Retail Stories of the Week

About half the capital expenditures in 2008 will support the opening of 1,000 or so new restaurants, with the rest financing efforts to improve the images of 1,600 locations, the report said.

McDonald's added 800 restaurants worldwide last year. Expansion plans call for at least 125 new units in China and between 35 and 40 restaurants in Russia.

McDonald's convenience push calls for opening more of its U.S. restaurants as early as 5 a.m., the report said.

Simmons, who became acting CFO in August, has worked at Gap for seven years. She replaced Byron Pollitt, who resigned to join Visa credit-card network.

Without identifying the stores, chief administrative officer Rodney Carterc said the chain plans to close 60 unprofitable Zales, Gordon's and Piercing Pagoda locations and "several dozen more" later this year.

Zale also is cutting its capital spending to $85 million this year from a planned $100 million, he told the Cowen & Co. annual consumer conference in New York City.

In another announcement, Ethan Allen Interiors Inc. said Tuesday it will close 12 stores and two service centers, cutting operating costs amid a slowdown in the housing market. Meanwhile, Liz Claiborne Inc. said last week that it is shuttering its 54-store Sigrid Olsen chain.

On Jan. 4, Talbots Inc. said it is closing 66 Talbots Kids and 12 Talbots Men's stores. And on the same day, Pacific Sunwear of California Inc. said it is shuttering the remaining 154 stores in its demo chain.

Macy's Inc. also recently announced that it was closing nine additional stores, including one in Dallas at Valley View Center. Some analysts predict the retailer will announce more closings.

In a letter to Charming Shoppes dated Jan. 15, the group informed the company of its intention to nominate three people to the board: Michael Appel, a managing director of Quest Turnaround Advisors; Arnaud Ajdler, a managing director of Crescendo Partners II LP; and Robert Frankfurt, president of Myca Partners.

The trio said it was “deeply concerned” about the chain’s current business strategy. The group hopes to “re-focus the company’s business operations and unlock the true intrinsic value of the company.”

Among the recommendations, the group suggested exploring the sale of assets like real estate, credit-card operations or the catalog business; slowing store expansion; streamlining operations and reducing overhead; and buying back shares.

The specialty apparel retailer disclosed in a filing it was informed on Tuesday that the SEC is conducting a nonpublic, fact-finding inquiry into the activities of the executive, Christopher L. Finazzo.

Aeropostale disclosed in a filing on Nov. 8, 2006 it terminated Finazzo for breaching its ethics policy.

According to the 2006 filing, Aeropostale said the termination was related to an investigation that showed Finazzo “had concealed personal ownership interests in, and served as an officer of, entities affiliated with one of the company’s largest vendors, South Bay Apparel, Inc.”

Aeropostale also said in the 2006 filing that the activities and their concealment comprised a conflict of interest that breached its business ethics code and violated Finazzo’s employment agreement.

Harlow most recently was a retail director with Deloitte Consulting LLP and has been involved with Circuit City over the past year. Prior to joining Deloitte, Harlow was senior VP of operations for the A&P U.S. division of The Great Atlantic & Pacific Tea Company Inc.

In signing on with Liz Claiborne, the designer is also ending his contract with Target Corp. He had created the Isaac Mizrahi for Target collection, which has been a magnet in driving customer traffic to its stores and helped solidify Target’s niche in cheap chic designs since its inception five years ago.

Mizrahi’s first women’s collection for Claiborne, to arrive in stores for spring 2009, will appeal to the same customer but will be updated with bold colors.

In a separate statement, Target said that the Mizrahi collection will continue to be available exclusively in select Target stores and at Target.com through the end of 2008.

Rentals are $3.99 for a new release and $2.99 for older films, or a dollar more for high-definition versions.

The movie rentals are now available in the United States and later this year internationally. Apple pledged to have 1,000 films available by the end of February, and films will come to iTunes 30 days after their DVD release.

Users will have 30 days to watch a film after renting it, and 24 hours to finish watching it after they have started.

CEO Edward Stack, CFO Timothy Kullman and EVP of operations Joseph Schmidt will take over Colombo’s responsibilities, the company said.

The first store will open in Romeoville, Ill., on Jan. 23, combining what Wal-Mart learned from its successful first-generation High-Efficiency stores (HE.1) with new state-of-the-art technologies. In addition to saving energy, the new stores will significantly reduce greenhouse-gas emissions by lowering refrigerant by 90%.

The improvement in energy efficiency comes from a new secondary refrigeration loop combined with an advanced water-source heating, cooling and refrigeration system, said the company. The technology was tested in Wal-Mart's Experimental Stores and uses a non-refrigerant-based solution to cool refrigerator and freezer cases, resulting in a 90% reduction in refrigerant. The HE.2 stores represent the first time secondary loop technology has been paired with a water-source heating, cooling and refrigeration system in the United States.

Marchetti, 50, joined Tuesday Morning in Feb. 2001 as senior VP, strategic planning and was promoted to executive VP, operations in Feb. 2002. In April 2003, Marchetti was promoted to COO.

Total 2007 holiday sales, which combine November and December sales, rose 3% to $469.9 billion, weaker than NRF’s projected 4% holiday forecast. It was the lowest holiday seasonal growth since 2002, when sales rose 1.3%.

“Economic pressures caused deterioration in the sales climate at the end of the year,” said NRF chief economist Rosalind Wells. “Because holiday sales were disappointing, retailers will have to quickly adapt with pricing strategies and promotions that will encourage customers to spend.”

NRF is forecasting that retail industry sales will increase 3.5% in 2008.

Also elected to the company’s board of directors, Sen will, as president and COO, be responsible for all day-to-day company operations. She was formerly executive VP of merchandising and logistics.

BJ’s also announced the restructuring of its merchandising division under the leadership of Christina Neppl, who will succeed Sen as executive VP of merchandising and logistics. Bruce Graham, senior VP, general merchandising manager of consumables, will assume additional responsibilities as general merchandising manager of perishables, and Mark Titlebaum will become senior VP, general manager of general merchandise, a position that has been vacant. Robert Eddy, senior VP of finance, will assume responsibility for the financial departments formerly managed by Neppl.

“Increases in energy and food prices are reducing consumer purchasing power,” said Carl Steidtmann, chief economist with Deloitte and author of the monthly index. “Sharply higher inflation caused real wage growth to fall to close to zero percent this month and, combined with continued falling home prices, caused the consumer index to drop sharply. Higher inflation and unemployment are key risks for consumer spending capacity in the months ahead, and we continue to expect uncertainty in the early months of 2008.”

The index comprises four components—tax burden, initial unemployment claims, real wages and real home prices—and fell to 2.30%, from a revised gain of 2.61% a month ago.

“January sales will be significantly affected by gift-card redemptions and fresh winter merchandise, and will be critical to retailers,” said Stacy Janiak, Deloitte’s U.S. Retail Leader.

The court said the case was dismissed under Rule 46.1, which provides for dismissals when both parties agree to settle a dispute. The justices had said they would consider the case Dec. 7, and oral arguments were expected to take place this spring. The Supreme Court did not provide additional details.

At issue in the case was how far employers under the Americans with Disabilities Act (ADA) must go to accommodate disabled employees. This particular employee, Pam Huber, was injured in April 2001 while employed as an order filler in a Wal-Mart distribution center in Clarksville, Ark. She applied for a different position at equivalent pay, but didn't get the job.

Wal-Mart said in court papers that it hired a more qualified employee. Huber was later given a job at about half the hourly wage she earned as an order filler.

Huber sued in June 2004, arguing that under ADA rules, she only had to be qualified for the equivalent position, not the most qualified, and should have been reassigned to the job with equivalent pay.

A federal court in Arkansas ruled in favor of Huber, but the 8th U.S. Circuit Court of Appeals, based in St. Louis, reversed and sided with Wal-Mart.

The ADA "only requires Wal-Mart to allow Huber to compete for the job, but the statute does not require Wal-Mart to turn away a superior applicant," the appeals court said.

The new Wal-Mart outlets, to be called Marketside, will be about 20,000 sq. ft., roughly half the size of the discounter’s Neighborhood Market grocery stores and twice the size of the Fresh & Easy markets, according to London’s Financial Times. A Wal-Mart spokesman said the retailer is always testing new ideas and declined to say if the new format would be rolled out in more locations.

A statement issued by the company said that Kirkland's is not currently seeking a replacement for David. Her departure comes as the company has struggled with declining sales and dropping stock prices.

The lawsuit filed in U.S. District Court on Monday said Casey's wrongfully denied overtime pay and wages to current and former Casey's hourly employees. It alleges that Casey's violated federal and state law by working cooks and cashiers off-the-clock to avoid paying overtime wages as required by the Fair Labor Standards Act and state laws.

Court documents allege about 20,000 employees are included in the class and said claims exceed $5 million.

The workers say they were asked to perform tasks before and after their shifts, including cleaning, counting the cash register and selling items to customers. They also claim they were denied mandatory meal and rest breaks.

The lawsuit seeks a jury trial and unpaid back wages, liquidated damages allowed under federal labor statutes, certification of class action and equitable relief as permitted under individual state laws.

The retailer said it expects to earn between $350 million and $470 million for the quarter ending Feb. 2. Sears earned $820 million in the fourth quarter a year earlier.

Sears blamed growing competition, a slowdown in the housing market and consumers' credit fears for slumping sales figures. The company said its domestic same-store sales dipped 3.5% during the nine-week holiday season because of poor performance in Kmart's seasonal categories and Sears' apparel and tools.

Total retail sales are slated to grow 3.5%, falling below last year's estimated 4.0% pace and marking the weakest growth since 2002, when retail sales climbed 3.0%, the NRF said. The retail sales figure excludes automobiles, gas stations and restaurants. The final 2007 figure won't be known until Tuesday when the Commerce Department is slated to report December's total retail sales figures.

“The consumer is full of anxiety,” said Rosalind Wells, chief economist at NRF, noting a number of financial pressures that are weighing on shoppers, from higher gas costs to tightening credit. “Retailers will once again be forced to market to more practical consumers, many of whom will be looking to trade down. Even areas of past high growth like luxury goods and online shopping will feel the pressure. In 2008, the challenges will be formidable for everyone.”

Wells expects sluggish sales in the first half of the year to eventually give way to strong sales in the third and fourth quarter, as she believes that a move by the Federal Reserve to further cut interest rates will help revive the economy.

Succeeding Trius will be Hector Nunez who will assume the position of president and CEO of Wal-Mart Brazil, effective Feb. 1. Nunez joined Wal-Mart Brazil as executive VP and COO in July 2006.

Dreiling most recently served as chairman, president and CEO of New York City-based drug store Duane Reade.

Prior to his tenure at Duane Reade, Dreiling served in senior leadership roles with Safeway, Inc. and Longs Drug Stores.

Smith succeeds Norm Daniels, who will continue to serve on the Joe’s Sports & Outdoor board of directors and be involved in the strategic direction of the company.

Smith is the former president of Bass Pro Shops and has been the president and CEO of several other leading retail companies. Most recently, he was executive VP of Pep Boys.

But a pricey licensing deal could make it difficult for the Children’s Place to do much, the report added. Under a long-term agreement, the retailer must invest $175 million to remodel 234 Disney stores over the next five years, a big promise from a company that reported a 70% drop in third-quarter profits in November.

In August, Children’s Place said it was unable to meet “several” of the remodeling deadlines, and sought a postponement of some of its obligations from Disney, the report said.

Ethan Allen said its focus on increasing in-home design consultations reduces its need for as many neighborhood stores as it currently operates. The company, which is calling the move a consolidation, expects the reduced store count to boost operating profit by $3 million to $4 million a year starting in the fiscal year ending June 30, 2009.

Combined with a change in how products are ordered, the work-force reassignment is part of the company's push on customer service, according to Paul Raines, Home Depot's executive VP for stores. The switch won't reduce employees' hours or result in layoffs.

The change could affect as many as half of the company's 2,000 U.S. stores, the report said.

The decision reverses a plan implemented several years ago by former Home Depot CEO Robert Nardelli, who switched freight receiving and stocking to overnight hours in order to reduce aisle clutter and safety concerns caused by forklifts operating during busy daytime hours. However, the change led to complaints of poor customer service.

The TCW Group Inc., which was formerly the company's largest institutional investor, slashed its holdings to 310,045 shares, which represents a 0.2% stake in the Richmond, Va.-based company. In August, TCW reported owning 18.3 million Circuit City shares, or a 10.9% stake.

The Los Angeles-based investment manager disclosed the stake in a Schedule 13G filing, which indicates the investment is passive, and the shares were not acquired to change or influence control of the company.

On Monday, Circuit City reported that same-store sales dropped 11.4% in December, on weak sales of tube televisions, camcorders and other devices early in the month. The company's stock has plunged from a 52-week high of $22.02 last February to a low of $3.61 last week.