STORES Magazine - August 2008 - (Page 52)

NOT SO HOT PRO FIT RATIO G ROWT H Poor earnings will show up in both a decline in yearover-year performance comparisons and as a low profit-to-sales ratio. Sure enough, eight of the 10 retailers in this group also show up on the Not-So Hot-Earnings chart: Casual Male, Haverty Furniture, 99 Cents Only Stores, Syms, The Bon-Ton Stores, The Pantry, Genesco and Dillard’s. The exceptions are Fred’s, an operator of small format discount stores and O’Charley’s, operator of O’Charley’s, Ninety Nine and Stoney River Legendary Steaks restaurants. Fred’s is well aware of its profitability problems and is on the case, having embarked on an effort to improve profitability and margins, following an internal study of the previous 10 quarters. The initiative includes closing 75 underperforming locations, repositioning and reducing corporate overhead by 10 percent, generating $11 million in annualized cash savings in the second half of this year and initiating multiple merchandising programs to enhance margin and address the changing shift in sales mix. This latter includes placing more emphasis on pharmacy sales. By the end of 2010, says CEO Michael J. Hayes, “we expect to achieve a cumulative increase of approximately $100 million in free cash flow generated directly as a result of these new strategies … which, compared with the $27 million cost of the plan, reflects substantial return for the company and its stockholders.” O’Charley’s profits have suffered during what the company says is a turnaround initiative begun two years ago. Among other things, it has absorbed a $16.5 million writeoff involving impairment charges and losses involving a number of restaurant locations as well as a commissary and other supply chain facilities. These charges came at the same time sales were suffering as a result of con- sumers’ cutting back on dining out in the second half of last year. These woes have continued into 2008, with sales dropping nearly 5 percent this year and margins being squeezed across all three formats. The capital spending has been trimmed for this year, and the company is continuing its rebranding projects — “Project RevO’lution” for the O’Charley’s brand and “Dressed to the Nines” for the Ninety Nine chain. COMPANY REVENUES 2007 EARNINGS 2007 RATIO Casual Male Haverty Furniture 99 Cents Only Stores Syms The Bon-Ton Stores The Pantry Genesco Fred’s Dillard’s O’Charley’s $464,128 784,613 1,199,374 267,149 3,467,659 6,911,163 1,502,119 1,780,923 7,370,800 977,752 $414 1,758 2,893 807 11,562 26,732 7,750 10,718 53,800 7,232 0.09% 0.22 0.24 0.30 0.33 0.39 0.52 0.60 0.73 0.74 All dollar figures in thousands SIZZLING SEGMENT No food service busiSIZZLING SEGMENT nesses are included in this group because Upscale Dining Ruth’s Chris Steak House restaurants weren’t P.F. Chang’s part of the initial Hot McCormick & Schmick’s 100, but restaurants Cheesecake Factory now constitute the Ark Restaurants largest segment among Morton’s Hot 100 Retailers, Benihana though for compilation purposes they are grouped into three sub-segments (Sandwich/beverage, casual and upscale dining). Size is not an impediment to hot sales, with fully 30 companies appearing on both the Top 100 chart and the Hot 100 list, ranging from Walmart at the top end to No. 99 Saks Fifth H18 STORES / AUGUST 2008 14.7% 17.6 16.6 16.3 14.9 12.4 9.9 8.9 14 Hot 100 companies that reported net losses in FY 2007 Avenue, which is pros- Jewelry 14.6% 26.9 pering after slimming Blue Nile 14.8 down from its foray Tiffany Finlay Enterprises 13.1 into regional departBirks & Mayors 7.0 ment stores. Jewelry, a retail segment not represented at all in the Top 100, is well-represented among Hot 100 Retailers, including Tiffany, Blue Nile, Finlay Enterprises (operator of leased departments and parent of the Bailey Banks & Biddle and Carlyle chains) and Birks & Mayors, which operates stores in both Canada and the United States. StORES David P. Schulz, a New York-based writer and editor, reports on U.S. and foreign retailers for several publications. WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - August 2008

STORES Magazine - August 2008 Contents Executive Editor's Page President's Page The Lure of Free Shipping Walmart’s New Look What Shoppers Think Will Widgets Work for Wheat Bread and Wasabi? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Store Design Industry Economics Hot 100 Retailers Concept2Watch Mobile Technology Small Store Technology Website Optimization Site Selection Mobile Payments Recycling Merchandising: Cool Sells Merchandising: Merchandising in Mexico Store Construction & Development Human Resources Loyalty Programs Mobile Marketing Loeb Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - August 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.