This Week’s Top Stories in Retail

August 15, 2008

 

Wal-Mart to Invest $1.1B in Expansion

Bentonville, Ark. (August 14, 2008) Wal-Mart plans to invest up to 1.8 billion reais ($1.1 billion) in Brazil to open 80 to 90 stores in 2009, the company said in a statement on Wednesday.

 

Wal-Mart is spending 1.2 billion reais to open 36 new stores in Brazil's fast-growing market in 2008, the statement said.

 

Netflix Suffers Shipment Issues

Los Angeles (August 14, 2008) DVD rental service Netflix Inc. said on Thursday the most severe system outage in its history was preventing shipments of discs to about a third of its 8.4 million customers. The company said it shipped no DVDs on Tuesday, some on Wednesday and none so far on Thursday.

 

Netflix spokesman Steve Swasey said the company would provide credits to affected customers and was working "feverishly" to determine the cause of the outage and fix the problem.

 

Fresh & Easy Sees More Than 10,000 Job Applications in July

El Segundo, Calif. (August 14, 2008) In response to opening six new stores in July, Fresh & Easy Neighborhood Market announced that it received more than 10,000 applications for jobs in the last month.

 

The number of people applying to work at Fresh & Easy has nearly quadrupled since May.

 

J.C. Penney Launches Solar- and Wind-Power Projects

Plano, Texas (August 14, 2008) J. C. Penney Co. announced plans for solar- and wind-power projects that will supply electricity to 10 stores and one distribution center. J.C. Penney also aims to obtain ENERGY STAR certification for at least 200 stores, the company said.

 

J.C. Penney has engaged SunPower to install solar-power systems at 10 J.C. Penney stores in California and New Jersey. According to the company, the solar systems will be financed, owned and operated by a third-party financier, from which J.C. Penney will purchase the solar-generated electricity under a SunPower Access power-purchase agreement. The rooftop installations are expected to be finished in November.

 

Urban Outfitters 2Q Profit Jumps 79%

Philadelphia (August 14, 2008) Urban Outfitters Inc. posted a 79% jump in quarterly profit, driven by strong same-store sales across all its branded stores and fewer markdowns that boosted gross-profit margins.

 

The specialty retailer reported net income of $57.0 million for the second quarter ended July 31, compared with $31.9 million a year earlier.

 

Wal-Mart 2Q Profit Up 17%

New York City (August 14, 2008) Wal-Mart Stores Inc. posted a 17% increase in its second-quarter profit Thursday, helped by cost cuts and a renewed focus on low prices to lure penny-pinching consumers.

 

However, Wal-Mart predicted slower sales growth at its established stores for the current quarter, saying it is seeing some volatility as customers find it difficult to stretch their paycheck to the next payday.

 

Kroger Reaches Tentative Deal With Union

Columbus, Ohio (August 13, 2008) The Kroger Co. said Wednesday it reached a tentative deal with the United Foods & Commercial Workers Union Local 1059 in Columbus, Ohio.

 

The agreement has not yet been ratified by union members.

 

Vornado, Reliance Form Retail Venture in India

Paramus, N.J. (August 13, 2008) Vornado Realty Trust said Wednesday it has formed a joint venture with India's Reliance Industries Ltd. to invest in shopping centers in India.

 

Vornado, a Paramus, N.J.-based real estate investment trust, and Reliance will each commit up to $250 million to the 50/50 venture to acquire, develop and operate shopping centers in key Indian cities.

 

Report: Retail Sales Rise 4.0% in July

Chicago (August 13, 2008) ShopperTrak RCT Corp.'s National Retail Sales Estimate reported Wednesday that July retail sales rose a steady 4.0%, while the company's Retail Traffic Index (SRTI) reported that total U.S. foot traffic slipped 2.2% for the same time period.

 

Both sales and traffic were slower in the beginning of July before the back-to-school shopping season picked up toward the end of the month.

 

Best Buy Becomes First Independent iPhone Retailer

Minneapolis (August 13, 2008) Best Buy Co. will start selling the iPhone on Sept. 7, becoming first U.S. chain to do so outside of Apple Inc.'s and AT&T Inc.'s own stores, according to a Reuters report.

 

The announcement expands the availability of Apple's phone to 970 full-size stores and 16 smaller Best Buy Mobile stores. It's also a coup for Best Buy, which has been upgrading its cell-phone departments.

 

Tween Brands Shifting to Low-Price Strategy

Chicago (August 13, 2008) In a move to drive growth and profitability, Tween Brands Inc. said Tuesday it will convert approximately 560 Limited Too stores to its lower-priced Justice brand and close 26 others. Both brands are targeted at 7-14 year-old girls, with Justice priced an average of 20% to 25% less than the more fashion-forward Limited Too.

 

Once the change over is complete, the company will no longer operate any Limited Too stores. It will, however, continue to sell Limited Too product in Justice stores.

 

China Retail Sales Up 23.3% in July

Beijing (August 13, 2008) China's retail sales rose by 23.3% in July from a year ago to 862.9 billion yuan ($126 billion), the government said Wednesday.

 

In the first seven months of the year, retail sales climbed 21.7% to 5.97 trillion yuan, the National Bureau of Statistics said in a statement.

 

CVS Buying Longs Drug for $2.7B

Woonsocket, R.I. (August 13, 2008) CVS Caremark Corp. said Tuesday that it is buying Longs Drug Stores Corp. in a deal valued at $2.7 billion. The $71.50 per-share cash offer, announced after the end of trading Tuesday, was a 32% premium over Walnut Creek, Calif.-based Longs' closing price of $54.04.

 

Longs operates 521 drug stores, mostly in California, and also has sites in Hawaii, Nevada and Arizona. Executives at CVS said the acquisition will give the chain a significant presence in fast-growing West Coast markets where property is often unavailable or expensive to acquire.

 

Linens 'n Things Sales Fall in 2Q

Clifton, N.J. (August 12, 2008) Linens Holding Co. said Tuesday its sales dropped 21% in its second quarter. The company, which filed for Chapter 11 bankruptcy protection in May, reported total sales of $504 million for the quarter and retail sales of $468.1 million.

 

Linens Holding said the retail sales figure does not include $35.9 million in liquidation sales related to the closing of 120 stores.

 

Circuit City Launches Fantasy Football Channel on YouTube

San Bruno, Calif. (August 12, 2008) Circuit City has launched a fantasy-football channel on YouTube. The YouTube FANalyst Channel, located at http://www.youtube.com/fanalysts, provides consumers with the latest analysis, tips and season predictions, the company said.

 

In addition to the channel, Circuit City is sponsoring the "Join The Squad Contest," which calls out fantasy-football fanatics all over the world to submit their own FANalyst video showcasing their football knowledge along with their player and team season predictions.

 

Report: Montgomery Ward May Bring Back Catalog

Milwaukee (August 12, 2008) Montgomery Ward may give its catalog business another shot, starting as soon as January, according to the Milwaukee Journal Sentinel.

 

Last week, Swiss Colony's Midwest Catalog Brands division bought the rights to the Montgomery Ward catalog and online business from Chicago-based Direct Marketing Services Inc. for $15.5 million, the report said. The price includes two other businesses: Charles Keath, a home-furnishings catalog and Internet business, and online retailer HomeVisions.

 

Ann Taylor Names New President

New York City (August 12, 2008) AnnTaylor Stores Corp. has appointed Christine M. Beauchamp to the position of president, Ann Taylor Stores, effective immediately. Beauchamp, who has been a strategic consultant to the company since earlier this year, succeeds Adrienne Lazarus, who is leaving the company.

 

Beauchamp was previously with Limited Brands, most recently as president and CEO of Victoria's Secret Beauty.

 

TJX Cos. Profit Jumps in 2Q

Framingham, Mass. (August 12, 2008) TJX Cos. Inc. posted a higher quarterly profit on Tuesday as shoppers headed to its stores for deals on clothes.

 

The company also is raising its profit outlook as it benefits from shoppers looking for cheaper alternatives.

 

Target Spent $870K Lobbying in 2Q

Minneapolis (August 12, 2008) Target Corp. spent $870,000 lobbying on consumer product safety standards and other issues in the second quarter, according to a recent disclosure report.

 

The company also lobbied on banking matters, crime enforcement and labor issues in the April-June period, according to the form filed July 21 with the House clerk's office.

 

Tesco to Expand in India

London (August 12, 2008) Tesco announced on Tuesday plans to open wholesale grocery stores in India that will supply goods to hypermarkets owned by Indian conglomerate Tata Group.

 

"This is another exciting development for Tesco," the group's chief executive Terry Leahy said in a statement. "It complements our entries into China and the United States, giving us access to another of the most important economies in the world. Our wholesale cash-and-carry format will bring improved value, range and service to thousands of Indian businesses."

 

Circuit City Stops Work on New DC

Richmond, Va. (August 11, 2008) Circuit City has halted construction of a new distribution center it was building in Pennsylvania. The $45 million facility in Covington Township, Pa., was due to open by the end of the year and replace two existing centers in Pennsylvania and Maryland.

 

Circuit City did not give a specific reason for the hold on construction, though a spokesman said the retailer has decided to "step back and take a look at it."  

 

Tiffany Appeals eBay Internet Ruling

New York City (August 11, 2008) Tiffany & Co. on Monday appealed a federal ruling that largely absolved eBay Inc. of policing its auction site for counterfeit items, saying the judge was wrong to leave the primary burden to the jewelry maker. Tiffany filed the appeal with the United States Court of Appeals for the Second Circuit, the company said in a statement.

 

The jeweler sued eBay in 2004, alleging it turned a blind eye to the sale of fake Tiffany jewelry on its Web site. But in July, all of its trademark infringement claims were rejected, and a federal judge held that brand owners are ultimately responsible for protecting their own trademarks.

 

Nine West in RFID Pilot

New York City (August 11, 2008) Jones Apparel Group Monday announced that it has initiated a program to evaluate radio frequency identification (RFID) technology in select Nine West retail locations. The goal of the pilot program is to study the benefits that item-level RFID provides in the areas of enhanced productivity, customer service and inventory accuracy.

 

"RFID has interested us for some time, and we believe it has reached the point where launching a pilot program of this nature makes sense," said Norm Veit, executive VP, MIS at Jones.

 

E Com Changes Name to Perfumania

Sunrise, Fla. (August 11, 2008) E Com Ventures Inc., which owns Perfumania perfume shops, said Friday it is changing its name to Perfumania Holdings Inc.

 

The company's ticker symbol will be "PERF" starting at the opening of trading Monday, it said in a news release.

 

Canada's Supreme Court to Hear Wal-Mart Case

New York City (August 11, 2008) The Supreme Court of Canada has agreed to hear two cases stemming from Wal-Mart's controversial closing of a unionized store in Quebec.

 

The store, located in Jonquiere, closed in 2005 after workers had agreed to be represented by the United Food and Commercial Workers and were negotiating their first contract. Wal-Mart said the store was not profitable. The court agreed to hear the case after a Quebec court sided with Wal-Mart, according to reports.

 

Best Buy Launches Automated Kiosks in Airports

Minneapolis (August 11, 2008) Best Buy Co. Inc. plans to add a dozen automated vending kiosks inside major airports across the country as part of a new pilot program called "Best Buy Express," company executives said.

 

The retailer is partnering with ZoomSystems, a San Francisco-based vending-machine company, for the project that will install the small automated stores at eight airports.

 

Publix Spends $500M for Albertson's Florida Stores

Orlando, Fla. (August 8, 2008) The price tag for the 49 Albertson's LLC store locations in Florida being bought by Publix Super Markets is about $500 million, according to a filing with the Securities and Exchange Commission.

 

The deal, which is expected to finalize in September, includes stores owned by Albertson's and stores subject to ground leases and traditional leases, the filing said. Publix said it would finance the purchase with internally generated funds or liquid assets.

 

IKEA to Invest in Green Companies

New York City (August 8, 2008) IKEA plans to invest $77 million in start-up companies producing eco-friendly products with an eye to eventually adding solar panels and other green goods to its inventory.

 

The news was reported by Cleantech Group, which said Ikea plans to focus on five areas: solar panels, alternative light sources, product materials, energy efficiency, and water saving and purification. The investments will be made in companies that offer commercial prospects within a four-to-five year horizon, according to Cleantech.

 

Sears Holdings Cuts Jobs at Support Center

Dallas (August 8, 2008) Sears Holdings Corp. announced that it plans to cut approximately 50 jobs at its National Claims and National Support Center in Dallas, according to a report in the Dallas Business Journal. The company issued a letter stating the layoffs would involve primarily administrative positions and would begin next month. It noted that the entire service facility is not closing. The service center is one of six nationwide.

 

In other news, West Virginia Attorney General Darrell McGraw said yesterday that Sears Holdings subsidiaries agreed to improve customer-service operations in the state as a response to claims that the retailer failed to comply with consumer-protection laws, according to an Associated Press report.

 

Report: Wal-Mart Eyes $10 Billion in Sales for Marketside

New York City (August 8, 2008) Wal-Mart Stores Inc. said its new small-format Marketside grocery-store concept could expand to a chain of more than 1,000 stores with more than $10 billion in annual sales, the Financial Times reported on its Web site.

 

The retailer plans to open 10 stores initially, with four slated to open in the Phoenix area this fall.

 

Spartan Stores Names CEO

New York City (August 8, 2008) Spartan Stores Inc. said Thursday its board of directors has appointed current president and COO Dennis Eidson to serve as CEO, effective Oct. 15. Eidson will continue in his roles until then and retain the president title.

 

Publix to Increase Recycling Efforts

Pompano Beach, Fla. (August 8, 2008) Publix has partnered with Organic Recovery to increase its recycling rate by 25% to 30% in 33 stores. By the end of summer 2008, Organic Recovery said it aims to serve all 84 Publix stores in Broward County, Fla.

 

"Organic Recovery presents an opportunity in fulfilling our mission to be intolerant of waste by diverting food waste that would typically be sent to local landfills, thus reducing the greenhouse-gas emissions," said Publix VP of facility services, Dave Duncan. "We are pleased with the short-term results and look forward to long-term resolutions."