TOP 50 SPONSORED BY JULY 2014 ã 8 Let’s all say it together: Extreme weather conditions. The weather is always a factor in retail, but given that it’s beyond anyone’s control, it usually doesn’t warrant much discussion. Not so this year. The weather was so disruptive that it not only deterred shoppers from getting out, it completely shut down stores for days at a time. At Urban Outfitters, for example, the number of store days across brands in which stores were closed for
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  TOP 50 SPONSORED BY  JULY 2014 ã 8  Let’s all say it together: Extreme weather conditions.  The weather is always a factor in retail, but given that it’sbeyond anyone’s control, it usually doesn’t warrant muchdiscussion. Not so this year. The weather was so disruptivethat it not only deterred shoppers from getting out, itcompletely shut down stores for days at a time. At UrbanOutfitters, for example, the number of store days acrossbrands in which stores were closed for a full or partial day  jumped 2,300 percent from 13 to 312! It’s fair to say the weather took a significant toll on sales and profits this year,contributing to a highly promotional environment andlots of markdowns.  There were other challenges that trended industry-wide —including a decline in traffic (not only attributable to the weather), consumer spending shifts toward higher-ticket durable goods such as electronics, as well as persistent unemployment and low consumerconfidence —contributing to a decline in the overallprofitability of our Top 50 ,which fell a full percentagepoint from an average of 7.1 percent last year to 6.1percent for the most recent fiscal year. Indeed, looking atthe rankings, you can see that companies whoseprofitability would not have landed them near the chart last year have easily made the list. Consider that the bottomfinisher last year was Hot Topic, with a profitability of 2.63percent, while this year’s No. 50 spot goes to New York &Co., which barely made it into the black, with a profitability of 0.26 percent. Likewise, this year’s most profitablecompany, lululemon, nabbed that spot with a 17.6 percentprofitability, while the top finisher last year turned in a 20.7percent profitability.Still,  Apparel’s  Top 50 showed considerable strengththis year. Trends that were shifting into gear in 2012continued full steam ahead last year. For many, the bestengines of growth are outlets,  which retailers are rampingupbig time, and international expansion ,with Chinafiguring prominently in the equation, as well as other partsof Asia, the Middle East and Brazil. As part and parcel of this continued spread comes centralizing whilelocalizing ,as our Top 50 work to gain visibility and reduceredundancy across data and build cross-functional teams, while also ensuring that product and service are varied tomeet the tastes and demands of different markets. If there was a drumbeat beneath all other activity, that would haveto be omnichannel ,which this year hit a fever pitch asretailers fully grasped the importance of serving customershowever they like to shop, and getting product to them where and when they want it. There are many piecesinvolved in achieving that goal, but the holy grail is inventory visibility  .Without that, you just can’t be sure if  you really have that blouse available for fulfill-from-store ,another trend that is swiftly becoming par for the course, with those retailers that have mastered it now working toadd offerings such as pick-up in-store . What else? Let’s call it marketing mindset shift ,characterized by the view that everything is marketing.Maybe it’s TV, print ads and radio, but it’s also pop-upstores, QR codes, unique partnerships and, of course, social media .Pinterest, Instagram, Twitter, Facebook:retailers now understand — they ignore those at their peril. And finally, if omnichannel is the drumbeat, then salesassociate growth and development is the cowbell.Most retailers would agree: we need more of it. ã JULY 2014 9 COVER STORY  #1 lululemon athletica Even though it’s been playing defense since former CEO Chip Wilson’s headline-grabbing comments that some women’sthighs may just not be a fit for lululemon’s yoga pants (and now there’s a new CEO, Laurent Potdevin), the retailer stillmanaged to nab the No. 1 spot with a 17.6 percent profit margin, on top of an almost 20 percent profit margin the previ-ous year. Despite a decrease in foot traffic, comps are up 4 percent (9 percent if you include e-commerce, sales of whichtotal $263.1 million). It doesn’t hurt that yoga is becoming a national obsession — the most recent Yoga in America study, undertaken by Harris Interactive Service Bureau, shows that as of 2012, 20.4 million Americans practice yoga, upfrom 15.8 million in 2008. It’s not just America, either. In advance of lulu’s first store opening in London earlier this year,700 people queued up two hours early for a yoga class at the Royal Opera House. What you’ll see in the coming year: 1)lulu is rebalancing its product mix to address the increasing demand for its seasonal merchandise — which is selling through at a rate four times faster than anticipated — as it works to find a healthy balance between the strength of its“scarcity model” and giving customers what they want; 2) continued expansion into Europe and Asia as it shifts its strat-egy to build local talent in those regions; 3) innovation from its new Whitespace™ team and workshop, such as its newly launched &go capsule collection, designed to move from gym to cocktail hour with items such as leggings with leatherpanels; 4) approximately 42 new stores, including in Australia and the United Kingdom and up to 10 new ivivva stores(for active girls); 5) the opening of a second distribution center, in Columbus, Ohio; and 6) a louder “voice” from its 900ambassadors in engaging the communities where they work. Opposite: lululemon’s first European store opened in March in London’s Covent Garden district.  JULY 2014 ã 10  THE TOP 50 #3  The Buckle Holding onto its long-time position in the top five, this denim-focused specialty retailer keeps customers coming back withsuperior customer service and unique product: private-labelmerchandise accounted for 34 percent of sales — and evenincluding its national brands, about 70 percent to 80 percent of product is exclusive to Buckle. For the year, men’s represented41.5 percent of sales and women’s 58.5 percent. A slightly lower-than-its-peers online sales growth of 7 percent is likely attributable to a non-promotional environment online as wellas to the service it offers to customers to have special ordersshipped to stores free of charge, where they can pick them up.The retailer ended 2013 with 450 stores in 43 states, and this year plans are for 17 full remodels and 17 new stores, including anew store in Anchorage, Alaska — its first in the state — andfour that are a hybrid of outlet, entertainment and full-priceretail. The company also broke ground on a new 80,000-square-foot office building to provide additional space to itshome team in Kearney, Nebraska. #4  Zuoan  After two years at No. 1, men’s wear fashion brandZuoan takes the No. 4 spot this year with a profit mar-gin down to 14.0 percent from 20.7 percent — stillnothing to sneeze at — due primarily to soft marketconditions in China that resulted in cancelled ordersfrom its network of distributors and a build-up of inventory for the brand. Zuoan also lowered wholesaleprices, which impacted profitability as well. In efforts tohelp distributors clear inventory and generate con-sumer awareness, it has targeted 10 major cities inChina for advertising and promotional programs; it isalso closing underperforming stores: in the third quar-ter the company closed a net of 309 distributor andsub-distributor stores for a total of 1,074 store locationsat the end of September. This year the company willlaunch a new chain of stores focused on leather goodsand accessories — it expects to open approximately 100 by the end of the year — which it plans to operateitself, rather than through distributors. #5 Francesca’sCollections Online sales at grew by 92 percent in fiscal 2013,helped by a new Instagram program (which led to a gain of more than1million unique impressions) and a fashion sponsorship with the cablenetwork Lifetime and reality show “ Project Runway: Under the Gunn,” which featured a variety of design challenges, including one whose winning design was to be sold exclusively at Francesca’s. On the day it was made available online, francesca’ exceeded its cyber salestraffic thresholds and capacity. This year, the company has and willfocus on generating online excitement around events such as Mother’sDay and back-to-school, while behind the scenes working to optimizeits mobile solution and improve SEO and SEM. Francesca’s continuesto refine its distinctive small-format boutique experience and its broadbut shallow assortment strategy, as it keeps a close eye on trends.Expect to see more tops and bottoms, but fewer dresses — all in morediverse fabrications and styles in 2014, with trends in femininity lead-ing the way. Focusing on the consumer experience, the retailer isenhancing its visual merchandising processes, adding web-based train-ing tools for its associates and remodeling 50 boutiques this year, whileit also expands its base with 85 new locations planned for the year. #2 Gildan Climbing from No. 12 to No. 2, Gildan is driving toward “household name” recognition as it ramps up its traditional business withfurther penetration into U.S. and international printwear markets while also developing Gildan ® as a consumer brand of apparelbasics sold through retailers. Sales of its first national mass-market Gildan ® branded underwear program launched in 2013 exceededexpectations, and the company is now rolling out its Gildan ® andGold Toe ® branded programs to multiple channels of distribution. While it pushes beyond its roots in men’s with expansion into ladies’ and youth categories, and increases its licensing, with brandssuch as Under Armour ® and Mossy Oak ®  ,Gildan is also going big with marketing, including a Super Bowl ® commercial that airedlast year and sponsorships of various sporting events including the NCAA college football bowl. The vertically-integrated company continues to expand its operations, and this year will modernize and upgrade its Rio Nance 1 facility, build a new textile facility,expand its biomass facilities in Honduras to produce electricity as well as steam, and invest in vertically-integrated yarn-spinning  with the construction of three greenfield yarn-spinning facilities in the southeast United States.
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