that she will soon leave the company.

This year, four top executives have left the company and if Sullivan leaves, McComb will have to count on a weakened executive staff and Paul Charron, (who will consult for one year) to get him up to speed on the intricacies of global manufacturing, and apparel specialty retailing.

With a dearth of top executive talent available within the industry, look for more executives with a background in consumer product’s or corporate finance to ascend to the CEO spot at a number of major apparel companies in the coming year.

Analysis:

It took 16 months for Liz Claiborne to determine that no one at their company, or the entire wholesale/retail apparel industry for that matter, was more qualified to take over as their new chief executive officer then William L. McComb, an industry outsider, who most recently served as a Johnson & Johnson group chairman.

The shift in the retail apparel landscape, (with department stores and mass merchants consolidating and specialty retailers mushrooming) has created a set of unique challenges for the CEO’s of the large apparel manufacturers, who are expected to consistently increase earnings and shareholder value. The growing presence of private label brands on the sales floor along with the reality of fewer retailers to sell, has forced the top apparel executives to re-think their long-term strategies and operational platforms.

Aside from Liz, some of the companies most affected by the changing retail dynamics have been the Jones Apparel Group, Kellwood Co., Warnaco, PVH, Ralph Lauren, Perry Ellis International, VF Corp., Tommy Hilfiger and Hanesbrands. Many large privately owned apparel and footwear manufactures are also reeling from the changed retail climate.

In order to become less vulnerable to the often unrealistic demands of the giant retailers, many of manufactures have turned to direct-to-consumer selling through ecommerce, the development of their own specialty retail stores, strategic acquisitions and extending the global reach of their brands. The one company that seems to be doing it best these days is VF Corp., which has just registered their 12^th consecutive quarter of earnings gains. VF Corp. has successfully acquired unique independent brands such as The North Face and Vans and grew them quickly through superior merchandizing and new channels of distribution.

“Moderate” apparel brands owned by the multi-brand manufacturers are most vulnerable to becoming replaced by private label and prominent “better” brands such as Jones New York and Liz Claiborne now compete with highly promoted private label brands in the department store channel. The luxury segment, with its emphasis on design detail, appears to be the least vulnerable sector, which may account for the growing strength of companies such as Coach, Louis Vuitton and Hugo Boss. Contemporary brands such Juicy Couture, Theory, Guess and Free People, (which are unique and difficult to emulate) are also holding up well.

Liz Claiborne’s stellar record of growth over a 10 year period came to a screeching halt during the past six quarters and many of the company’s top executives have recently left the company. When the firm passed over its highly regarded president, Trudy Sullivan, in favor of Mr. McComb, it raised the question as to how soon it will take for her to assume a CEO position elsewhere. If she decides to leave, as expected, it will be left to Paul Charron (who will “consult” for one year) to teach Mr. McComb all about the unique complexities of running multi-brand multi-channel apparel company and how to generate earnings growth in an increasingly hostile retail environment. It should be very interesting.