You can stick your head in the sand and just say, hey, the consumer is softer and the dollar's too strong, or you can test, re-test, find out what you are doing wrong and fix it, and fix it fast.
If you want to see who's doing it, first look no further than Tiffany (TIF), which has offered the most lame set of excuses for continual disappointments, never acknowledging that perhaps there are real issues, deeper issues, behind its miserable quarterly performances.
If you want to see the latter, go examine the quarter just announced by Williams-Sonoma (WSM), the upscale housewares company that also houses the Pottery Barn and West Elm brands.
I was slack-jawed as I listened to an investor relations person -- not an exec, a CEO or a CFO, but a flak -- read a script of Tiffany's horror show quarter. It was almost exactly the same as the last two years of calls, except this time the weakness wasn't just pronounced in the U.S. because of the strong dollar and softness with the consumer, whatever that means, but a gigantic drop off in Hong Kong, where so many Chinese shop on vacation.
Europe was weak. Why? They blamed, among other issues, tragedies in Paris and Brussels. The future? More of the same, but with an assumption that one day the headwinds will abet. If you wanted to hear pointed questions about that wishful thinking, you came to the wrong place. Tiffany didn't take questions on the call.
The company continues to buy back stock, heaven knows why, and offers a couple of changes in the lines that it sells. But there is no mention of any of the issues that are confronting retailers everywhere, from declining mall traffic to the need for a strong internet presence to the addressing of younger people so they, too, might want the Robins Egg blue boxes that their parents were so thrilled to get.
Now, how about Williams-Sonoma? While it isn't a jewelry store, it does sell expensive products in a mall-based environment in addition to catalogues and an online presence.
The company's stock has had a rough go of it of late and the last quarter continued the decline when the company had a shortfall in its key Pottery Barn division which had a 2% decline in same store sales.
You could tell that the execs went into full court press to get to the bottom of Pottery Barn (PB), which went from having a 2% decline last quarter to a 0.2% gain. More important its flagship Williams-Sonoma brand stores gave you a 3.5% number vs. a 2.7% gain last year and its West Elm business is on fire, giving you 19% same store sales up from 15%. That's been a powerhouse, but to see an acceleration like that is extraordinary.
On the conference call, CEO Laura Alber talked about a top-to-bottom mission to fix the small decline that PB had, including dealing with deliveries that had become more haphazard than the company could stand, along with offering sophisticated tracking and a beefed-up call center to insure that one call from a customer was enough.
It invested a ton of money to find out more about its customers and has a millennial outreach that may be second to none, including an accolade from Google that it is one of the most disciplined companies that it deals with. The company has spent fortunes and thought more than just about any retailer about where the customer comes from, the web, the emails, the stores, and knows that customer as well as she can be known.
Throughout the call, you will hear Alber talk about "if there is a weakness, we will fix it." It was a major theme throughout the call.
Alber is one of the most forward-thinking execs in retail today. She knows engagement is important, she puts out 30,000 user-generated pictures of content. And she knows the new customer cares about the environment and sustainability more than at any other time. Why is West Elm so successful? Because, as Alber says, the chain "does continue to be uniquely positioned with millennials and millennial-minded customers who seek out brands that share their values and engage with brands that share the values and engage with brands through social media word of mouth."
At no time does Albers make excuses for the consumer, the product, the price point, the dollar. Nothing. It's about beating the numbers and not settling for less.
The two companies couldn't be more different. That's why one's a buy and one's a sell, at least until they change the management. I bet you can guess which one is which.