The Weekly Consensus: Week of January 4, 2010
The Big Story: Oh Nos
Steve Bowles
Even though the first chronological decade of the 21st century doesn't end until next year, the close of 2009 marks the end of the cultural decade that was opened by the year 2000. In taking a look back at a decade variously labeled the pedantic "two-thousands," the futuristic "millennium," the antiquarian "aughts," the marketing-savvy "twenty-ohs," and, most appropriately, simply the "ohs," it is easy to see that the country has just gone through ten of its most tumultuous, volatile years in its history. Certainly, the phrase that seems to encapsulate the events of the last ten years is "oh no."
Be it in the geopolitical or economic arena, the preponderance of news from the ohs was bad. Terrorism, war, natural disaster, business collapse: this was the decade's stock-in-trade for the United States. The defining image of the decade comes, of course, from September 11, 2001. But any discussion of this decade will also inevitably include images of soldiers far from home, the plight of the city of New Orleans after Hurricane Katrina, political infighting, stockbrokers holding their heads in disbelief, going out of business signs, foreclosure auctions and unemployment lines. There is something for every pessimist to latch onto as emblematic of these troubled times.
It is impressive, then, that when polled, Americans are much more likely to be looking to the future in the 2010s with optimism than looking back with nostalgia toward the good old days of the 1990s.* For many, adjusting to the so-called "new normal," where "flat is up," appears to be seen as an opportunity to rethink and reevaluate, taking the lessons learned in the past ten years and anticipating better days that are to come. The new normal may be scaled down to reflect the economic reality and filled with fewer consumer goods for most Americans. But instead of fixating on what may have been lost, it seems that they are choosing to emphasize the opportunities the situation allows, including placing increased importance on family, on friends and on personal, rather than purely material, satisfaction.
Whatever one expects out of the next ten years, we at Consensus hope that the decade that kicks off with January 1, 2010 (be it called the twenty-tens or the teens, or even the oh-tens) is a good one for all our readers, clients, family and friends. Oh yes, happy new years, from now until our next decade-in-review in 2020.
*See, for example, Kelton Research at www.keltonresearch.com.
Apparel/Swimwear/Intimates
Betsy White
Aeropostale's $10 Sweatshirts Land Retailer in Winner's Circle
In a holiday season when retailers crawled back from last year's record decline, three U.S. clothing chains stood out as winners. Aeropostale Inc., Nordstrom Inc. and Kohl's Corp. promoted lower prices on specific merchandise and managed inventory to outpace industry sales in November. They will probably say next week those gains continued in December, according to Liz Dunn, an analyst at Thomas Weisel Partners LLC in New York. Teen retailer Aeropostale boosted sales by offering $10 hooded sweatshirts for two hours on Black Friday, the biggest shopping day of the year. By contrast, Abercrombie & Fitch Co.'s main holiday promotion was a $25 gift card on $100 in purchases, more than customers were willing to spend, said Thomas Weisel's Dunn. Nordstrom made fewer cuts to inventory to capture more revenue than Saks Inc., the luxury retailer that reported a 26 percent drop in November same-store sales.
Atlanta-Based Children's Clothing Maker Ousts President
The U.S. attorney's office has opened an inquiry into Carter's Inc., the Atlanta-based manufacturer of children's clothing such as OshKosh B'gosh, and the company's president has been ousted. The actions are the result of an independent investigation and audit after the company reported that discounts given to some wholesale customers were improperly reported by certain sales people, affecting earnings back to 2003. A Carter's news release said President Joseph Pacifico's employment ended on Dec. 21. Michael D. Casey, chairman and CEO, immediately took on the role of president. The release said Carter's was informed that the U.S. attorney's office is conducting an inquiry. Carter's also sent a report to the Securities and Exchange Commission.
Niche Clothiers' Ranks Shrink
There was a time Gary Anders would approach short men wearing sport coats hanging to their knees and hand them a business card. "Come see me," he'd say. "I can help." Those days are gone. On Wednesday, the Chicago branch of Napoleon's Tailor, Mr. Anders' two-store chain aimed at dressing "the less-tall man," closed for good, leaving only his store in Milwaukee, one of a handful of such specialty shops remaining in the U.S.
Athletic & Sporting Goods
Michael O'Hara
Gander Mtn. Expects Stock Split to Occur Jan. 14
Gander Mountain Company said its expects it will consummate a reverse stock split Jan. 14, 2010 as part of its plans to become a private company. After the reverse stock split, any shareholder holding less than one share will receive a cash payment of $5.15 for each share held prior to the reverse split. Immediately following the reverse stock split, the company will file a second amendment to its articles of incorporation to effect a 30,000-for-1 forward stock split. As a result, shareholders owning 30,000 or more shares of common stock at the time of the reverse split will retain their current numbers of shares of common stock without change and not receive cash in the transaction. The funding for the cash payment for the fractional shares described above will be provided by the company's two largest shareholders, Gratco LLC and Holiday Stationstores, Inc.
Study: Tiger Woods Scandal Costs $12 Billion in Stock Losses
Shareholders of Nike, Gatorade and other Tiger Woods sponsors lost a collective $5 to $12 billion in the wake of the scandal involving his extramarital affairs, according to a new study by researchers at the University of California, Davis. The losses are separate from "and potentially much larger than damage to Woods" own earnings. With fellow UC Davis economics professor Christopher Knittel, Stango looked at stock market returns for the 13 trading days that fell between Nov. 27, the date of the car crash that ignited the Woods' scandal, and Dec. 17, a week after the golf great announced his indefinite leave from the sport. To assess shareholder losses, the economists compared returns for Woods' sponsors during this period to those of both the total stock market and of each sponsor's closest competitor. The study focused on nine sponsors for which stock prices are available: Accenture; American Express; AT&T Tiger Woods PGA Tour Golf (Electronic Arts); Gillette (Proctor and Gamble); Nike; Gatorade (PepsiCo); TLC Laser Eye Centers; and Golf Digest (News Corp.). Overall, Knittel and Stango concluded that the scandal reduced shareholder value in the sponsor companies by 2.3 percent, or about $12 billion.
Banking & Lending
Douglas Stebbins
GMAC Said to Discuss U.S. Aid Package of $3 Billion or More
GMAC Inc., the home and auto lender that counts the U.S. government as the largest stakeholder, is discussing with the Obama administration a third bailout of $3 billion to $4 billion, said a person familiar with the matter. The size of the assistance is under negotiation, the person said on condition of anonymity because the talks are private. A deal may be reached in days as Detroit-based GMAC incorporates losses from its home-loan businesses, the person said. GMAC received two rounds of government aid totaling $13.5 billion as it struggled with losses at home-mortgage operations, which include Residential Capital LLC, known as ResCap. The primary lender to General Motors Co., its former parent, and Chrysler Group LLC is being helped by profits in auto-lending and is working to sell or restructure the ResCap unit.
U.S. Economy: Confidence Rises as Outlook Brightens
Confidence among U.S. consumers improved in December for a second month as Americans grew less concerned about the immediate future, pointing to an economy that will keep expanding into 2010. Attitudes about current conditions decreased to the lowest level in 26 years and wage expectations also fell, a reminder that the worst employment slump in the post-World War II era has shaken consumers. Gains in home and stock prices are helping households recover some of the record $17.5 trillion plunge in wealth, which may help sustain spending next year.
Hacker of 130 Million Credit, Debit Cards Pleads Guilty Again
A Miami man who admitted in September that he stole 40 million credit and debit card records pleaded guilty yesterday in federal court in Boston to a second computer hacking case. Albert Gonzalez pleaded guilty to charges that he stole data on 130 million credit and debit cards from Heartland Payment Systems Inc., 7-Eleven Inc., Delhaize Group's Hannaford Brothers Co. and two unidentified national retailers. Gonzalez was indicted in New Jersey, and the case was transferred this month to Boston.
Catalog & Internet
Christopher Ellis
Department Store Web Sites See Large Traffic Increases
Nearly four out of five consumers who went online in November visited an online retail site, and the web sites of department stores and toy stores saw the biggest traffic increases from October, according to a monthly analysis of U.S. online activity by comScore Media Metrix. The top-gaining retail category was online department stores which grew 33% from October to November, reaching nearly 81 million visitors. Wal-Mart Stores Inc.'s Walmart.com led the way with 46.2 million visitors, up 62%. Target Corp.'s Target.com was up 43% to 38.8 million visitors and Sears Holding Corp.'s Sears.com attracted 19 million visitors, a gain of 36%.
Online Retailers Boost Customer Satisfaction
The largest online retailers increased customer satisfaction during the holiday shopping season to a record level, a study released Wednesday showed. Amazon scored the highest with an 87, while Web sites for Macy's, Sony, Gap, Home Shopping Network, and Overstock.com had the greatest year-over-year increases in satisfaction. Each of the five retailers registered increases of 10% or more. Amazon's score marked a three-point improvement from last year and set a new high-water mark for the index's 100-point scale, ForeSee said. Eleven e-retailers scored more than 80, considered the threshold for excellence, and none of the retailers in the study scored below 70.
Consumer Electronics/Video/Audio
Douglas Stebbins
Apple Tablet Computer Rumor Sends Shares Up
Apple shares have jumped another 1% as speculation grows that it will launch a new touch-screen computer. Over the past two weeks the iPhone manufacturer's share price has been pushed up steadily by the rumors. Apple has booked San Francisco's Yerba Buena Centre on 26 January for a "major product announcement" without giving any further details. Blogs and analysts have fueled rumors that Apple will launch a new touch-screen "tablet" computer - resembling a larger version of the iPhone and variously dubbed the iSlate or the iTablet.
Half of All US Homes to Have HDTVs by End of 2009
The holiday season is the time when many people get new HDTVs and other gear for their home theater. This year there were some raging steals on HDTVs thanks to low prices and holiday specials. Comcast has announced the results of an independent study by Leichtman Research Group about the HDTV market. According to the study by the end of 2009 almost 50% of the homes in America will have an HDTV. That is a lot of TVs and this year there is another thing coming soon to push people to buy HDTVs. The winter Olympics will be kicking off soon.
The Twelve Most Tarnished Brands in Tech
Quick, what's the most admired technology brand? Maybe you answered Apple. Or Google. Or maybe even Microsoft. I'm reasonably certain, however, that none of the brands you're about to read about sprung to mind. They're all damaged goods-severely damaged goods in most cases. No brand is guaranteed eternal health. (The two most powerful tech trademarks of the mid-1980s were arguably Compaq and Lotus; both are still around, but in greatly diminished form.) The brands in this story haven't just lost a little of their luster. Most were once among the most respected names in tech, but ran into financial hardship and got sold (often repeatedly) to new owners who were usually mostly interested in strip-mining whatever goodwill the brands retained with the American public.
LCD TV Sales Boom Foreseen In 2010
While worldwide shipments rose 1 percent this year, they're expected to ramp 22 percent to 171 million units in 2010, according to DisplaySearch. Global LCD TV shipments managed to grow in 2009, despite the worst economic recession in decades, market research firm DisplaySearch reported. Shipments of the flat-panel sets, which account for the majority of TV sales, will rise 1% year-over-year in 2009 to 140.5 million units, DisplaySearch said. Driving sales is demand in China, where people are replacing their old CRT TVs, and large price declines in Western Europe and North America. Prices for most screen sizes fell from 20% to 30% year-over-year in 2009, with the overall average LCD TV price falling 24%, which is twice the rate of decline in 2008.
Cosmetics & Pharmacy
William Busko
Drugstore.com, Inc. Agrees to Acquire SkinStore.com
Drugstore.com, inc., a leading online retailer of health, beauty, vision, and pharmacy products that owns and operates Beauty.com, announced that it has entered into an agreement to acquire Salu, Inc. in a stock and cash transaction. Under the terms of the agreement, the transaction is valued at $36 million payable half in cash and half in drugstore.com common stock, plus an opportunity for senior management of Salu to receive an additional amount based on achievement of certain performance targets and integration milestones. Salu owns and operates SkinStore.com, a leading online retailer of clinical skin care and beauty products. Additionally, Salu has distribution capabilities in Australia and operates spalook.com for Sandow Media, parent company of NewBeauty Magazine. In 2009, Salu is expected to generate at least $40 million of revenue, $0.5 million of net income and $1.4 million of adjusted EBITDA, excluding one-time transaction-related charges. The acquisition will create one of the largest online beauty retailers offering consumers a wide-ranging product selection, with mass beauty products on drugstore.com, prestige beauty brands on Beauty.com and clinical skin care products on SkinStore.com.
Study: Women to Spend Less on Cosmetics in '10
American consumers will maintain and even intensify their focus on thrift in 2010, and their frugality is expected to reduce cosmetics purchases by women by nearly 9 percent. According to a survey of 600 Americans, age 25 and up, by AlixPartners' consumer products group, women are expected to reduce spending on cosmetics by 8.7 percent next year, greater than the 7.5 percent decline expected for prepared food and prepackaged meals or the 3.4 percent drop foreseen for health and personal care items among all respondents. Seventy-five percent of those surveyed said they expected to be more frugal when shopping for food in 2010 and 55 percent said they would reduce their spending on household-care products. The study showed the consumers in the South are less likely to scale back buying in 2010 than those in other U.S. regions.
Department & Discount Stores
Mark Lenz
Shoplifters? Studies Say Keep an Eye on Workers
Gift cards are just so easy - so easy for dishonest employees to exploit, that is. At the Saks flagship store in Manhattan, a 23-year-old sales clerk was caught recently ringing up $130,000 in false merchandise returns and siphoning the money onto a gift card. "Gift card fraud is spiking," said Joshua Bamfield, author of the Global Retail Theft Barometer, an annual international survey of retailers. "To employees, this is like currency. It's almost as good as the U.S. dollar."
2009's Top Stories in Retail Real Estate
The CoStar Group News Department covered a plentiful basket of major national retail news during 2009. CoStar covered it all during 2009—from the most interesting trends in retail real estate, to continued mass store closures and bankruptcies, and the major retail sale transactions that were few and far between while the industry grappled with recession. In its year-end issue, there is a rundown of the CoStar articles covering national retail news affecting the commercial real estate industry that garnered the most attention by readers each month during 2009.
2009 a Year of Drama for Retailers
The retail story of 2009 was a remarkable drama. It was the year of the bargain hunter who flocked to Wal-Mart and dollar store chains, the year of dwindling department store profits and the year when even grocers felt the pinch. As the economic malaise deepened and cost many Americans jobs in 2009, shoppers put the brakes on the rampant (and especially luxury) spending that had marked the run-up to the recession. In other words, what was good for Wal-Mart was bad for Saks Fifth Avenue, said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York retail and investment banking firm.
Energy Alternatives
Christopher Ellis
Taiwanese Solar Cell Maker to Buy GE Energy Plant
Motech Industries Inc., the Taiwan-based solar cell manufacturer that is 20 percent owned by chip foundry TSMC, has signed an agreement to acquire GE Energy's Delaware solar module assembly operation, the company announced. Financial terms of the deal were not disclosed. The plant, located in Newark, DE, assembles crystalline silicon based photovoltaic modules and currently employs 75 people, according to Motech, the largest solar cell manufacturer in Taiwan. With the purchase, Motech gains the right to use GE Energy's module trademark for two years, Motech said. As a condition of the purchase agreement, Motech will be required to maintain GE's standards for solar module manufacturing at the site.
OLED-Based 'Light-Emitting Wallpaper' Gets Grant Boost
A company developing ultra-efficient organic LED (OLED) lighting technology has been awarded a £454 000 (about $740 000) grant by the Carbon Trust, an independent company set up in 2001 by the UK Government in response to the threat of climate change, to accelerate the move to a low carbon economy by working with organizations to reduce carbon emissions and develop commercial low carbon technologies. The OLED materials, being pioneered by LOMOX Ltd (Wilmslow, UK) , have a variety of potential applications and when coated onto a film could be used to cover walls creating a light-emitting wallpaper which replaces the need for traditional light bulbs. As well as being flexible, OLED film will require a very low operating voltage (between 3 to 5 volts) so it can be powered by solar panels and batteries making it ideal for applications where mains power is not available such as roadside traffic warning signs. The LOMOX OLED technology promises to be 2.5 times more efficient than standard energy saving bulbs. It has been estimated that, by replacing current lighting technologies, it could reduce annual global CO2 emissions by over 2,500,000 tonnes in ten years and nearly 7,400,000 over the next 40 years, roughly equivalent to a quarter of the annual carbon emissions of Wales (or the annual emissions of Birmingham).
Footwear
Michael O'Hara
Zappos Retails Its Culture
Visitors touring Zappos.com's suburban Las Vegas headquarters can see Chief Executive Anthony C. "Tony" Hsieh waving from his cubicle or get their photos taken in goofy, mullet-shaped wigs. On the tour, which the online shoe retailer offers 16 times a week, staffers blow horns and ring cowbells to greet the guests, who move among the aisles in groups of 20, trying to get a handle on the company's unique culture. "The original idea was to add a little fun," Hsieh explains. Then it all escalated "as the next aisle said, 'We can do it better.' " Zappos already knows how to sell shoes. Now it's hoping to profit from people's fascination with its friendly, antics-filled business model. Last summer, the company began holding two-day, $4,000 seminars on how to recreate the essence of its corporate culture.
Paris Hilton and Her Shoe Company Sued in Seattle
Paris Hilton and her shoe company, Antebi Footwear Group, have been sued in federal court in Seattle by a New York shoe company, alleging patent infringement. Brooke Hollow Inc., which does business as Gwyneth Shoes, is suing the celebrity actress and Antebi in U.S. District Court in Western Washington, alleging that a Gwyneth Shoe design patent has been infringed. The suit involves a Gwyneth Shoe patent called "Shoe Sock Having a Heart Shaped Pad." Gwyneth contends in the suit that the Paris Hilton Footwear Line Collection, which features a shoe with a similar pad, copies that design. The suit alleges that Hilton herself chose the styling and design for her shoe collection. The suit quotes a Hilton blog post, "Each shoe has a heart shaped comfort pad sewn into the inner sole, so you can dance all night long! ... They are super cute!" Why is a Brooklyn shoe company suing Hilton, one of Hollywood's most famous people, in Seattle? According to the complaint the Seattle court "has jurisdiction...because the defendants conduct commerce within the judicial boundaries of this court at...national department stores with branches located in Washington, including Macy's located at 800 Stewart St., Seattle." The complaint adds that "venue is proper...because Antebi Footwear Group is a corporation, and Paris Hilton is a person, subject to personal jurisdiction in this district."
Gifts/Accessories/Luggage/Pets/Accessories
Mark Boucher
eBooks Outsell Print Books and Free eBooks are Biggest Bestsellers
eBooks, some of them free eBooks, outsold print books this Christmas. On December 26, Amazon announced that, for the first time ever, they had sold more eBooks than physical books on Christmas day. In an interview Jeff Bezos was also quoted as saying that he believes that the print book will eventually disappear. And how much money is Amazon making? How much money are authors and publishers making? When GalleyCat examined the Kindle Store bestsellers, they found that 64 of the 100 bestselling eBooks, the majority, were, in fact, free, including the number one bestseller, "Midnight in Madrid", by Noel Hynd.
Will eBooks Kindle a Fire in 2010?
Since I'm still coping with what 2009 dumped on us, I don't have any predictions about what 2010 will bring—except for one thing: I predict 2010 will be the Year of the eBook. I've had an Amazon Kindle for two years now, but only recently have more and more people been asking me about it. The buzz, I suppose, is from all the new devices becoming available. Amazon has retooled my Kindle into the pencil-thin Kindle 2; Sony has introduced its Sony Reader Touch Edition; Barnes & Noble has its brand-new Nook; and Apple is supposedly coming out with an e-book reader of its own, even though Steve Jobs has famously claimed these machines are obsolete because nobody reads anymore.
Book Store Challenges Internet Titans
A shop on Main Street is trying a new way to attract business through the World Wide Web. Don Krohn and Janis Brennan of Main Street Books offer a 10 percent discount from the list price on almost everything to their online shoppers. Then they donate 10 percent of the online purchase price to several good causes, such as Doctors Without Borders, the Dana-Farber Cancer Institute, the Association for the Preservation of Cape Cod and other high-rated charities. "Our independent bookstore offers socially aware Internet shopping and a good deal for you!" reads the Web site, live since late November. The hope is that the charitable giving will draw traffic at a time when "a lot of people are torn between shopping locally and saving money," Krohn said.
The Next 'Killer App'? Pet Electronics
Bipeds, particularly among the marketing breeds, have for too long overlooked the nascent "pet electronics" market. At long last, this space is receiving its due with the staging of the first annual Pet Consumer Electronics Show planned for early next year in scenic and pet-friendly Fire Hydrant, WI. Booths and displays at Pet CES have been sold out for months. Amidst the throng of exhibitors expected at Pet CES is Uncle Milton Industries Inc., makers of the revolutionary "Pet's Eye View Camera, the Clip-On Digital Camera." For you camera geeks out there, this little baby comes with a 100 mAh rechargeable lithium ion battery, a USB connection, a screen, a collar clip and, of course, a slobber-resistant lens. The Pet's Eye Camera also comes with 8 megabytes of SDRAM to store 40 640-by-480 pixel JPEG masterpieces.
Grocery/Healthy Foods/Snacks/Confectionery
Mark Boucher
Tree of Life Sold to Kehe
Tree of Life's Netherlands-based parent company, Royal Wessanen nv, has agreed to sell the company's natural and specialty food distribution businesses in North America, including Tree of Life U.S. and Tree of Life Canada, to Romeoville, IL-based Kehe Food Distributors, Inc. The deal is expected to close early next year. Wessanen revealed earlier this year that it was considering the divestment of its North American businesses to realign its business portfolio and concentrate future business development on its core European companies. Wessanen acquired Tree of Life in December 1985 as its entry into the burgeoning U.S. natural and organic food market, providing the financial backing that eventually enabled Tree of Life to become the first nationwide distributor of natural and organic products to natural food stores and supermarkets.
Aging Puts a Wrinkle in the U.S. Marketplace
It all begins with aging. U.S. fertility rates have fallen by 44 percent since the peaks of the baby boom and are projected to continue to fall by another 12 percent over the next several decades. Falling fertility, combined with rising life expectancy and the large baby boom generation just nearing retirement age, equates to an aging population. By 2037, nearly one in three households in the U.S. will be headed by someone over the age of 65. Aging, however, is only the most obvious impact. There are five other key trends fostered by aging that will completely alter the marketplace for consumer products.
DC Grocers Prepare for Bag Tax
The largest supermarket retailers in the nation's capital are preparing to give away free reusable bags during the coming week as a new 5-cent tax on both paper and plastic grocery bags takes effect Jan. 1. Landover, MD-based Giant Food, a division of Ahold USA, will provide every shopper with as many free reusable bags as it takes to pack their order from Jan. 1 to Jan. 7. The chain estimates it will give away 250,000 bags in that time period. The bags, a solid green color with the Giant logo, normally sell for 99 cents each. In addition, Giant will continue to offer a 5-cent discount per bag to customers who bring in their own grocery bags. California-based retailers Safeway and Trader Joe's, both of which operate stores in the D.C. area, also are planning to give reusable bags away with purchases, local reports said. Safeway also was distributing bags through local charities, according to the reports. Harris Teeter, based in Matthews, N.C., will give away free reusable bags to customers who have a VIC loyalty card and spend at least $20 in the store. The Anacostia River Cleanup and Protection Act allows retailers to keep 2 cents of the 5-cent tax if they also offer a 5-cent discount to customers who bring their own bags. Otherwise, they retain only 1 cent of the tax.
Home Improvement/Auto Repair
William Busko
The Good News: Output Ends 21-Mo. Skid
Turns out there's a bit of light at the end of this year's very dark tunnel. North American production in November rose 7 percent from a year earlier to 911,157 light vehicles, the first monthly improvement in 21 months. And December output is expected to beat December 2008 as demand slowly inches higher from a multidecade nadir. But considering how ghastly the first half of 2009 was, almost any production improvement will look great on a year-over-year basis for the next several months. North American production cratered in the first half of the year to below 3.5 million units—less than half the production in the first six months of 2008. And 2008's first half was pretty lousy itself, down 12 percent from the same 2007 period. With production improving in 2010, manufacturing employment at North American automakers and their suppliers will rise.
Global Auto Sales Set for Gains in 2010
Auto sales will gain momentum worldwide in 2010 on the back of better access to credit and a return to 3 percent growth in the global economy, setting the stage for record volumes in 2011, according to the latest industry forecast from Scotia Economics. China, which became the world's largest auto market in 2009, will lead the way, along with India and Brazil, but the U.S. market will also see a double-digit advance.
Housewares/Furniture
William Busko
Jennifer Convertibles Reports for Fourth Quarter and Fiscal Year End
Jennifer Convertibles, Inc. announced its financial results for the fourth quarter and fiscal year ended August 29, 2009. For the fourth quarter, revenue from continuing operations decreased by 25.6% to $22.8 million from the $30.7 million reported for the same period last year. For the fiscal year 2009, revenue from continuing operations decreased 21.6% to $94.2 million from the $120.1 million reported in the same period last year. For the twelve-month period operating margins from continuing operations decreased to 28.9% compared to 29.4% for the same period last year.
U.S. Furniture Factories Hit Milestone
U.S. residential furniture factories hit a milestone in October, with orders flat compared with the same month a year ago, according to Smith Leonard, an accounting and consulting firm in High Point that covers the industry. It was the first month since October 2007 that there was no year-to-year decline, according to the monthly report. The other good news was that 41 percent of the participants in the company's survey reported gains in orders, compared with 33 percent in September. Factory shipments in October, however, were down 10 percent from the comparable month a year earlier. For the year to date, orders were running 16 percent behind the 2008 pace and shipments were down 18 percent.
IP Holding Companies & Multi-brand Companies
Douglas Stebbins
jWIN Licenses Polaroid Name, Prepares to Market
So you've got a company without an all-that-recognizable name, and you really want to ramp it up. What do you do? Well, if you're jWIN you buy some street cred by striking up a deal with Polaroid, making your products have a connection with a legacy of creativity and innovation that you had nothing to do with. jWIN, producer of inexpensive electronics, just announced that they have entered into a licensing agreement with Polaroid, the film and camera titan that's fallen onto tough times lately. Obviously, this all comes down to what's in a name, and jWIN is hoping to leverage the Polaroid brand into the new digital world that Polaroid couldn't find their own way in.
Tiger Woods Brand Rehab: The Innovators
Woods' situation demonstrates how damaging ethical lapses can be when an individual is his own brand. Woods remains, as Nike called him, "one of the greatest athletes of his generation," and his alleged indiscretions had nothing to do with his golf game. If Woods' endorsement used to entice golfers to buy particular brands of sporting equipment in the hope of improving their games, his off-the-course escapades theoretically shouldn't make much difference. But to the extent that Woods' endorsement was valuable because he seemed like an especially likeable guy, the revelations of the past two weeks must have done his brand serious damage.
Jewelry/Mining
Mark Lenz
Diamond Prices Firming
Now that it has ended, it's safe to say 2009 was a year that at best can be described as turbulent. The year started off at an all-time low. There was a complete loss of confidence in everything. This took a toll on the price of diamonds, as nearly every item was being traded at 50 percent to 60 percent below the Rapaport list. However, at the close of the year, prices had not only recovered much of their lost ground but were continuing to firm.
Tourneau Names James Seuss CEO
Timepiece retailer Tourneau LLC has announced the appointment of James Seuss as chief executive officer. Seuss will join Tourneau on March 1, 2010, and will also serve on the company's board of directors. Most recently president and CEO of Cole Haan/vice president of Nike Inc., Seuss brings more than 25 years of global luxury retail experience to his new position.
Office/Crafts & Hobby/Flowers/Party
Mark Lenz
Bringing Bouquets and Gift Baskets Together
The name 1-800-Flowers.com is already something of an anachronism: not since the early part of this decade has the company's signature phone number played more than a supporting role, last year accounting for less than 20 percent of orders. The rest of the name could soon be a misnomer as well. Earlier this month the company began showing its first TV commercial urging customers to send a holiday-themed gift basket, with nary a mention of flowers to be heard. It's a small difference that signals a big shift at the company: away from its namesake flower market, which relies on just a handful of holidays for most of its business (Mother's Day and Valentine's Day, specifically) and largely excludes half the population (namely, men). Instead, the company is aiming at the $16 billion gift basket industry, which is proving a consistent, year-round performer even in tough times.
Las Vegas: Party Supply & Liquor Stores Report Drop in Sales This New Year's Eve
A majority of people who voted in a Las Vegas poll say they're staying home for New Year's. But that doesn't mean they are spending a lot of money to throw a party. Retailers say they are seeing a drop in sales this year. Many party goers are on a budget. Liquor stores reported their sales were down as well.
Restaurants/Food Service
Mark Boucher
New York's Tavern on the Green Closing Up
Tavern on the Green, once America's highest-grossing restaurant, is singing its culinary swan song. The former sheepfold at the edge of Central Park, now ringed by twinkling lights and fake topiary animals, is preparing for New Year's Eve, when it will serve its last meal. Just three years ago, it was plating more than 700,000 meals annually, bringing in more than $38 million. But that astronomical sum wasn't enough to keep the landmark restaurant out of bankruptcy court. Its $8 million debt is to be covered at an auction of Baccarat and Waterford chandeliers, Tiffany stained glass, a mural depicting Central Park and other over-the-top decor that has bewitched visitors for decades. Even the restaurant's name is up for grabs. At stake is whether another restaurateur taking over the 27,000 square feet of space, owned by the city, can reopen as Tavern on the Green. Next month, a Manhattan federal judge will either side with the city and rule that the moneymaking name Tavern on the Green, valued at about $19 million, belongs to whomever operates the space or say the LeRoys own it.
OSI Restaurants Settles Suit for $19M
Outback Steakhouse parent company OSI Restaurant Partners LLC has agreed to pay $19 million to settle a class-action lawsuit filed by women claiming that corporate promotions were tainted by sex discrimination. The Tampa-based restaurant operator said this week that the consent decree with the U.S. Equal Employment Opportunity Commission "includes no finding of fault on the part of Outback." The lawsuit was originally filed in September 2006 on behalf of two Colorado women, Rosalind Martinez and Mindy Byers. The suit alleged they were not promoted beyond low-level restaurant management jobs while less qualified men were made "managing partners," who could share in restaurant profits. Female employees "hit a glass ceiling at Outback and could not get promoted to the higher-level profit-sharing management positions in the restaurants," the EEOC lawsuit alleged. The settlement could include numerous female employees at various locations throughout the United States. The Outback Steakhouse chain totals about 971 restaurants, of which 792 are based in the United States. OSI also operates and franchises the Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse & Wine Bar and Roy's Hawaiian Fusion Cuisine brands.
The Biggest Product Launches of 2009
While restaurants already are rushing to debut new products, menus and campaigns for 2010, a look back at 2009 shows that the biggest product launches came from restaurant brands looking outside of what they are most known for. McDonald's focused on premium coffee, while Starbucks Coffee zeroed in on food and debuted a lower-cost instant coffee product. Smoothie chain Jamba Juice introduced steel-cut oatmeal and pizza-like flatbreads, while Domino's Pizza rolled out a line of bread bowl pastas. Wendy's, the nation's No. 3 burger brand, introduced a line of boneless chicken wings, and KFC asked customers to "unthink" its fried heritage with the long-awaited debut of Kentucky Grilled Chicken. Other restaurant concepts, facing negative sales trends, re-evaluated their menus top to bottom. Ruby Tuesday positioned itself as an upscale yet affordable destination with more premium items, such as lobster, and value-focused offerings like a $5 cocktail program. Macaroni Grill, meanwhile, underwent a menu makeover led by its new chief executive Brad Blum that included new dishes emphasizing Italian-Mediterranean flavors, such as Lamb Spiedini, and re-engineered recipes with fewer calories. A seared scallops and spinach salad, for example, went from 1,270 calories to 420 calories. Value was another big theme in 2009, which saw several chains from Dairy Queen to Sonic Drive-In introducing national value menus in order to drive traffic from penny-pinching guests.
Those are the latest headlines. Thank you for reading.
Sincerely,
The Team at Consensus
73 Newbury Street | Boston, MA 02116 | P: 617.437.6500 | F: 617.437.6506
1325 Avenue of the Americas, 25th Floor | New York, NY 10019 | P: 212.651.2135 | F: 212.504.2772
All securities transacted through Consensus Securities LLC member FINRA/SIPC.