Posts Tagged 'Chico’s'

Inventory management? It depends on the inventory

I commented recently (on RetailWire) about the skill set needed to manage different kinds of inventory. There is no hard and fast rule, because it depends on whether the store in question is in the “staple” or “fashion” business:

Any store needs to hit the right balance between staple, fashion and fad merchandise. (The difference being that “fads” have a much shorter life span unless they evolve into fashion trends with more staying power.) The question of “the right balance” really depends on the nature of the retailer’s brand image and target customer. Clearly Forever 21 needs to play in a completely different world than (say) Chicos — which is not devoid of fashion but is more dependent on staple inventory.

It’s a key question because the product life cycle of each type of merchandise — and the inventory management needed to get into and out of trends profitably — may be totally different for fads, fashion and “basics.” Retailers don’t want to be stuck with too much of a fast-moving fad; on the other hand, they don’t want to erode their in-stock levels on basics by fixating on chasing trends.

Is Chico’s going private?

Rumors that the private-equity firm Sycamore Partners will take Chico’s private have sent its stock soaring. Meanwhile, the question posed on RetailWire is whether this move will be good for Chico’s business. I have mixed feelings on the topic:

Sycamore has already assembled a collection of mall-based specialty apparel chains. (The article mentions Aeropostale and Talbots, but there are also investments in Hot Topic and the Coldwater Creek brand assets.) These are not the strongest brands in the business, and even Chico’s is struggling right now. Either Sycamore believes in the segment, or they bought the brands at a sufficient discount to make some money on a future sale.

Going private can be liberating for a company no longer under the microscope for its quarterly results, but the question in Chico’s case is whether Sycamore is already highly leveraged and how it will affect the company’s operations. It would make sense for Sycamore to find some back-office economies among all the brands and chains it now operates.