Quiksilver’s Annual Results and a Bankruptcy Update

Quik filled its 10-K for the year ended October 31, 2015 on January 27th. Meanwhile, as you probably know, the bankruptcy court has confirmed the company’s reorganization plan and it may be out of bankruptcy by the time you read this.

Doing my usual detailed review of the year doesn’t seem all that productive as the post-bankruptcy Quik will have such a different structure than the company that filed. Still, I want to highlight a few numbers and trends. I’ll also summarize very briefly the terms under which Quik is coming out of bankruptcy and comment on where they go from here.

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Retail and Brand Strategy: Cycles or Long Term Trends?

Could this time really be different?

Recently, a couple of retail CEOs have been pointing out, or maybe bemoaning, the lack of a strong retail trend. They’ve noted how in the past they’ve been able to rely on such trends for big sales boosts and have explained their worse than expected performance partly by the lack of it.

They say, “But that will change.” I’m sure they are right. It will change.   Their implication, however, is that this is a traditional retail cycle of relatively short term duration. I’m not so sure about the “short term” part.

It’s a bit awkward for me to be asking, “Could it be different this time?” because I’m very aware of the cycles of history over decades and centuries. I know that in retail cycles, not to mention social, economic, and financial cycles, it has mostly turned out to not be different.

I’m going to compromise with myself and say it’s probably not different, but the time frame during which that becomes clear is going to be longer than we’re used to. The factors that are coming together guarantee a long, strange trip as the tidal wave of divergences works through our retail market. I’m going to look at what those are and try to reach some conclusions about succeeding in our industry.

Let’s start with overall economic conditions and debt then move on to customer behavior and how we sell to them. Next, I want to take a look at technology and what that means to the competitive environment. Based on that, I’ve got some ideas about how retailers and brands have to operate.

It IS the Economy, Stupid

I don’t think I need to spend much time trying to convince you that this economic recovery has been weaker than any since the 2nd World War. You are certainly aware that wage growth has been low to nonexistent and that job growth, especially for our primary customer group, has tended to be in lower paying jobs and often involve multiple jobs. Let’s call that group the millennials, though you’ll see below I think that’s an over simplification. When can we expect improvement?

Not for a while, and the reason is debt. I’ve recommended a book called This Time Is Different: Eight Centuries of Financial Folly by Reinhart and Rogoff. It’s so well researched that it’s hard to dispute their findings, but they are hardly the only ones acknowledging the problem debt is causing. Basically, they show that debt over a certain point leads to lower growth in an economy.

They suggest that growth starts to be impacted when total private and public debt as a percentage of GDP reaches around 90%. As of the start of 2015, by way of some examples, Canada is the cleanest dirty shirt at a bit less than 300%. The U.S. is about 375%, the Eurozone about 475%, the U.K. 500% and Japan, the hands down winner, is north of 650%. What probably won’t surprise, but should disturb you, is that total debt has continued to rise since the Great Recession.

I’ve always found the idea of fixing a debt problem with more debt perplexing.

Meanwhile, take a look at this chart showing real GDP growth in selected periods in the U.S. 2000 is the year the stock market bubble first burst. To my way of thinking, though the Fed stepped in and “saved” us, that’s when things started to go south in a noticeable way.

GDP chart for Retail and Brand Strategy article for TWB 1-16

















I borrowed” this chart and the data in the previous paragraph from Hoisington Investment Management’s review and outlook for the third quarter of 2015. You can get your own copy at http://www.hoisingtonmgt.com/hoisington_economic_overview.html. I highly recommend it.

I’ve studied enough statistics to understand that correlation does not necessarily equal causation, but I’m convinced that there’s a relationship between GDP growth and debt. It is kind of logical. If you owe money, then you have less to spend while you pay it back and pay the interest. If you choose not to pay it back, then the people you owe it to have less to spend.

I think we’re in a low growth period until we do something about our overall level of debt. Solving the problems will be unpleasant and, if avoided long enough, draconian. Please, please, please, email me and tell me why I’m wrong.

So the first thing we have to deal with is continued slow economic growth caused by over indebtedness. Let’s move on. I don’t have room for a good rant on the damage the Federal Reserve is doing with continued low interest rates.

Our Customers

Our customers are, uh, wait a minute. Who are they anyway? Seems like we, as an industry, are trying to sell to everybody from six year olds to baby boomers. A couple of individual brands seem to succeed with that, but mostly you can’t. I’ll spare you my oft repeated speech about the dangers of expanded distribution except to remind you that 1) growth requirements make it hard to be a successful public company in this space because of the requirement for regular, quarterly growth and once you get into broader distribution 2) they may know your brand but not your story and your competitive advantage goes away and 3) we’re way over retailed with too much indistinguishable product.

I also wondered a while ago if maybe distribution didn’t matter due to online and because good merchandising could overcome wider distribution. To summarize, I thought that once a product was ubiquitous in the online world and a click away, customer’s reaction to broader distribution might change. I’ve decided the answer is “no.” It turns out that getting retailers who’ve never been great at merchandising specialty product to do it well is expensive, challenging and time consuming. There’s also our continuing problem of a lack of product differentiation which poor merchandising just highlights.

Meanwhile, back to our customers. If we have to characterize them as a demographic, we’d say, “the millennials.” This is the group (much like my mom’s generation who’s formative years were in the Great Depression) that got slammed by the Great Recession. They are financially conservative (and will be for life), are having a hard time making a wage that allows them to live independently, are not particularly brand loyal (though if you can get them, you can keep them), are most influenced by their community (not your advertising), and are more interested in experiences. A product is something they seek in order to have an experience, rather than buy for the hell of it. They have the data to find exactly the right product with exactly the right attributes because they don’t want to screw up the experience. Don’t try and bullshit them.

Okay, now that I’ve defined our customers as a demographic, I have to tell you not to do that. In the days of instant, endless, information about anything, groups, trends, styles, points of view can come and go pretty damned quickly. And anybody who’s interested in them can find out about them and be part of the community they represent. It’s easier to say your customer is of a certain age, and it may be true. But it’s not an adequate description of who they are.

Notice how the term “fast fashion” seems to have disappeared? It’s like it’s no longer an aberration, but a permanent condition. This seems to require that companies be a bit reactive after all those years where being proactive was a virtue.

To go with a soft economy, then, we’ve got customers that are harder to get and keep and in general have less money to spend. I am just a font of good news today.


 Let me remind you of two things I hear brands and retailers saying all the time.

“Get the right product to the right place at the right time,” and “Give the customer what they want, when they want it, where they want it.”

Those two catchy phrases make a lot of sense and are indicative of two things. First, they tell us how much the customer is in charge. In the days of too much retail space, too many undifferentiated products and near perfect information, that’s probably inevitable. Second, we’re all trying to figure out how, exactly, to do this and the one thing we’ve learned for sure is that it’s really expensive. There’s an advantage here to big players with strong balance sheets, because the cost for a 50 store retail chain to do it is probably not that much different than for a 600 store chain. Let’s put it this way- the cost per store is lower for the larger retailer or brand.

When you accomplish it, you won’t have created a long term competitive advantage; you will have just bought yourself the right to compete. I’m not talking about using a POS system here. I’m saying that from design at the brand to returns at the retailer the systems have to be integrated to keep up with the speed and requirements of your customers.

My Hero

Maybe you remember that a couple of years ago Rip Curl got itself in trouble. They tried to sell the company, but couldn’t get the price they wanted. So they decided to solve the problem the hard way.

They refocused on just being the best surf company they could be. They cut their product offerings by 50% and focused on the ones that their customers needed. They try to offer technology and quality that differentiate the products they do sell. They emphasized efficiency and reduced their distribution. They only sold places where they could make money. What a good idea.

In summary, their primary focus was on improving net income (and reducing working capital invested) rather than gross revenues.

It seems to be working, and regular readers will know I thoroughly approve of what they decided to do. Bluntly, I don’t think they had a choice. And neither do many of you.

The economy is making fast revenue growth difficult. Your customers (who can’t be simply identified as an age group any more) won’t buy what you tell them to buy, but what their community supports. They have endless choices and information. And the continuous investment required to satisfy their product and shopping requirements has gone through the roof- especially for smaller brands and retailers.

Do some surprising things. Perhaps completely outside of what your customers expect. Even contrary to your brand image. If you accept my premise that it’s tougher to get and keep brand loyalty in the days of endless, instant new brands, and that’s it’s damned near impossible to keep up with what’s “cool” anyway, why not surprise your customers this way? It’s a way to claw back a little initiative and not have to be reactive all the time in an impossible attempt to keep up with the rate of change.

Especially as a newer brand, focus on your web site and selling there. You can’t find the customers- they have to find you. Social media, etc. This minimizes marketing costs. What you do spend should be aligned with creating experiences. If you’re not going to grow revenue as fast as you once might have, make sure you’re selling at a price that gives you a solid gross profit. In your brick and mortar retail, be very cautious about whom you open and curate the hell out of them until you know they have you figured out. Do some temporary stores in surprising places for strange reasons. Never over supply.

It’s really a pretty interesting time to be building a brand as long as you acknowledge what I think are longer term conditions under which you have to operate. Rip Curl can watch some of its competitors flail as it just focuses on the bottom line with a business model that’s responsive to existing business conditions using some of the concepts I’ve briefly described above.

You can do the same thing.

The SIA Show: Dates, Data, Skate, Change, Burton and a Business Model I Like

Well, I guess we might as well get right to it. The date change for the SIA show to three week days in early December starting in 2017 was a major topic of conversation at the show. I got a point of view. Several, actually.

The New Dates

First, I’ve been through this twice before. Or is three, including the move from Las Vegas to Denver? Now, as then, a bunch of people hated it, a bunch of people liked it, and some shrugged their shoulders. I suppose there were people it benefited and those it didn’t. But a year after the change, nobody was even talking about it. Well, maybe except me. I love Denver, but miss playing blackjack. No idea why I’d miss something that usually cost me money.

I guess what I’m trying to say is I’m pretty sure it’s a done deal for better or worse. So let’s get over it and focus on running our businesses better in what are surely challenging times for pretty much everybody.

What did I hear from people? The specialty retailers hate the idea of being out of their shops for three or four days in early December when they are busy selling and don’t know what their inventory position will be like. The large apparel brands are thrilled and I guess pushed for the change. The hard good snowboard brands mostly said, “If the retailers come, we’ll be here. If not, we won’t be or if we are, it will be with a booth one third our current size.”

Now, if it wasn’t a done deal, what I’d like to see is a merger of Outdoor Retailer and SIA into one show. No, it’s not impossible. Yes, it would be difficult, maybe expensive, highly charged, and have lots of obstacles. But not impossible and, I think, responsive to the realities of our market. It might even be easier to accomplish than it would have been a year or two ago.

My next point of view- how did Nick Sargent find himself taking over just as this was happening? The timing seems, I don’t know, not well coordinated maybe? Or- maybe it’s perfect. Anyway, it’s a lot of change at one time. What doesn’t kill you makes you stronger, Nick. There must be a story I’ll never hear. Damn.

That’s enough on the change of dates. Let’s move on.

Outstanding Industry Data

Wednesday I went to the SIA intelligence day and heard Goddess of Research (not her actual title) Kelly Davis lay out all kinds of interesting market data for hard goods and apparel. You all need to be aware that the quality of the research SIA is doing and making available has gotten really good and way more valuable, hence I’ve bestowed the title “Goddess.”

Both presentations are available as PDFs to members. They are full of good information and I suggest you get them. The single stat that hit me hardest was the weather slide in the hard goods presentation. What it said on the slide was, “Weather explains ¾ of the variance on snow sports participation and sales.”

Interestingly, I didn’t hear audience members wailing and keeling over when that slide came up. Maybe we’re all just too used to that idea. I have to have a long talk with Kelly about just what that means, and I’ll report back. Notice she said 75% of the variance- not 75% of sales. Still, it implies a certain lack of control over your results in this most seasonal of businesses even when you do things right. And it seems to validate the approach I’ve been pushing for years- only buy (or produce) what you reasonably believe you can sell at good margin in an average year and carry over as little inventory as possible. It’s never worth more the following season.

I’d always rather you were bemoaning the sales you missed rather than the inventory you can’t sell.

The second research related item I want to tell you about is the Downhill Consumer Intelligence Project (DCIP). This coordinated effort collected way better data from way more consumers than SIA has ever collected before. It tries to tell you not just how consumers have acted, but why.

You can see some of the data in Kelly’s presentations. But, perhaps more importantly, you also have access to and have the ability manipulate this data in something called the DCIP dashboard. I’m not sure who gets what access and who has to pay and who doesn’t (I only get access to the top line data) but go check it out.

Below is a sample page from that program which, I think, shows some of the variables you can manipulate. Anybody who doesn’t focus like a laser when they see that 49% of skiers and 60% of snowboarders don’t own their equipment is not in touch with reality. That’s either a problem or an opportunity. I imagine it’s both.

dcip chart for sia show article 2-16

















You know what I found out at the show? Among all the hundreds of people who have free access to this program and data, literally nobody has used it to write a report that slices and dices their market.  That makes me want to tell you a story about a sister industry.

Skateboarding: A Cautionary Tale for Snow

Even before 2003, skateboarding had been through its cycles. But it was around then that its popularity really took off and the Chinese decided it might be worth making some skateboards because the market had gotten big enough to be interesting.

There were maybe half a dozen “core” skateboard companies at the time mostly founded by former pro skaters. They enjoyed a great business model where they sold their product mostly to “core” skate shops. That provided retailers and brands with enough margin to fund traditional marketing programs focused on their team riders. There hadn’t been much (any?) product change in a long time. The industry had convinced skaters that a skate board was made from seven or eight laminated plies of Canadian hardwood maple and not any other way.

After some fits and starts, the Chinese (and now others) learned to make a skateboard that was the same as that made by the core brands. But they made and sold it at a much lower price and skaters (and skaters’ parents who were footing the bill) realized that there was nothing wrong with paying less for a product that tended to wear out anyway (When wood contacts concrete or asphalt, wood loses).

I’d characterize the core brands as having resisted this major change in their business model, though eventually they started to adjust.

Meanwhile, the former riders who’s started these brands got a little older (it happens). Pretty soon they were in their 40s or more. Somehow, though they still thought they could be the arbiters of the skate industry.   So when longboards, and plastic boards, and scooters came along (not necessarily in that order) they said, “Nah, that’s not skateboarding and it’s not cool.” But of course, the 14 year olds didn’t much care what these older gentlemen thought and went by on their longboards, plastic boards, and scooters and said, “Yeah, well, whatever.” With one or maybe two exceptions, the “core” brands have lost most of their relevance to the market. They didn’t change when the market changed.

And We Snow Sliders Care Why?

In skateboarding, there are always new brands popping up. Getting 100 good decks made is easy, and the kids (amazing how many people I call kids these days) are having so much fun having their own brand they don’t care that they aren’t paying themselves.

It’s not that easy in snowboarding, and I noted I didn’t see the usual 6 to 10 new brands I’ve become used to seeing there. Yes, there were a couple, but not many. That kind of bothered me.

It bothered me because even though there isn’t the kind of disruption China and longboards brought to the skate industry, there is certainly the issue of the management of leading companies (ski and snowboard, resorts, brands, retailers) getting older and, whether they admit it or not, inevitably less in touch with their core customer who, Kelly Davis tells us, is young. Only 6% are baby boomers (though they spend a lot of money).

Last year I made a presentation at the show and said, “Hire some 14 year olds.” I wasn’t kidding. We’re faced with a slow economy that’s been, and continues to be, particularly hard on our primary customers. It’s also changing faster than the people in senior industry management positions have ever seen. It’s making traditional organizational structures and management processes less relevant. I’m not quite ready to say “obsolete” but maybe I should be.

You have to follow your customers not lead them. Your business will be more reactionary than you are comfortable with (or at least more than I’m comfortable with- that’s why I want the 14 year olds). I expect successful companies will be taking little risks every day in their advertising and promotion, and long term print campaigns will become a thing of the past. The way younger employees work is going to befuddle and annoy you, but you’re the one who will have to adjust.

A senior manager (or owner’s) job has always been to hire the right people and let them do their job. What I’m concerned about is senior managers (or owners) not being clear on just what that job is and how they will know if the employee is or is not doing it. The skate brands got stuck in the past. My perception is that the past is receding way more quickly in snow in 2016 than it did in skate starting in 2003.

I continued to hear too many anecdotal stories at the show about brands, retailers, resorts that won’t make even small, but fundamental changes to the way they run their businesses. We’ve all watched as brands, retailers, resorts have gone out of business.

Somebody once wrote, “The biggest risk is taking no risk at all.” Still makes sense to me. What you perceive as risky, or just as too much trouble, isn’t, but only the 14 year old can see that.

The Burton Conundrum

It isn’t any secret that Burton hasn’t been doing as well as it used to. Whether due to issues with distribution or lack of focus, it’s been through a period where it’s not as dominant as it once was. That was widely acknowledged at the show, though by all accounts they still make outstanding product.

I feel strongly both ways about this. On the one hand, there’s no doubt that some other brands have found opportunities as a result, and I like healthy competition+. But at the same time, Burton is closely identified with snowboarding, and with many non-riders, it may be the only pure snowboarding brand name they know.  In addition, a number of Burton programs (Learn to Ride comes to mind) have been important in supporting and building snowboarding. As an industry we rely, and I imagine will continue to rely, on their efforts in these areas. A focused and successful Burton is important to the industry.

Burton also enjoys the benefit of not being a public company. As a result the company’s goals can be (and I perceive have been) not entirely focused on growing revenue every quarter.

So what do I want? My cake and to eat it too of course. I want Burton strong and prosperous. Just not too strong and prosperous.

A Brand Model I Liked

Karakoram has been around six years, but this is the first time I’d had a chance to talk with them. They make high end, split board bindings for use in the backcountry. What do I like about them?

They told me their product improves the way split boards function and the explanation made sense. They sell an expensive, high end product that meets a clear need. They know their target customer group. That group will not be turned off by the price. In fact, I’d guess they associate it with the quality and reliability they require.

Their product development is clearly focused; they only make changes that improve performance. Feels like that might take some costs out of the annual product cycle. Split boards and backcountry seem to be growth markets. Finally, they’ve got a bunch (six?) of patents on their product.

There’s nothing better than a high end product with some barriers to entry in a clearly defined and growing market. How many of those factors does your business have going for it?

Get over the show date change. Use SIA’s data. Don’t follow in the skate industry’s footsteps. Follow your customer. Embrace change since you have no choice. Identify your business’ strengths.  Yeah, I know.  Easier to say than to do.

Fulfilling the Omnichannel Imperative

On December 28th, Zumiez filed an 8-K with the SEC. I don’t think they were required to file it because the amount of money involved ($1.3 million in the 4th quarter) wasn’t really “significant” as defined by the SEC for a company the size of Zumiez. But they filed it anyway. How come?

I’m sure their lawyers said something like, “Well, okay, we guess you don’t really need to file it but, you know, just to be on the safe side, why don’t you?” That’s what lawyers do. But I’m guessing that the management team looked at what Zumiez was doing and decided that it was such a fundamental change in their business model and potentially so impactful on how they run things that an 8-K was appropriate. I agree with that.

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An Artificially Intelligent Digital Commerce Platform

You’re probably going to read this if only to find out what that title means. We’re all going to find out together as the online shopping experience continues to evolve.

The North Face has worked with a company called Fluid to develop an online shopping assistant powered by IBM’s Watson Cognitive Computing Technology (I say again, whatever that means).

It’s in beta right now and has just been released for use by the public. Apparently, it’s only for jackets so far. Go here to give it a try. What I found was that it was still a little clunky to use, but that’s why they call it a beta and I imagine it will only get better. Anyway, go play with it yourself.  I can’t see why it won’t ultimately be utilized in brick and mortar as well.

I’m waiting for the online shopping assistant that takes a picture of me through the camera on my digital device, asks me a few sizing and preference questions, saves those, and shows me what’s new that I might want whenever I log on. It’s probably already out there and certainly we already see shopping suggestions (way too much if you ask me) based on what we’ve purchased before. Imagine what that’s like when VF shares the data among all its brands. I am thinking such a system, if it does nothing else, might cut down on returns- brands are spending a lot of money on returns from online sales.

I’ve got one suggestions for The North Face. This is going to sound a little weird, but once in a while the digital assistant (you guys need to name this thing) should recommend a product from another brand when it’s appropriate. I don’t know when, how or what’s involved in programming that, but think of the credibility it would generate. And better they buy another brand’s product that is right for them than one of yours that’s not.  The North Face wouldn’t be the first to do that.  What’s the name of the insurance company that checks its competitors for the best deal?

Here’s the link to the article.  It’s intriguing and exciting to imagine where all this is going, but then I don’t have to run a retailer.

GoPro Gives Us Some Preliminary Financial Results

On January 13th, GoPro filed an 8-K with the SEC. In the press release it included, they announced expected fourth quarter revenue of $435 million and $1.6 billion for the year and a projected gross margin of 34.5% to 35.5%. The annual number represents 16% year over year revenue growth. By way of comparison, in the quarter that ended December 31, 2014, GoPro reported revenues of $633.9 million and had a gross profit margin of 47.9%.

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Skullcandy Revises its Forecast for the Quarter

A couple of days ago, Skullcandy decided that the prospects for its fourth quarter had changed enough that they needed to disclose it. They filed an 8K with the SEC to accomplish that. You might want to read the press release that’s part of it.

Skull said it expects fourth quarter sales to be the same as last year’s fourth quarter. Previously, they had forecasted an increase of 5%-7%. Earnings per share for the quarter are expected to be between $0.20 and $0.22 per share. Previously, they had projected $0.38 to $0.40 per share.

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The Role of Store Brands

I came across this short article recently talking about the ongoing improvement in store brands and their importance to retailers. Now, it’s not our industry but I thought everything they said applies to us.

I guess the standard explanation for store brands is that they give the retailer some more margin. True, and that margin is increasingly important to the retailer these days. Yet their success suggests that more is going on.

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A Brief Review of The Buckle’s Quarter

The Buckle didn’t say anything unusual or intriguing in its conference call or 10-Q. I guess that’s good. But at the moment, this is the last retailer I haven’t reported on, and it appeals to my sense of order to get it done before settling in for Christmas and the holidays.

What we can learn from The Buckle is that they basically have the same general market related issues as all the other retailers in our space.

For the quarter ended October 31, 2015, their sales fell 4.1% to $280.2 million. In the same quarter last year, sales were $292.2 million. They ended the quarter with 468 stores in 44 states compared to 461 a year ago. Private label was about 35% of their business. I’ve remarked in the past about The Buckle’s apparent success in integrating its owned with purchased brands. I think they continue to be good at that.

Comparable store sales declined $15.2 million or by 5.2%. The number of transactions was down 5.6%. Online sales were up 13.6% to $25.9 million during the quarter. We haven’t heard much talk lately about online sales cannibalizing brick and mortar. I’m beginning to think it’s something retailers should refocus on, if they ever lost their focus.

The gross profit margin also declined from 43.7% to 41.9% while total gross profit fell $10 million to $117.3 million. “The decrease was primarily attributable to a reduction in merchandise margins (1.00%, as a percentage of net sales) and deleveraged occupancy, buying, and distribution expenses as a result of the comparable store sales decline (0.80%, as a percentage of net sales).”

Selling expenses declined very slightly to $52.3 million and general and administrative expense was down 15.5% from $10.3 to $8.7 million. As a percentage of revenues, selling expense rose from 18.1% to 18.7%. General and administrative expense fell from 3.5% to 3.1%.

Operating income fell 12.9% from $64.6 to $56.3 million and net income was down 11.6% from $40.6 to $35.9 million.

Cash flow from operating activities through three quarters was $53.4 million compared to $91.6 million in the same period the previous year, but the balance sheet remains strong. I would note an increase in inventory from $147 million last year to $176 million in this year’s quarter. Not what you want to see with declining sales.

One analyst asked some penetrating and rigorous questions of CEO Dennis Nelson. I can’t quote everything he said here, but he was very concerned with comparative store sales declines that go back to 2013. After laying that all out, he asks, “…what is going on with the retail market and Buckle, in particular? And is brick-and-mortar stores are going through secular decline, what is Buckle’s strategy to resume comps growth going forward?”

I guess I’d characterize CEO Nelson’s response as nonspecific. I never expect CEOs to be very detailed in explaining their strategies during a pubic conference call. But I thought his answer could have been given by other retail CEOs and demonstrated the common issues and uncertainty as to how to respond to those issues they all face.

Even with sales down a bit, The Buckle had a pretty good bottom line although it exhibited the same issues and uncertainty as its competitors. I guess my conclusion, after seeing the results from various retailers, is that you need to build your balance sheet, control your inventory, be thoughtful to cautious about the roles of brick and mortar and where you open new stores, and define omnichannel in a way that does more than just make things easier for customers.

What does your store stand for as a brand that can differentiate it from its competitors?



Tilly’s Offers Us Some Thoughts on Retail Stores.

It used to be way easier to grow a retail chain. You found a good location, made a deal with the landlord, made improvements, and brought in some inventory and some experienced management to train the new group of employees. If you did this mostly right, a year later (maybe sooner) you had a cash flow positive store.

Tilly’s says a couple of things about why it’s not that easy any longer. After we take a brief look at the quarter that ended October 31, we’ll talk about what they say.

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