The Weekly Consensus: Week of January 9, 2012 Vol. 4, No. 2
Amazon Worrier
Betsy White
Back in 1993, before Eddie Lampert had publicly announced his interest in Sears and the internet had really caught on (but after Al Gore “invented” it), the management of Sears made a fateful decision to jettison the catalog business. Apparently the Company decided it would rather be a physical department store chain, which it further reinforced by its nearly simultaneous divestitures of its interests in Allstate Insurance, Dean Witter and Coldwell Banker.
In the mid-1990s, Sears owned about 700 of its 1,700 U.S. Sears store locations (versus owning about 600 of its locations today). Although it claimed to be an integrated brick-and-click retailer as early as 1999, it would be hard to find anyone that would mention Sears.com as a top go-to site for cyber shopping over the last 20+ years. Sears claimed it discontinued its catalog because it was not profitable, but it appears that its management failed to re-engage in any meaningful way the shoppers it immediately disenfranchised.
Of course, there were plenty of other, newer kids on the block around in the 1990s that were ready, willing and able to capture the wallets of the Sears catalog orphans. In 1994, a guy named Jeff Bezos started a company he called Amazon.com. Really only an online bookstore at its start, Amazon’s revenue over the last year, derived from selling nearly everything under the sun, reached $43.6 billion, now surpassing (by nearly $1.0 billion) the total sales of Sears Holdings, the parent company of both Sears’ and Kmart’s 4,000 stores.
Even more amazing than the relative sales volumes of Amazon and Sears Holdings is the fact that Amazon’s enterprise value is almost 11 times greater than that of Sears Holdings. Over the last five years Sears Holdings has chosen to repurchase $5.8 billion of its common stock, twice the $2.9 billion value of its capital expenditures over the same period. Sears Holdings’ comparable store sales have declined in each year over the same five year period and, based on the condition of the stores, it’s clear the bulk of the capital expenditures have not gone to maintaining them. In its SEC filings, Sears Holdings states that the majority of its recent capital expenditures have been on information technology, but it hardly seems to have gotten the bang for its buck that Amazon has, which spent $2.1 billion on capital projects during the same five year period.
Two weeks ago Sears Holdings announced it was closing of up to 120 stores -- approximately three percent of its store base -- a number that seems unlikely to move the company towards meaningfully higher profits. Even more recently it announced the hiring of a new chief merchant, Ron Boire, who is also to be the head of both the Sears and Kmart stores. The brick-and-mortar business clearly needs an overhaul, which is a job seemingly well suited to Mr. Boire’s background at Brookstone, Toys “R” Us, and Best Buy, but is that really where the company’s focus should be? With its rich direct-to-consumer heritage and a tech-pedigreed CEO in Lou D’Ambrosio, Mr. Lambert and the Company’s board should be grooming Sears to be the next generation’s Amazon.com, where America (and the world) will once again shop.
Apparel/Swimwear/Intimates
American Apparel Revenue Figure Up in December
Clothing maker American Apparel Inc. says that revenue in stores open at least one year rose 12 percent in December. The Los Angeles company, which has struggled with losses and staying afloat financially, has closed stores in the past year in an effort to improve results. Wholesale net sales rose 25 percent during the month and total revenue rose 15 percent to $56.3 million. Revenue gains were "notably large" in the U.S., Asia and Australia, CEO Dov Charney said in a statement.
Liz Claiborne Inc. will change its name to Fifth & Pacific Cos. as it moves past its iconic brand and focuses on Juicy Couture, kate spade and Lucky Brand. The company agreed in October to sell its namesake, Monet and Kensie fashion brands for $328 million, allowing the cash-strapped apparel maker to reduce its debt. The Liz Claiborne and Monet brands are being sold to department store operator J.C. Penney Co., while the Kensie brand is going to affiliates of the financial-services and brand-management company Bluestar Alliance. Liz also sold its Dana Buchman brand to Kohl's Corp. The company, founded by Liz Claiborne in 1976, expects the name change and new stock symbol, "FNP," to become effective on or about May 15.
Patagonia Registers as First California Benefit Corporation
Patagonia became the first company in California to elect benefit corporation status. Patagonia founder Yvon Chouinard led the largest group of businesses to register on the legislation's first effective date among the 7 states that have passed benefit corporation laws. "Patagonia is trying to build a company that could last 100 years," said Patagonia founder Yvon Chouinard. "Benefit corporation legislation creates the legal framework to enable mission-driven companies like Patagonia to stay mission-driven through succession, capital raises, and even changes in ownership, by institutionalizing the values, culture, processes, and high standards put in place by founding entrepreneurs."
Holden announced that the “Stussy by Holden” collection, an active lifestyle streetwear line hitting stores Fall 2012. The “Stussy by Holden” collection includes two military-inspired jackets, a packable vest, a CPO field shirt, and a field pant—all constructed with eco-friendlier fabrics and updated with tailored fits and technical performance. The collection retains the classic Holden style—understated elegance with a clean, bold design and subtle-yet-unique details—all while offering timeless quality.
Athletic & Sporting Goods
lululemon athletica Founder Chip Wilson to Step Down
lululemon athletica inc. announced that Chip Wilson, founder, Chairman of the Board and Chief Innovation and Branding Officer of lululemon athletica plans to resign his executive position of Chief Innovation and Branding Officer effective January 29, 2012. Mr. Wilson will continue to serve as Chairman of the Board of Directors of lululemon. "I remain deeply committed to the Company’s continued success and given the strength we’ve built into the organization over the past three years, I feel comfortable leaving the company with Christine Day at the helm of a world class management team whom I fully believe will continue to elevate our world. I look forward to continuing to contribute in my role as Chairman of the Board," said Mr. Wilson.
Schutt Announces New Technologically-Advanced Football Helmet
Schutt Sports announced it will debut the new Vengeance helmet, which includes four new impact-absorbing features, for the first time at the American Football Association Conference on Sunday, Jan. 8. The Vengeance will also be the first football helmet released with Schutt’s patented back-shelf design – a shelf built into the back of the helmet intended to increase the strength and protective properties of the helmet.
Quiksilver CFO Joe Scirocco to Resign
Quiksilver Inc. announced that Joe Scirocco, the company's corporate chief financial officer, has decided to leave the company to pursue other interests. Scirocco, who has served as CFO of Quiksilver, Inc. since April 2007, plans to continue in his current role for a period of time while the company performs a search for his replacement and to enable a smooth transition.
Rossignol Announces Snowboard Division Manager
Beginning January 9 in Park City, Utah, the newly recruited Tom Lebsack will continue his journey in the industry as Rossignol’s Snowboard Division Manager for the US market. Lebsack previously represented Rossignol Snowboards as a sales and service agent with Blue Dot Distribution in the Northwest region. More recently, Lebsack worked with Red Bull to develop, implement, and manage Red Bull Event Programs as Logistic Manager for a 13-state region.
Black Diamond Equipment Hires Walter Wilhelm as VP
Walter Wilhelm, president of Walter Wilhelm Associates—a consulting firm for top apparel, footwear, and softgoods companies worldwide—has been hired on at Salt Lake City’s Black Diamond Equipment as the new VP of Business Process. Wilhelm will be working at the corporate level, assisting with onboard acquisitions, business development, and helping drive efficiency and continued growth with the company’s brands.
Catalog & Internet
Yahoo Hires Scott Thompson Chief Four Months after Firing Bartz
Yahoo! Inc. hired Scott Thompson as chief executive officer, asking the former president of EBay Inc.’s PayPal unit to complete a strategic review and reverse a growth slump that led to the September ouster of Carol Bartz. Thompson takes the helm Jan. 9, Sunnyvale, California-based Yahoo, the largest U.S. Web portal, said today in a statement. The new CEO will need to assess options that include divesting Asian assets and selling a stake in itself to private equity firms. Yahoo Chairman Roy Bostock said on a conference call that he has no plans to take Yahoo private. Thompson said his priorities are boosting revenue and putting the company at the forefront of innovation. John Donahoe will serve as PayPal’s interim chief, working closely with the PayPal leadership team, said John Pluhowski, an EBay spokesman.
Strong Holiday Propels eBags to Record Annual Sales
Online retailer eBags.com announced record holiday sales, increasing 32% over last year. On Cyber Monday, the company recorded its largest sales day ever, increasing 46% over the previous record day (Cyber Monday last year). For the calendar year, eBags sales grew 26% for another company all-time high. Mobile shoppers were one reason for eBags' record holiday sales. Sales from mobile devices grew 187% this holiday season and accounted for 9.0% of eBags.com total sales (up from 3.9% last holiday). Of the visits to eBags.com this holiday season, 13.4% came from mobile devices versus 5.8% during the same period in 2010. eBags.com is the world's leading online retailer of luggage, handbags, business cases, backpacks and accessories.
Consumer Electronics/Video/Audio
Will HDTV Manufacturers March to Irrelevance?
Next week’s Consumer Electronics Show should bring out the latest HDTV sets from all the big names including Samsung, Sony, LG, Panasonic, Sharp, Toshiba and more. We expect to see more connected TVs with more iPads and other tablets controlling them. A challenge they will all be facing is how to make their TVs stand out from the pack. With little differentiation between one high-refresh-rate, LED backlit, big-screen HDTV set and another, TV manufacturers are going to have to differentiate in order to make their TVs more appealing than others. One differentiation we may see is added TV “smarts,” either built into the TV itself or provided in a companion device like a tablet. TVs with more smarts will help but, with rumors of an Apple TV coming in 2012, we wonder if any of the major TV brands will be able to compete with Apple in the battle for the living room.
AT&T to Pay $215M to TiVo to Settle Patent Suit
AT&T Inc. will pay TiVo Inc. at least $215 million through June 2018, becoming the latest TV signal provider to settle a patent lawsuit involving the digital video recorder pioneer. AT&T could pay up to $300 million if subscriptions to its U-verse television package rise in line with AT&T forecasts, said TiVo spokesman Steve Wymer. The settlement follows one that TiVo reached in May with satellite TV signal provider Dish Network Corp. and its set-top box provider, EchoStar Corp., for $500 million.
They have been locked in combat over mobile devices - and now Google and Apple are set to do battle in a technology war over 'smart' TVs. LG Electronics will next week unveil its first internet-connected TV to run on the Android interface this month. Samsung is making its first set using Google software later this year, while Sony and Vizio have produced Android models already.
Cosmetics & Pharmacy
Ulta Sees Solid Double-Digit Sales Gains During Holiday Season
Beauty retailer Ulta Beauty posted a same-store sales increase of 12.6% during the seven-week holiday period. Total net sales for the seven-week holiday period, from Nov. 13 to Dec. 31, were $386 million, a 24.4% increase from the prior-year holiday period of $310.4 million. Comparable store-sales for the 2011 holiday period increased 12.6%, compared with a 9.5% increase during the same period in the prior year. Over a two-year period, comparable store sales increased 22.1%.
A Holiday to Remember for Prestige Retailers
This is one holiday season that department store beauty retailers will want to remember. After languishing for much of this decade, the fragrance business came roaring back, driven by a balance of new and old, designer and celebrity scents. Skin care, particularly the high-priced high-tech variety, and makeup came driving though. Gift sets sold out and the tried-and-true blockbusters — a perennial question mark — sold as well. As one major vendor said, “It’s a beauty year.” One strong indicator of market health — or lack of it — in the prestige arena is Macy’s Inc., which is estimated by industry sources to do about 40 percent of the upscale business in the U.S. And Macy’s was all smiles this week.
Critical Mass: Value Drives Holiday Beauty Sales
Once again, value was the driving factor for holiday beauty sales in mass stores, as shoppers started to open wallets after several tightfisted years, but only for items they deemed worthy. That said, it was still a healthier holiday for discount stores and drugstores than the last two, with estimates pegging beauty sales increases at 4 percent over last year. But experts think there are beauty sales being left at the cash register. “Is beauty playing a lesser role in holiday than it used to?” questioned Candace Corlett, president of WSL Strategic Retail. “I don’t recall seeing as many beauty circulars. There were fewer spritzers in stores. Beauty is a fun category that makes women smile, and it seems a lost opportunity for holiday sales.”
PZ Cussons Acquires Fudge Hair Care
The Imperial Leather soap owner PZ Cussons has ramped up the expansion of its beauty division by splashing out £25.5m on the Australian-owned Fudge Hair Care brand. Fudge, which is being sold by the privately held Sabre Group, is best-known for its Hair Shaper and Matte Hed products, sold chiefly through salons in the UK, Australia and New Zealand. PZ Cussons launched its beauty division, which includes the brands St Tropez, Sanctuary and Charles Worthington, a year ago.
Department & Discount Stores
Discount Retailer Dollar General Taking Away Market Share from Wal-Mart
Dollar General, one of the most successful buyout deals completed by a hedge fund in the retail industry, isn’t just for bargain-seekers anymore. The leading U.S. discount retailer, which owns and operates 9,813 stores in 38 states –more stores than any other American discount retailer has — is on its way to becoming a one-stop shopping destination for everyday necessities. Can’t-do-without stuff like food, health and beauty products, paper and cleaning products, as well as pet supplies and apparel are the big mainstay items at Dollar General stores. It isn’t Wal-Mart, it’s true, but it aims to be a much better discount chain than the world’s largest retailer. It might be hard to believe, but Dollar General has been doing the near-impossible thing: It has been taking market share from the world’s No. 1 discount retailer Wal-Mart, according to some analysts.
Merger with Pamida to Let Shopko Expand to Smaller Towns
The Shopko brand is expanding to smaller communities. Green Bay-based Shopko Stores and Pamida announced they will merge and spend $80 million to convert existing Pamida stores to Shopko Hometown stores, which are smaller retail outlets typically found in communities of less than 10,000 people. The company also said it plans to add five to seven Hometown stores in 2013 and up to 30 a year beginning in 2014. None of the new stores would be larger-format stores like the Shopko stores found in the Madison area. Instead, they would range from 15,000 to 30,000 square feet and be located in more rural communities that are not typically served by other big-box retailers such as Walmart and Target.
Sears Names Brookstone’s Boire Chief Merchandising Officer
Sears Holdings Corp. named former Brookstone Inc. executive Ron Boire chief merchandising officer to revamp its retail experience as the largest U.S. department store chain works to revive sales. Boire, 50, will lead merchandising for Sears and Kmart, the Hoffman Estates, Illinois-based company said. He was previously president and CEO of Brookstone, an electronics chain, and also spent 17 years at Sony Electronics Inc. in various roles. Boire joins the retailer as Chairman Edward Lampert, who along with his hedge funds owns 60 percent of Sears, attempts to reverse four years of declining sales. Sears tumbled 27 percent on Dec. 27 after announcing plans to close as many as 120 stores. Same-store sales fell 5.2 percent in the eight weeks ended Dec. 25, the company said last month.
Stores Pay Price for Holiday Deals as Forecasts Slip
Retailers are starting to pay the price for a discounting binge that was deeper and longer than ever -- especially stores that cater to middle-income shoppers. Look no farther than American Eagle Outfitters Inc. The clothier’s promotions helped boost sales in the past two months by 15 percent to $887 million. The teen retailer was forced to reduce its fourth-quarter profit forecast. Ditto for Target Corp., J.C. Penney Co. and Kohl’s Corp., which lowered their own fourth-quarter profit forecasts after pouring on the discounts. “The retailers that cater to the middle class are struggling,” Alison Paul, retail sector leader at Deloitte Touche LLP in Chicago, said in an interview. “Some of them showed great volume numbers, but the proof is in the profit.”
Family Dollar Expects Growth in Tough Economy
Family Dollar executives told analysts that the discount chain will continue to grow, as customers remain pressured and the economy is still anemic. "Our core customer is still very stressed, elevated unemployment," CEO Howard Levine said. The Matthews-based chain of 7,100 discount stores reported that sales in the first fiscal quarter rose 7.6 percent, to $2.1 billion, and profits rose 8.1 percent, to $80.4 million. Both store traffic and the amount of customers' purchases increased. The company's first fiscal quarter ended in November. Family Dollar opened its first four stores in California last year. Executives said they are doing well, with an assortment of goods geared towards Hispanic consumers. The chain plans to open between 450 and 500 total new stores this year.
Footwear
Bakers Sells Wild Pair to Steve Madden
Speciality retailer Bakers Footwear Group has sold its Wild Pair brand to footwear business Steve Madden for up to US$4m. The deal includes an agreement for Steve Madden to license the brand to Bakers on a non-exclusive, non-transferable and royalty-free basis in perpetuity, allowing the retailer to continue to offer Wild Pair products in its stores. Bakers said it expected the net proceeds from the transaction to be about $3.3-3.9m. The acquisition comes nearly 18 months after Steve Madden made a $5m equity investment in Bakers, in return for a near-20% stake in the business.
The Walking Company Holdings, Inc. Announces Annual Sales
The Walking Company Holdings, Inc. announced that its net sales for the year ended December 31, 2011 were approximately $201.5 million, a 7% increase as compared to 2010, and that the Company had a net profit for the year. The Company further announced the following transactions that closed in December: (i) An expansion and extension of its existing line of credit with Wells Fargo Bank, increasing total availability to $40 million through 2016. (ii) A voluntary partial redemption of its 8.375% Convertible Notes due 2015. The Company distributed $6.0 million to such noteholders to reduce the outstanding principal amount of the Notes by approximately $6.3 million (a discount of approximately 5%). There now remains outstanding approximately $13.1 million in principal amount of such Notes. (iii) Distribution of a cash dividend of $0.20 per share on its common stock, totaling approximately $2.1 million.
Shoe Carnival Cuts Q4 EPS on Weak Boot Sales
Shoe Carnival said poor boot sales, largely due to warm weather so far this winter season, led to a fourth-quarter EPS shortfall. The family shoe chain expects EPS in the fourth quarter to be in the range of 20 cents to 23 cents a share, down from an earlier projection of 33 cents to 36 cents. Comparable store sales are expected to decline in the range of 3.0 to 3.5 percent. Shoe Carnival had expected fiscal 2011 EPS between $2.05 and $2.08 with sales ranging from $767 to $770 million and comps up in the range of 1.2 to 1.7 percent.
Asics Campaign Praises the Regular Athlete
Asics has signed up non-professional athletes to appear in its global TV campaign. The effort focuses on the work and dedication needed to become a top athlete. The 'Made of Sport' campaign by 180 Amsterdam shows the challenges and demands facing elite and amateur athletes in a range of sports.
Dr. Martin Luther King, Jr. Gets His Own Supra Vaider Sneaker
It looks like Just Blaze isn’t the only one getting his own Supra sneaker this month! January 15 marks what would have been the birthday of the late Dr. Martin Luther King, Jr. And on Monday, January 16, we’ll all celebrate Martin Luther King, Jr. Day here in America. So in honor of both of those occasions, Supra has created a very special Supra Vaider to honor Dr. King.
Gifts/Accessories/Luggage/Pets
Petsmart Names Moran Chairman, Lenhardt President
Petsmart Inc. of Phoenix appointed president and CEO Robert Moran, 61, as chairman of the board, replacing Phil Francis, effective Jan. 30, 2012. Moran, who served as president and CEO since 2009 and president and COO from 2001 to 2009, will retain the CEO title. Francis will remain a director, as he has been since the late 1980s. He was appointed president and CEO in 1998 and became chairman the following year.
Nestlé’s Purina, Jenny Craig Units Launch Joint Weight Loss Program
Nestlé launched a program through its Nestlé Purina and Jenny Craig divisions aimed at helping owners and their pets with their New Year’s weight-loss resolutions in 2012. Through the program, veterinarians can obtain clinic materials on the Nestlé Purina Project: Slim Down website to promote pet weight loss, as well as special offers for owners who want to lose weight along with their pets. Jenny Craig Centres will also promote the Project: Pet Slim Down program and provide special offers for clients with pets.
New All-Natural Dog Food Company Ships Pet Food Nationwide in US
A new pet food company, DooD, recently entered into the pet industry with its all-natural dog food shipped right to the pet owner's home. According to DooD, the food contains high-quality ingredients, including 85% lean ground turkey, 85% lean ground beef, all-natural chicken, whole grain brown rice and vegetables. The pet food company creates a custom diet for the dog, calculating its daily caloric intake by taking into consideration weight, breed and age.
FundHub, a sales agency focused on the fundraising channel, added stationery and accessories manufacturer Wellspring to its vendor lineup. FundHub will represent only 12 lines in total; Mud Pie, Bridgewater Candle, Greenleaf Gift and Boston International have already signed on.
Grocery/Healthy Foods/Snacks/Confectionery
Publix Will Exit E-Commerce for a Second Time
Grocery retailer Publix will stop accepting online orders for curbside pickup Jan. 27. The company says not enough customers consistently used the service and it did not meet financial expectations. This is the second time Publix has exited e-commerce. Publix shuttered its previous online grocery business, PublixDirect, in 2003 after two years in operation. That service provided online ordering and delivery to customers’ homes. The grocer’s current iteration, Publix Curbside, launched in 2010 and did not offer delivery. It was available at two stores in Atlanta and one in Tampa, FL. The service enabled customers who ordered groceries online to have their orders delivered to their cars at the participating stores four hours later. Publix charged a $7.99 fee for online orders.
Kraft Flavor Deal with SodaStream Sparks Rise
Kraft Foods Inc. triggered the biggest rally since October in SodaStream International Ltd. by announcing a partnership with the Israeli maker of homemade soda machines. “The partnership lends credence to the emerging at-home soda-making category and, as a result, could help drive further adoption of SodaStream’s system,” said Jon Andersen, a Chicago- based analyst at William Blair & Co., who has an outperform rating on the stock. Shares of the Airport City, Israel-based company climbed 21 percent this week, the biggest three-day rise since Oct. 6, after Kraft, the world’s second-largest food company, said Crystal Light drink mixes and Country Time lemonade would be used as carbonated flavors with SodaStream machines.
Sara Lee Sells Coffee Division, Buys Tea Brand
After selling its North American foodservice coffee business to The J.M. Smucker Co. on Jan. 3, Sara Lee Corp. acquired Tea Forte, an ultra premium tea brand. Founded in 2003 by former Museum of Modern Art designer Peter Hewitt, the Concord, Mass.-based specialty tea company has established a presence at specialty food retailers, upscale hotels and restaurants in 35 countries. The specialty teas are available in loose leaf and in the company's signature pyramid infuser. The deal strengthens Sara Lee’s presence in the ultra premium tea category. Terms of the acquisition were not disclosed. In 2011, the privately held premium tea company, which offers a line of teawares and brewing accessories, reported revenues of $12 million.
Giant Food Stores to Buy 16 Genuardi's Markets
In what amounts to its biggest expansion move ever in the Philadelphia market, Giant Food Stores announced it had acquired 16 Genuardi's supermarkets from Safeway Inc. for $106 million. The transfer of ownership to Giant of 16 of 27 Genuardi's stores in the region - coupled with the closing of three more stores and the hoped-for sale of the remaining eight - likely signals the end of the Genuardi's grocery name, which was among the region's most highly regarded before Safeway acquired the family-owned business in 2001. The move signals the dissolution of an ill-fated marriage begun about a decade ago, when Safeway, of California, bought out the Genuardi family for $530 million. A division of the Netherlands' Ahold U.S.A., Giant Carlisle has been elbowing its way into the Philadelphia market by trying to lure customers with low prices, clean stores, and a vast selection of merchandise. Its success is all the more remarkable given how that model has caused grief for peers Acme Markets, Pathmark, and Super Fresh even as the struggling economy has sent middle- and working-class shoppers in search of lower-cost grocers over the last three years.
Campbell President Exits for Sara Lee
Campbell's North America division president Sean Connolly will take the helm at Sara Lee's North American retail and foodservice business, the companies said. Sara Lee said Connolly will serve as CEO of MeatCo, effective Jan. 17, following Sara Lee's planned spinoff of its international coffee and tea business. During his tenure as president of Campbell North America, a position he held since 2010, Connolly was responsible for the company's largest division, the company said.
Home Improvement/Auto Repair
Sears Completes Spinoff of Orchard Supply Hardware
Sears Holdings Corp. has completed its spinoff of Orchard Supply Hardware Stores Corp. into a separate publicly traded company, the company said. Orchard, which started as a purchasing cooperative in San Jose, Calif. in 1931, runs 87 hardware stores in California. It started trading on the Nasdaq market under the ticker symbol "OSH."
Canada's Home Improvement Industry Showing Signs of Recovery
Canada's home construction industry has faced an alarming and steady decline since the start of the global economic recession late in 2008. In fact, numbers released just this past month by the Canada Mortgage and Housing Corporation pointed to a 13% stop in new home building across the country. There is one bright spot in the housing construction market, however: home renovations. It would appear that while many homeowners are reluctant or unable to sell their existing homes, much less build new ones - more and more are opting to make their current homes live up to their needs and expectations.
Housewares/Furniture
Helen of Troy Closes PUR Acquisition
Helen of Troy has completed its acquisition of the PUR water purification-products business from Procter & Gamble. The price for the purchase, which was announced in early December, was not disclosed. Gerald Rubin, Helen of Troy’s chairman, president and CEO, said the PUR line would be integrated into the company’s Healthcare/Home Environment segment—which also includes health-care devices such as thermometers, humidifiers and heating pads, and air purifiers, portable heaters, fans and bug zappers, sold under the Vicks, Braun, Honeywell, Stinger and SoftHeat brands.
Kaz Fuels Helen of Troy Third Quarter; Net Up 21.5 Percent
The acquisition of Kaz, the manufacturer of home-environment products, proved to be a boon for Helen of Troy’s top and bottom lines in the third quarter. Net income rose 21.5 percent to $32.9 million, while net sales jumped 65 percent to $338.8 million, and a Helen of Troy statement gave most of the credit to Kaz. Gerald Rubin, Helen of Troy’s chairman, president and CEO, said the company’s recent purchase from Procter & Gamble of the PUR home water filtration business, which will join Kaz in Helen of Troy’s Healthcare/Home Environment segment, shows that the company is marching ahead in its expansion of this segment.
Pier 1's December Sales Climb 11.3 Percent
Pier 1 Imports Inc. said that revenue at stores open at least a year climbed 11.3 percent in December, driven by a greater number of shoppers who spent more on each visit. The gain topped the 10.3 percent rise in the same month a year ago. Revenue at stores open at least a year is a key indicator of a retailer's health, because it excludes the impact of stores that were recently opened or closed. The high-end home decorating store said sales remained strong throughout the month, including the week after Christmas, in every region.
IP Holding Companies & Multi-brand Companies
How Retailers' Love Affair with Celebrities Will Blossom in 2012
Retailers’ relationships with celebrities have blossomed from fling into full-blown love affair in recent years, as major department stores and mass retailers have secured exclusive celebrity lines as a means of differentiating themselves from competitors and attracting consumers. Most recently the nuptials between Martha Stewart and JC Penney and Vera Wang and Men’s Wearhouse have spawned major headlines. In addition, the holiday buzz around Lady Gaga’s Workshop at Barney’s, the Kardashian Kollection at Sears, Jennifer Lopez’s and Marc Anthony’s lines at Kohl’s (now separate, given their personal separation) and the countless other celebrity collaborations, such as Kathy Ireland’s recently announced fur and accessories line for the Fur Vault and at Macy’s, and Gwen Stefani’s new Harajuku Mini Line at Target, provide proof that retailers’ affection for celebrities is not likely to dwindle any time soon. Looking ahead to 2012, retailers will continue to value celebrity appeal and trip over themselves to snare the next celebrity as a means to drive consumer traffic. But with so many A, B, C and even D-list personalities flocking to the potentially high rewards of a licensed product line, getting past the velvet rope and gaining entry into an oversaturated market has become increasingly difficult. That being said, if executed intelligently, a celebrity-branded line provides stars with additional revenue sources and added touch points to maintain relevance and authenticity among consumers. These celebrities are looking not only for another paycheck but also another way to extend their fame and further build their personal “brand.”
Google Grabs Patents, Targets Apple
The patent deal between Google Inc. and International Business Machines Corp. is a big deal. Google obtained around 200 patents from IBM that seem to have something to do with mobile-phone and Web technologies. This is going to be a good for Google and not so good for Apple Inc. or Microsoft Corp., both of which have been trying to gouge Google and its handset makers over various patent infringements triggered by the Android OS. A quick look at the description of the patents tells me that these are not just a bunch of defensive plays, but a few offensive ones that might allow Google to begin to sue Apple and Microsoft, since that seems to be the game everyone is playing.
Plum TV Inc., the owner of the Plum network of cable TV channels serving resort areas ranging from Vail to the Hamptons, has filed for Chapter 11 bankruptcy protection. The company, launched by Nantucket Nectars co-founder Tom Scott, filed in the United States Bankruptcy Court for the Southern District of New York. Plum also said it reached a deal to sell its assets to a group of investors led by Terry Mackin, president of Greenwich, Conn.-based ForesightLab and former president of Univision; and Bill Apfelbaum, chairman of New York City-based Media Ventures Group and former CEO of TDI. The company plans to submit the sale agreement to the court as a “stalking horse,” or initial bid, as part of a court-supervised asset auction.
Jewelry/Mining
Claire's Stores CEO Kahn Resigns
Accessories retailer Claire's Stores Inc. announced that Eugene Kahn has resigned as its chief executive officer, effective immediately. The company declined to give a reason for his departure. Mr. Kahn, 61, became CEO in 2007 when Claire's was sold to an affiliate of private-equity firm Apollo Management L.P. in a deal worth roughly $3.1 billion. Before he came to Hoffman Estates-based Claire's, he was chairman and CEO of May Department Store Co. in St. Louis, where he engineered the company's purchase of Marshall Field's in 2004. He left May in 2005.
Birks and Mayors Says Jean-Christophe Bedos to Take Over as CEO
Jewelry retailer Birks and Mayors Inc. said that Jean-Christophe Bedos will take over as president and chief executive later this year. Bedos will serve as chief operating officer until April 1 when he will take over the top job from Thomas Andruskevich, who announced last year that he would be leaving the company. Bedos joins Birks and Mayors from jeweler Boucheron International.
Tiffany Most Exposed to Luxury Slowdown Outside U.S.
With Europeans and Asians buying fewer $65,000 diamond necklaces and $10,000 amethyst earrings,Tiffany & Co. may be in for a less-than-glittering 2012. No U.S. luxury merchant is more exposed internationally. The world’s second largest jeweler generates almost half its sales outside of the Americas, up from 38 percent in 2006, according to data compiled by Bloomberg. Tiffany’s foreign sales are concentrated in Europe, which is facing a sovereign debt crisis, and Asia, where China’s growth is slowing. “It’s better to be a little more conservative for those other parts of the world,” said David Schick, an analyst with Stifel Nicolaus & Co. in Baltimore who recommends holding the shares. “You are seeing more volatility in the financial markets. It’s not confidence-inspiring for bigger-ticket spending. That tells you not to expect too much in the top line for Tiffany.”
Diamond Jewelry is Most Important Category for U.S. Retail Jewelry Sales
Diamond jewelry represents by far the most important product category for American retail jewelers, according to newly released data from the Census Bureau’s Economic Census. Further, over the past two decades, the sales mix of diamond jewelry has shown a steady increase. Diamond jewelry represents almost 43% of a typical specialty jeweler’s sales. If the category “other loose gemstones” – which is mostly diamonds – is included, diamonds and diamond jewelry generate nearly half of all specialty retail jewelers’ sales. This sales mix is in line with the Jewelers of America Cost of Doing Business Survey.
Stuller to Exclusively Distribute Kid’s Jewelry Line
In a case of catching them while they are young, Stuller, Inc has become the exclusive distributor of Bfly, a birthstone collection for babies and young girls. Bfly is the creator of the patented Butterfly Gem cut, which resembles a butterfly in flight when tilted back and forth. This cutting technique enhances the stone’s facets, with an approximate light return of 85 percent while its solid angles and grooves allow for easy setting without hiding the gemstone.
Office/Crafts & Hobby/Flowers/Party
Barnes & Noble Might Spin Off Nook Business
Barnes & Noble said that it was considering spinning off its Nook e-reader division in an effort to help the nascent - and expensive - digital business grow. Separating the unit could potentially bring new investors into the Nook business to help shoulder its costs but would raise questions about Barnes & Noble’s ultimate ability to compete for readers. While the company has made quick work of capturing almost 30 percent of the e-book market in two years, the rise of digital reading has increased the pressure on Barnes & Noble to devise a winning long-term strategy against Amazon, which still dominates in e-book sales. The Nook has been a crucial component of that strategy. And while it has sold well and drawn critical praise, Barnes & Noble has acknowledged that the Nook has not been profitable, leaving investors anxious about the future costs tied to it, with the need to develop new software and hardware and to advertise the products. By one analyst’s estimate, Barnes & Noble spends $200 million to $250 million annually on its Nook business.
Nebraska Book Co. Closing Seven Off-Campus Stores, Reviewing 40 Others
NBC Acquisition Corp. and its subsidiaries, including Nebraska Book Co., announced the company's plan to close seven "underperforming" off-campus bookstores outside Nebraska. In the midst of a negotiated Chapter 11 reorganization, the company said it filed a notice with the U.S. Bankruptcy Court for the District of Delaware. The stores will remain open for the back-to-school rush this month and will close in mid-to-late February 2012. The company also announced that it obtained an extension from approximately 40 additional off- campus stores to continue evaluation of performance and negotiation with landlords through April 30.
Restaurants/Food Service
Friendly Wins Approval of Sale, Sun Capital Retains Ownership
Friendly Ice Cream Corp., the 76-year-old restaurant chain, won court approval to sell the business, allowing it to be retained by its current owner, private-equity firm Sun Capital Partners Inc. U.S. Bankruptcy Judge Kevin Gross approved the sale at a hearing in Wilmington, Delaware, according to court documents. Friendly canceled its proposed Dec. 22 bankruptcy auction after it didn’t receive any qualified bids to compete with Sun Capital. Sun Capital, based in Boca Raton, Florida, will pay about $75 million and retain ownership through a unit while allowing the Friendly’s chain to shed debt. Friendly, which opened in 1935 with one shop in Springfield, Massachusetts, sought bankruptcy protection in October citing the struggling economy and rising commodity costs. Debt was listed at about $297 million and assets were valued at more than $100 million, according to court documents. The Wilbraham, Massachusetts-based company, known as “Friendly’s,” closed 63 sites as part of the bankruptcy filing. Another 424 locations will stay open.
Real Mex Set for Ch. 11 Auction
Real Mex Restaurants, parent of the El Torito, Acapulco and Chevys Fresh Mex restaurant chains, is scheduled to go up for auction later this month as part of an ongoing Chapter 11 reorganization. According to court filings last week, bids are due before Jan. 20, and an auction would be held on Jan. 26 with the court expected to make a ruling on the results by Jan. 30. Cypress, Calif.-based Real Mex filed for bankruptcy in October, saying the move would speed a turnaround. At the time, company officials said they were considering a sale of assets, as well as negotiating with existing bondholders and stakeholders about a possible purchase. Sun Capital Partners is the majority owner of Real Mex, and sources say the private equity firm may still be interested in the chain.
Arby’s Names George Condos COO
Arby’s Restaurant Group Inc. said Thursday it has named George Condos chief operating officer. Condos succeeds Diana Petrovich-Tao, who left the company. Condos has more than 30 years of experience in the restaurant industry, mostly with Dunkin’ Brands Inc., where served as senior vice president and brand officer of Dunkin’ Donuts and vice president of marketing, development and operations. He also served as chief executive of Friendly’s Ice Cream when that company was sold to Sun Capital Partners in 2007. Arby’s operates more than 3,600 quick-service sandwich restaurants systemwide. The brand was purchased by Roark Capital Group in July 2011 for $430 million.
Ruby Tuesday Slips to Loss, Cuts FY Outlook
Thursday reported a loss for the second quarter, with comparable-store sales worse than the targeted negative 3 percent. The casual dining restaurant company also cut its outlook for the full year, citing competitive promotional environment with heavy advertising levels. For the second quarter, Ruby Tuesday reported a net loss of $2.0 million or $0.03 per share, compared to net income of $4.6 million or $0.07 per share in the year-ago quarter. On average, 9 Street analysts expected a loss of $0.05 per share for the quarter. Analysts' estimates typically exclude special items. Same-restaurant sales decreased 4.2 percent at company-owned Ruby Tuesday restaurants. The company's guidance range had been negative 2.0 to negative 3.0 percent. At domestic franchise restaurants, same-restaurant sales decreased 6.0 percent during the second quarter. The company has retained a broker to assist in sale leaseback transactions designed to raise targeted gross proceeds of $50 million through the sale of approximately 25 locations. The company anticipates potentially closing on the sale of locations in the third and fourth quarter.
Banking & Lending
Consumer Confidence Perks Up, House Prices Sag
Improving labor market conditions lifted U.S. consumer confidence to an eight month high in December, but persistently weak house prices remain an obstacle to faster economic growth. The sharp rise in sentiment reported by the Conference Board offered hope for a pick-up in consumer spending after an anemic performance in November.PayPal Launches Pilot with Home Depot to Offer In-Store Payment Service
PayPal, the electronic-payments division of eBay Inc., said it is testing an in-store payment system with Home Depot Inc. that allows shoppers to purchase items without cash or a conventional credit card. The pilot program is being run in five Home Depot stores, a PayPal spokesman said. Shoppers at those hardware stores can pay for items via PayPal by typing in their phone number, as well as a personal-identification number, into a payment terminal. The phone number is connected to customers' PayPal accounts. Customers can also use a plastic card with a magnetic stripe that PayPal plans to issue. The card works like a conventional credit card or debit card and is tied to a PayPal account.
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