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Retailers Look Forward to Back-to-School Season Spending

This could be a good back-to-school summer for Los Angeles retailers.


Families with children in the western United States are expected to increase their back-to-school spending 7 percent, to nearly $410 this year, according to a National Retail Federation survey. Aside from the holiday season, July and August are the most important sales period for merchants.


“The momentum is there. Stores definitely are feeling that this will be very strong back to school,” said Sandy Potter, a principal at Los Angeles retail consulting firm Directives West.


In a separate survey by Santa Monica-based mall operator Macerich Co., nearly 63 percent of shoppers say they will be buying jeans and shorts for their school age children good news for local manufacturers who have pounced on making denim in light of ballooning demand for high-end jeans.


“There are more adult denim companies that are doing children’s (clothing),” said Eloisa Han, owner of Eloisa & Mia LLC, a Los Angeles company that represents 42 children’s apparel brands.


Andrew Strasmore, president of Fire, a division of Los Angeles-based apparel company Topson Downs Inc., is hoping that a strong back-to-school season will signal strong holiday sales (though there is seldom a direct relationship). Fire’s corduroy gaucho pants have been the No. 1 seller at Brass Plum, the juniors department at Nordstrom, for the last two weeks.


“Early indication is that there are key items that are performing very well,” Strasmore said. “It’s a barometer for the holiday season.”



Smart Ads


TV diner Mario Martinoli has apparently paid off for food service warehouse Smart & Final Inc.


The non-membership warehouse chain of stores saw its same-store sales rise 4.1 percent in the second quarter ended June 19 and management is thanking an ad campaign that features Martinoli driving home the point that shoppers can find quality food at the stores.


“There’s no question that we have increased awareness of our store and our concept. The more familiar people are with what we have to offer, the more people come back and shop with us,” said company spokesman Randall Oliver.


Martinoli is also seen recommending eateries on KCBS-TV (Channel 2).


The City of Commerce-based company has had a tough time establishing its brand identity with shoppers, given its motley selection of merchandise (not to mention competition with Costco and other warehouse operations).


Oliver said Smart & Final has boosted its television advertising, including in its new markets such as Phoenix and Las Vegas. Besides TV ads, the company has boosted spending on newspaper inserts, direct mail and radio advertising. Last year, the company opened four new stores, bringing its total to 223.


The increased ad spending is reflected in Smart & Final’s second-quarter operating and administrative expenses, which increased 6.6 percent from a year earlier, to $64.3 million. That cut into its bottom line, despite an increase in same-store sales.



Luxury Shuffle


Raffles L’Ermitage will change hands when Colony Capital LLC’s nearly $1 billion acquisition of Raffles Holdings Ltd. properties closes later this year, but don’t expect changes at the five-star Beverly Hills hotel especially not its name.


“I don’t believe big investors would risk changing anything that is doing really well,” said Jack Naderkhani, general manager of L’ Ermitage.


Naderkhani, who started managing the 119-room L’Ermitage in 1990, is familiar with Colony Capital. The Los Angeles-based private equity fund owned a piece of L’Ermitage from 1996 to 2000 before it sold its interest in Credicom Asia, L’Ermitage’s owner prior to Raffles.


Colony Capital, which has almost 20,000 hotel rooms in its portfolio, has a long history of buying and selling hotel properties. In addition to the Raffles acquisition, the company recently invested $1 billion in French hotel group Accor SA to expand that brand’s global reach. Accor operates the low-budget Motel 6 chain among other brands.


*Staff reporter Rachel Brown can be reached by phone at (323) 549-5225, ext. 224, or by e-mail at

rbrown@labusinessjournal.com

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