▲ RETAIL: MEDIA: A Q&A with Ann Taylor “Gossip Girl” costume Loft does stylist Eric Daman, the laundry page 13. ▲ with P&G, ▲ EYE: page 10. Elisabeth Shue ▲ BEAUTY: talks nurses Remembering and “Hamlet,” hair stylist Paul page 12. Starr, page 10. Women’sWWD Wear Daily • The Retailers’FRIDAY Daily Newspaper • August 22, 2008 • $2.00 Beauty Rhythm Method Christopher Bailey is dancing to the beat of a new drummer — Burberry the Beat for Men, the house’s newest fragrance. In the U.S., the scent will launch exclusively at Bloomingdale’s in September, rolling out to wider distribution in February. It could do $30 million at retail in the U.S. in its fi rst year on counter. For more, see page 4. Moving Into Prestige: CVS Set to Roll Out Luxury Beauty Units By Molly Prior WOONSOCKET, R.I. — CVS Pharmacy is talking about a revolution. The growth-minded drugstore chain has drafted plans to open upscale beauty emporiums — about the size of a Sephora store — filled with previously untouchable department store brands. To drive home the drugstore chain’s seriousness about tackling prestige beauty, the concept will be called Beauty 360, with no mention of CVS in sight. The first concept store is slated to open by year’s end in a major East Coast city, Mike Bloom, CVS’ senior vice president of merchandising, told WWD exclusively. Another will open weeks later on the West Coast, he added. See CVS, Page6 PHOTO BY JOHN AQUINO; STYLED BY DANILO MATZ DANILO JOHN AQUINO; STYLED BY PHOTO BY 2 WWD, FRIDAY, AUGUST 22, 2008 WWD.COM Gap Net Up Despite Comp Drop By David Moin WWDFRIDAY IN ITS SLOW AND LABORIOUS TURNAROUND EFFORTS, GAP INC. SHOWED PROGRESS ON Beauty Thursday, reporting second-quarter net earnings up 51 percent due to improved margins and wide BEAUTY cost reductions. CVS plans to open luxury beauty meccas fi lled Still, comparable-store sales dropped 10 percent, indicating the $16 billion San Francisco-based 1 chain continues to face serious issues with product acceptance, drawing customers into the stores, with previously untouchable brands. and operating locations that are too large for the offering. Space NK is looking to crank up its fragrance ▲ 5 For the quarter ended Aug. 2, Gap’s net earn- business with the fall introduction of fi ve ings were $229 million, or 32 cents a share on a namesake scents. diluted basis, compared with $152 million, or 19 cents, for the second quarter last year. The 8 Elan Sassoon, who has rarely handled scissors in 2007 second-quarter diluted earnings per share his 38 years, is grooming a hair empire in Boston. included 2 cents of expenses related to the com- GENERAL pany’s cost-reduction initiatives. Excluding the 2 cents a share of expenses, 2 Gap Inc. reported Thursday that second-quarter second-quarter diluted earnings per share last net earnings gained 51 percent while comparable- year on a non-Generally Accepted Accounting store sales dropped 10 percent. Principles basis were 21 cents. Maria Pinto, who dresses such prominent Chicago ▲ 11 Second-quarter net sales were $3.5 billion, women as Michelle Obama and Oprah Winfrey, compared with $3.69 billion in the year-ago period. opened her fi rst store in the Windy City this month. Gross margins rose to 38.2 percent from around 34 percent a year ago. In the call, executives said they 12 EYE: Elisabeth Shue discusses holding her own were pleased with current inventory levels. with comic Steve Coogan, making out with her Full-year earnings per share guidance has co-stars, her tennis addiction, and hew new been upped to $1.30 to $1.35, from $1.20 to $1.27. movie, “Hamlet 2.” Capital expenditures for the year are down to $450 million from $500 million. 13 A Q&A with Eric Daman, costume stylist for CW’s “External conditions aside, we continue to de- hit TV show, “Gossip Girl.” liver improved earnings with healthy margins and Classifi ed Advertisements..................................................................................................15 I am pleased with our second-quarter results,” TO E-MAIL REPORTERS AND EDITORS AT WWD, THE ADDRESS IS said Glenn Murphy, chairman and chief execu- [email protected], USING THE INDIVIDUAL’S NAME. tive offi cer of Gap. “While we continue to pursue WWD IS A REGISTERED TRADEMARK OF ADVANCE MAGAZINE PUBLISHERS INC. COPYRIGHT ©2008 our 2008 fi nancial strategy, we are very focused FAIRCHILD FASHION GROUP. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A. on bringing more customers into our stores.” VOLUME 196, NO. 40. WWD (ISSN 0149–5380) is published daily (except Saturdays, Sundays and holidays, with Downsizing will be signifi cant in the years one additional issue in January, October and December, two additional issues in March, April, May, June, August and November, and three additional issues in February and September) by Fairchild Fashion Group, which is a division ahead. Murphy said the company plans a 10 to 15 of Advance Magazine Publishers Inc. PRINCIPAL OFFICE: 750 Third Avenue, New York, NY 10017. Shared Services percent reduction of square footage over the next provided by Condé Nast Publications: S. I. Newhouse, Jr., Chairman; Charles H. Townsend, President/CEO; John W. three to fi ve years. Bellando, Executive Vice President/COO; Debi Chirichella Sabino, Senior Vice President/CFO; Jill Bright, Executive Vice President/Human Resources. Periodicals postage paid at New York, NY, and at additional mailing offi ces. Canada Post “We have never had a clear real estate strat- Publications Mail Agreement No. 40644503. Canadian Goods and Services Tax Registration No. 886549096-RT0001. egy for our 3,100-plus stores,” involving what the Canada Post: return undeliverable Canadian addresses to: P.O. Box 503, RPO West Beaver Cre, Rich-Hill, ON L4B role is and the right size for each store, Murphy 4R6 POSTMASTER: SEND ADDRESS CHANGES TO WOMEN’S WEAR DAILY, P.O. Box 15008, North Hollywood, CA said during a conference call. “That work is now 91615–5008. FOR SUBSCRIPTIONS, ADDRESS CHANGES, ADJUSTMENTS, OR BACK ISSUE INQUIRIES: Please The environment is still write to WWD, P.O. Box 15008, North Hollywood, CA 91615-5008, call 800-289-0273, or visit www.subnow.com/wd. completed.” He said the objective is to operate Please give both new and old addresses as printed on most recent label. First copy of new subscription will be mailed “ within four weeks after receipt of order. Address all editorial, business, and production correspondence to WOMEN’S a chain with a simpler structure. “It’s much eas- ier to operate a 10,000-square-foot store than a challenging. I don’t see any WEAR DAILY, 750 Third Avenue, New York, NY 10017. For permissions and reprint requests, please call 212-630-4274 or fax requests to 212-630-4280. Visit us online at www.wwd.com. To subscribe to other Fairchild magazines on the 17,000-square-foot store.” World Wide Web, visit www.fairchildpub.com. Occasionally, we make our subscriber list available to carefully screened Old Navy, the most troubled division, an- reason for any optimism in companies that offer products and services that we believe would interest our readers. If you do not want to receive nounced top-level changes on Thursday, includ- these offers and/or information, please advise us at P.O. Box 15008, North Hollywood, CA 91615-5008 or call 800-289-0273. WOMEN’S WEAR DAILY IS NOT RESPONSIBLE FOR THE RETURN OR LOSS OF, OR FOR DAMAGE OR ANY ing the promotion of Tom Wyatt from interim the back half of the year. OTHER INJURY TO, UNSOLICITED MANUSCRIPTS, UNSOLICITED ART WORK (INCLUDING, BUT NOT LIMITED TO, DRAWINGS, president to president, and the departure of mer- ” PHOTOGRAPHS, AND TRANSPARENCIES), OR ANY OTHER UNSOLICITED MATERIALS. THOSE SUBMITTING MANUSCRIPTS, chandising executive vice president Sheryl Clark, — Glenn Murphy, Gap Inc. PHOTOGRAPHS, ART WORK, OR OTHER MATERIALS FOR CONSIDERATION SHOULD NOT SEND ORIGINALS, UNLESS SPECIFICALLY REQUESTED TO DO SO BY WOMEN’S WEAR DAILY IN WRITING. MANUSCRIPTS, PHOTOGRAPHS, AND which underscores the concern about product. OTHER MATERIALS SUBMITTED MUST BE ACCOMPANIED BY A SELF-ADDRESSED STAMPED ENVELOPE. The company is searching for a new top merchant and could select from the fi eld of candidates reviewed while considering who should run Old Navy. As an insider already running Old Navy since February, Wyatt was hardly a surprise choice. He joined Gap in 2006 and most recently ran the Gap’s outlet division. DAILY It’s actually the fi rst On the cost reduction side, Gap has been cutting back on everything from inventory to capital “ expenses for store openings and remodelings, to marketing. QUOTE time I’ve worn heels in, Murphy stressed the company won’t go back to historical levels of marketing spend until it gets the product, store presentations and messages right. Of the three retail divisions, Murphy said Gap like, fi ve months, so it feels a little is more advanced in that journey and closer to unleashing marketing that’s robust again. The divi- sion is doing more print advertising this year compared with last year. weird. But I love heels. Makes me feel a Murphy said that as the specialty retailer moves deeper into the second half, Gap remains fo- cused on cost and inventory management and returning excess cash to shareholders. little more confi dent. “The environment is still challenging. I don’t see any reason for any optimism in the back half of ” the year,” Murphy said, adding the company is focused on four key pillars. Number one is driving — Gymnast/Olympic gold medalist Shawn Johnson, Page 12. improving margin dollars.