Retailers ax non-core brands to play safe in slump

By Dhanya Skariachan - Analysis

BANGALORE (Reuters) - The recession is forcing many U.S. retailers to focus on their key brands and pull the plug on secondary lines -- a move that could have the added benefit of helping them return to their more successful roots.

In boom times, retailers flirted with hipper styles and unconventional fashions to differentiate themselves or woo shoppers across various age groups. However, things are changing now as they struggle to find new ways to cut costs in the slump.

"It is very smart for individual retailers to pull the plug at this point because the time-horizon for these (secondary) concepts to break even has grown substantially as consumer spending has slowed," Boenning & Scattergood analyst Holly Guthrie said.

Teen apparel seller Pacific Sunwear of California (PSUN.O: 株価, 企業情報, レポート) closed its underperforming d.e.m.o stores last year and larger rival Abercrombie & Fitch Co (ANF.N: 株価, 企業情報, レポート) is currently in the process of winding down its money-losing Ruehl chain.

Guthrie said Ruehl "didn't work" because the price point was too high, the product was not sufficiently unique and the market was saturated with similar merchandise.

Abercrombie, which runs its namesake stores and the Hollister and Gilly Hicks chains, saw sales at Ruehl stores open at least a year fall 34 percent in the first quarter.

Earlier on Thursday, women's apparel retailer Talbots Inc (TLB.N: 株価, 企業情報, レポート) said it completed the sale of its J.Jill brand as part of its efforts to focus solely on executing the turnaround of its core business.