just wanted to make sure everyone saw this, sorry if its a double post
November 11, 2005
Sale at H&M Stirs Frenzy, but Analysts Are Unmoved
By ERIC WILSON
H&M, the Stockholm-based retailer that has brought its formula of quick and cheap fashion knockoffs to the United States, showed for a second time that customers will bang down the doors at the whiff of a designer bargain. They did so a year ago for inexpensive clothes by Karl Lagerfeld. And they did so again yesterday for the introduction of a collection by Stella McCartney - nearly 200 women were lined up at an H&M branch on West 34th Street in Manhattan at 10 a.m.
Dressed in skinny jeans, long knit scarves and artfully wrapped sweater coats, some of the shoppers had been waiting for an hour, their noses pressed to the glass doors, to buy clothes that looked very much like the ones they were already wearing.
The difference, said Lola Delon, 30, a singer from Brooklyn with skintight jeans tucked into her boots, was that H&M's latest shipment, also delivered to 400 of its approximately 1,000 stores worldwide, has a designer label.
"We're here for the chance to buy Stella McCartney at a cheap rate," said Ms. Delon, who, like many followers of fashion, considers it an occasion of monumental importance when Ms. McCartney's one-time offering of comparatively cheap knockoffs - silk blouses and deep V-neck sweaters for $59.90 each - come within financial reach.
At another H&M location one block away at Herald Square, hundreds of women picked the racks clean in less than three minutes after the doors opened. Only one teal bikini remained unwanted.
As similar scenes unfolded at stores in Europe, H&M executives could reasonably boast that they had matched the success of the Lagerfeld promotion, which was credited for a spike in the company's fourth-quarter sales last year. Stores in London, where Ms. McCartney is based, were mobbed, and at the H&M on Fifth Avenue near Rockefeller Center, the line of customers stretched halfway to Sixth Avenue.
But such breathless H&M promotions did little to impress financial analysts, who viewed the event as a manufactured and isolated frenzy.
Yesterday,
Citigroup issued a report that cast doubt on whether the Stella McCartney collection would affect H&M's annual sales of $7.7 billion. The company's overall sales have been increasing with new store openings - the chain is now in 20 countries - but declining in the last two years at stores open at least a year.
In the last year, H&M, which is the largest specialty retailer in Europe, posted a small profit on its American business, but the company has also reported concerns that the revival of some textile-trade quotas could affect its gross profit because more than half its production is based in Asia. Citigroup expects H&M's earnings growth to remain at 15 percent for the next few years, about half of its average from 2000 to 2005.
The sudden crowds and swooning shoppers underscore the business potential of the H&M formula of incorporating limited-edition designs with a fast turnaround, which is influencing stores as diverse as J. Crew and
Kohl's. Retailers of "fast fashion" like H&M and Zara currently account for about 1 percent of United States retail sales, but they are growing faster than the overall market.
Lisa Sandberg, a communications director for H&M, said that the 10 stores currently carrying the McCartney line in the United States are expected to sell out within days.
"They're like piranhas," said Marta Celinska, a 28-year-old graphic designer for Calvin Klein, who approached the Herald Square store with a strategy. Ms. Celinska showed up with three friends, each brandishing an Excel spreadsheet that listed their favorite pieces.
Yet Ms. Celinska managed to grasp only a knit scarf and a silk shirtdress with disco balls dangling from a drawstring, as more aggressive customers made off with armloads of dresses in multiple sizes. "I'm very disappointed," she said. "I didn't even get a trench coat."