Page 1 Friday s EYE: s RETAIL: The Buckle s FINANCIAL: Designers and Aéropostale PVH’s turn out continue to buck the Emanuel for “The odds, page 3. Chirico September talks s Issue,” BEAUTY: Donna Karan acquisitions, page 4. marks 15 years of page 11. Cashmere Mist, page 7 Women’s Wear Daily • The Retailers’ Daily Newspaper • August 21, 2009 • $3.00 WwDFRIdAYBeauty Growing Garden Domenico Dolce and Stefano Gabbana are adding a new flower to their fragrance franchise: Rose The One, set for an initial launch Aug. 30 at Saks Fifth Avenue, followed by a wider launch in October. Inspired by the Italian design duo’s favorite flower, the scent is the third in a series of The One fragrances. Industry sources estimated the new addition could generate retail sales of more than $150 million globally in about 30,000 doors in its first year on counter. For more, see page 6. Duane Reade’s New Face: Pumping Up Beauty Side, Injecting Better Service By Molly Prior Duane Reade, Manhattan’s scrappy hometown chain, has stepped squarely into the drugstore wars. Protecting its turf against encroaching national chains and aiming for a profits turnaround, the retailer is rolling out an aggressive overhaul featuring an upscale face and more prestige beauty brands, thrusting it to the forefront of an industry trend as drugstores aim to eat into the market share held by department stores. On a recent afternoon, the cheerful suggestion by a Duane Reade employee, “Would you like a complimentary facial?” stopped one shopper in her tracks. The beauty adviser, outfitted in a white lab coat, stood alongside a sleek white display See Duane, Page8 ANILO MATZ ANILO D TYLED BY TYLED BY S E CHINSEE; g PHOTO BY GEOR PHOTO BY 2 WWD, FRIDAY, AUGUST 21, 2009 WWD.COM Gap Reports Profit Virtually Unchanged By David Moin marketing investments to gain market share.” • Fifty more Old Navy stores will be remod- AT GAP INC., THE GLASS SEEMS HALF FILLED. eled in the next two months, after four test re- Continued cost cutting and expense controls models were launched earlier this year. WWDFRIDAYBeauty offset weak sales, enabling Gap to report virtually • Gap’s Piperlime Web site will introduce ap- GENERAL flat net earnings for the second quarter ended Aug. parel with contemporary styles at the beginning Duane Reade, Manhattan’s scrappy hometown 1 and looking relatively good considering most re- of September. 1 chain, has stepped squarely into the drugstore tailers are reporting losses or declining profits. • The company will work on strengthening wars. The specialty chain reported net profits of its pricing message, particularly at Old Navy With cost cutting and expense controls offsetting $228 million, or 33 cents a diluted share, com- and the outlets, and would, as Murphy said, “err 2 weak sales, Gap Inc. said second-quarter net pared with $229 million, or 32 cents a diluted to make sure the value part of all our brands is earnings were essentially flat at $228 million. share, for the second quarter last year. clear and comes through to the customer.” Second-quarter net sales were $3.25 billion, • The Gap brand could resume television Domenico Dolce and Stefano Gabbana turned to down 7.1 percent from $3.5 billion for the second advertising in the fourth quarter. The strat- 6 their favorite flower, the rose, to base their latest quarter of last year. Comparable-store sales fell egy will be considered in the coming weeks, scent, Rose the One, which is set to bloom. 8 percent, compared with a decrease of 10 per- Murphy said. 7 Donna Karan’s Cashmere Mist fragrance is cent for the second quarter of 2008. Online sales In addition, Murphy said Gap will celebrate celebrating its 15th birthday with a new ad increased 17 percent to $224 million, compared its 40th anniversary today by dressing up the campaign and a luxurious new interpretation. with $191 million. New York Stock Exchange in 1969 Premium Salvatore Ferragamo Parfums is getting into the “We’re proud to deliver second-quarter earn- Jeans, a new collection launched last week and s 7 ings per share above last year, especially during named in honor of Gap’s debut year. Gap officials home fragrance business with a line called the a challenging environment,” said Glenn Murphy, will remotely ring the exchange’s closing bell Tuscan Soul Lifestyle Home Collection. chairman and chief executive officer. “Our focus today from Gap headquarters in San Francisco. 9 Yves Rocher, a pioneer of the botanicals movement, is to find the right balance between maintaining By division, Gap North America was down is opening franchise units in Canada and dipping our cost discipline and making appropriate, tar- 10 percent to $878 million in sales; Banana its toe back into the U.S. market at Sears. geted investments to gain back market share.” Republic North America was down 15 percent to Murphy later stressed in a conference call $516 million; Old Navy North America was down 13 Italy’s Stefanel agreed to sell Munich-based that the retailer’s balance sheet is healthy but 4 percent to $1.24 billion, and the International specialty chain Hallhuber to private equity firm that building traffic and comparable-store sales, division was off 5 percent to $361 million. Change Capital Partners as it looks to reorganize. and communicating its pricing message, particu- The company expects operating expenses in 14 Sears Holdings Corp. cut expenses and closed larly at Old Navy and the outlets, are priorities. the third quarter to be flat to up about $20 mil- stores in the second quarter, but weakness in The company ended the quarter with $2.1 lion compared with the third quarter of last apparel contributed to a $94 million loss. billion in cash and cash equivalents, an 11.6 year, primarily due to an increase in marketing percent operating margin compared to 10.7 per- expense of about $25 million. EYE cent in the year-ago quarter and with a 150 basis Gap Inc. ended the second quarter with At the premiere of R.J. Cutler’s documentary point increase in gross margins. Operating ex- 3,145 store locations, and net square footage de- 4 penses in the quarter were down about $50 mil- creased 0.3 percent from the end of fiscal year “The September Issue,” Anna Wintour said her lion compared with the second quarter last year, 2008. Year to date, the company has opened 23 process today doesn’t differ much from 2007. and since the beginning of fiscal year 2007, oper- store locations and closed 27. Gap Inc. continues Classified Advertisements.................................................................................................15 ating expenses are down about $650 million. to expect that it will open about 50 stores and TO E-MAIL REPORTERS AND EDITORS AT WWD, THE ADDRESS IS Officials also disclosed: close about 100 stores this year, bringing square [email protected], USING THE INDIVIDUAL’s NAME. • Gap Inc. is now making “targeted selected footage down about 2 percent. WWD IS A REGISTERED TRADEMARK OF ADVANCE MAGAZINE PUBLISHERS INC. 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