2 posts tagged “retail stories of the week”

Philip Downer, who previously served as managing director for the company, will replace him.

Borders U.K. reported a same-store sales increase of 2.9% for the period between Dec. 2, 2007 and Jan. 5.

Dennis Abramczyk, also an executive VP, will remain in his position until a replacement is named. He served in the post for nine years.

Sources close to the situation said the $100 million deal would put Fortunoff merchandise in all 47 Lord & Taylor stores, and even open a Fortunoff boutique in the Lord & Taylor Fifth Avenue flagship.

Purchase, N.Y.-based NRDC Equity Partners, the private equity firm that owns Lord & Taylor, hasn’t commented directly on the matter, but it is said to be nearing a deal. People close to NRDC have warned, however, that Fortunoff has drawn interest from several bidders that could outmaneuver NRDC.

The proposed acquisition comes on the heels of a report that the company is considering Chapter 11 bankruptcy, and observations from retail experts that its stores are struggling to keep up its inventory.

Should the acquisition by NRDC take place, sources briefed on the negotiations said NRDC had no plans to close any Fortunoff stores and would like to expand the number of its full-line stores, from four to perhaps dozens.

The company plans to save $50 million annually by 2010 with the plan, and save $20 million to $25 million in fiscal 2008.

It will close the stores between 2008 and 2010, including 64 in 2008, and open fewer Ann Taylor and LOFT stores in 2008.

It will also delay a planned new concept until 2009 and focus on off-price factory stores.

The 180 jobs are in the company's headquarters and represent 13% of its corporate staff.

In a filing with the Securities and Exchange Commission, Aeropostale said it will pay Geiger a base salary of $1 million per year, with eligibility for an annual bonus capped at $3 million.

Ullman was also quoted in the interview, published on Thursday, as saying the company may scale back its plans to open new stores, cutting 10 of the 50 stores it planned to open each year in 2008 and 2009.

“The precipitous drop in sentiment in the fall is what we feel we need to deal with going forward. We’re assuming no improvement in the trend in 2008,” he said in the interview.

A slowdown in the U.S. housing market, as well as high energy prices and turbulence in the credit market, have hit Penney'’s predominately middle-income shoppers.

Representatives at Wal-Mart were not immediately available for comment. The report, citing an internal statement, said the company would close its product-development and sourcing divisions.

Wal-Mart is aiming to strip excess costs and promote low prices as its core, lower-income shoppers are being squeezed by a deteriorating housing market, higher food and fuel costs and a credit market crunch.

In other news, Wal-Mart is set to announce a partnership with Disney for more than 150 products based on the Disney Channel’s popular series “Hannah Montana.” The show has transformed its star Miley Cyrus, 15, into a real-life pop star.

Wal-Mart plans to offer a line of licensed Hannah Montana goods, from clothing to food, that will target girls ages 6 to 14. The chain will set up in-store “Hannah Montana Shops” in about 750 locations.

At its annual shareholders meeting in Bellevue, Wash., on Jan. 29, Costco chairman of the board Jeffrey Brotman said the company plans to “open in Australia sometime next year,” when asked about the chain’s plans for international expansion.

Costco executive VP and CFO Richard Galanti later confirmed that Costco is searching for sites in Sydney, Brisbane and Melbourne.

During his presentation, CEO Jim Sinegal said Costco increased the number of stores powered by solar energy to 13 and that the company is considering solar panels for 25 more locations.

Sinegal also confirmed the 531-store chain plans to open 29 new locations this year and estimates Costco could eventually open 1,025 stores worldwide with more than 700 warehouses in the United States.

According to the EPA, Kohl's is buying 236 million kilowatt-hours of green power a year.

Kohl's has been installing rooftop solar photovoltaic systems on more than 60 of its stores in California. In total, more than 138,000 solar panels generating more than 25 megawatts of renewable energy are expected when Kohl’s solar installations are complete in 2008.

Barington Capital Group and Clinton Group, which together accumulated a stake of approximately 5.3% in Dillard's, also sent a letter dated Tuesday to the Little Rock, Ark.-based company’s board outlining recommendations for strategic and operational improvements.

"If the company were more effectively managed, it would be worth substantially more than its current stock price," the letter from the investment group said. "The vast value potential of the company is not being realized. Dillard's is an undervalued asset with tremendous opportunity for improvement.

The investment group proposed that the retailer reduce its cost base—including better buying—tighten its assortment of offerings and vendors, and update its private-label merchandise that will set it apart from its department store peers, the group said.

"The disappointing financial performance of Dillard's must be addressed," the letter said. "While we acknowledge that the market conditions in the department store sector have been challenging over the past few quarters due to concerns with a weakening U.S. economy, the magnitude of Dillard's recent weak results cannot be attributed to the economy alone."

The letter also said Barington has tried to reach out to Dillard's board and chief executive William Dillard II several times during the past six months, though it said that hasn't been met with any response from the company.

Turf has spent the majority of her career partnering with Segal in the leadership and strategic direction of the company. Though Segal will no longer direct Crate and Barrel's day-to-day operations, he will assume the title of chairman and will continue as a key advisor and counselor.

"I have relished every moment of the last 45 years," Segal stated. "However, I also recognize that transition and change are key to the growth of any retail business, and I want to give Barbara Turf and other talented members of our executive team their well-deserved opportunity to take Crate and Barrel into the future.”

Prior to becoming president of Crate and Barrel in 1996, Turf held the post of executive VP of merchandising and marketing for many years, maintaining responsibility for all aspects of product selection and branding.

Traditional gifts, such as candy, flowers and jewelry will see a slight decrease in popularity this year with more consumers preferring gifts of experience and gift cards. Almost half (48.2%) of all consumers plan to celebrate Valentine’s Day with a special night out, compared to 45.3% last year, and 12.3% will give a gift card, compared to 11.3% last year.

Greeting cards still remain the most popular choice, though the number of people planning to purchase one is down from last year (56.8% vs. 62.8% last year). Nearly 48.0% of consumers will buy candy, 35.9% will buy flowers and 11.8% will buy clothing.

Men will again dish out the most this year, spending an average of $163.37 on gifts and cards, compared to an average of $84.72 spent by women.

“We all know economic times are tough so our plan is to help with added savings throughout the year, focusing especially on what people want, when they need it," said John Fleming, chief merchandising officer, Wal-Mart.

The retailer will reduce prices by 10% to 30% on a range of products, particularly Super Bowl snacks, groceries, fitness items and home products. The company said it will offer no interest for 18 months on purchases of $250 or more with a Wal-Mart credit card.

In addition, Wal-Mart plans to include a $100 gift card with the purchase of a $1,296 Phillips 42-in. LCD HDTV.

The company said the latest price cuts will be detailed in its latest home circular.

John P. Mackey, 54, received a base salary of $93,500 in the fiscal year that ended Sept. 30. He did not receive a bonus or awards of stock options.

However, he did get $68,363 in non-equity incentive plan compensation, along with $297 in matching funds from a company 401(k) program.

Mackey's salary fell by more than two-thirds from the prior fiscal year, but the pay cut was self-imposed. He announced in late 2006 that beginning the next calendar year, he would take a salary of $1, but he was paid his old salary for the first three months of the fiscal year that had already begun.

Whole Foods will hold its annual meeting March 10 in Austin, Texas. Six of the seven directors, including Mackey, are running for re-election. The seventh is retiring and won't be replaced immediately.

Investors also will vote on a shareholder resolution to split the chairman and CEO jobs, which Mackey, a co-founder of the chain, has held since 1980.

The board opposed the resolution, saying Mackey is uniquely qualified to lead the company.

Lewis will be succeeded by W. Bruce Johnson, an executive VP of supply chain and operations who will fill the role on an interim basis. The company said Monday that Lewis will also resign from Sears' board.

"We are entering a new phase in Sears' evolution as a multichannel retailer, as reflected by the new operational structure we recently announced, and the board has determined that now is the right time to put in place new leadership to take the company forward," Sears chairman Edward Lampert said in a statement.

Johnson joined Kmart in 2003 as senior VP of supply chain and operations. He was named to the office of the chairman in 2005 and took on store operations in 2006.

Prior to joining Best Buy, Roberts spent more than 18 years at Accenture, most recently as a senior partner in their Global Retail Practice.

Roberts will lead Best Buy’s international information-systems team to create “Best Buy-in-a-box,” a suite of off-the-shelf IT packages. In addition, one of his primary initial focuses will be to create an e-commerce platform as part of the multichannel strategy to support the company’s international growth.

The survey found that consumers plan to purchase 3.9 million televisions for Super Bowl Sunday, up more than 50% from 2.5 million last year. In addition, viewers plan to purchase 1.8 million pieces of furniture, up from 1.3 million last year.

Consumers intend to spend an average of $59.90 on Super Bowl-related merchandise, up from last year’s $56.04. Total spending for the Feb. 3 Super Bowl is expected to reach $9.5 billion.

Super Bowl spending isn't limited to increases in entertainment products. Food, beverages and apparel are also expected to see growth. According to the survey, of those that will be watching the game, 67.4% will be purchasing food and beverages and 6.0% will buy team apparel and accessories.

The elimination of these media markets will allow the company to increase its brand presence in outperforming markets.

The company plans to open 17 new stores during the next 12 months in existing states, confirming its previously announced intent not to increase store count in fiscal 2008.

Additionally, the company will reduce its corporate work force by approximately 10% through the consolidation of functions and the automation of certain activities.

Cost Plus anticipates these cost reductions will result in annual savings of approximately $8 million beginning in fiscal year 2008.

Diane von Furstenberg Studio LP, in a lawsuit filed in federal court in Manhattan, alleged the retailer is selling a style of dress that bears a print nearly identical to her trademarked "Spotted Frog" design.

The lawsuit said Furstenberg’s company sent a notice to Target on Friday and the dress was removed from the retailer’s Web site on Wednesday. However, the dress is still being sold at Target retail stores, the complaint said.

Henry joined the company in September 2000 as controller. He has served as VP, controller since February 2006.

The change lowers the overall price Catterton will pay in the deal to $179 million from $267 million.

Restoration Hardware said “increased pressure” in the retail sector led it to agree to the new deal.

Catterton has loaned $25 million to Restoration Hardware for working capital.

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.