This Week's Top Stories in Retail

June 27, 2008 

 

Report: Best Buy Plans to Double Sales in 5 Years
Minneapolis (June 26, 2008) Best Buy Co. expects to double its sales to $80 billion in the next five years, president and COO Brian Dunn said at the company's annual meeting on Wednesday, according to the Minneapolis / St. Paul Business Journal.

Best Buy doubled its revenue from $20 billion in fiscal 2003 to $40 billion in fiscal 2008. The company expanded from 679 stores to 1,314 during that time.

Ralphs Unveils Lower-Price Policy
Los Angeles (June 26, 2008) Ralphs Grocery Co. is initiating a lower-price policy that involves reductions on goods that customers buy most often, according to the Los Angeles Times.

The 262-store chain in Southern California is planning to cut prices on thousands of popular goods.

Rite Aid Posts 1Q Loss
Harrisburg, Pa. (June 26, 2008) Rite Aid Corp. said Thursday that it swung to a big loss in its first quarter as it continues to spend heavily to absorb more than 1,850 newly acquired stores and offered promotions on items such as food and toiletries that hurt profit margins, according to the Associated Press.

Rite Aid also said it has turned around the declining sales in the Brooks and Eckerd stores it acquired last year, and is a matter of several months away from full integration.

Report: J. Crew Could Expand Madewell Brand
New York City (June 26, 2008) An executive at J. Crew Group Inc. said on Wednesday that the company could make a decision about whether to expand its Madewell brand during the second half of the year, according to the Associated Press.

CFO Jim Scully made the remarks, which were Webcast, during the Wachovia Nantucket Equity Conference. 

Bed Bath & Beyond 1Q Profit Tumbles 27%
Union, N.J. (June 26, 2008) Bed Bath & Beyond Inc. said Wednesday its fiscal first-quarter profit tumbled 27%, as costs outweighed sales growth.

For the quarter ended May 31, Bed Bath & Beyond earned $76.8 million compared with $104.6 million for the same quarter in 2007.  

Collective Brands Finance Chief to Retire
Topeka, Kan. (June 26, 2008) Payless ShoeSource parent Collective Brands Inc. said Wednesday CFO Ullrich "Rick" E. Porzig, will retire.

Porzig has worked at the company for more than 14 years. He also holds the title of senior VP.  

Report: Starbucks to Pull CD Floor Racks
Seattle (June 26, 2008) Starbucks plans to remove its rotating CD racks from the floors of 6,500 stores in the U.S. and Canada by September, according to the Seattle Times.

The coffee chain will instead focus on four CDs for sale near cash registers.

Report: Barack Obama Urges Tesco to Work With Unions
London (June 26, 2008) Presumptive Democratic presidential nominee Barack Obama has urged Tesco CEO Sir Terry Leahy to meet with the United Food & Commercial Workers Union (UFCW) over employment rights at its Fresh & Easy Neighborhood Market stores in the United States, according to the Daily Telegraph.

"I again urge you to reconsider your policy of non-engagement in the United States and advise your executives at Fresh & Easy to meet with the UFCW," Obama wrote in the letter, the report said. 

J.C. Penney to Reduce Store Openings in 2009
Plano, Texas (June 25, 2008) J.C. Penney Co. will further slow the pace of new department store openings and cut capital spending next year because of the weak economy. The company said Wednesday it now plans 20 new or relocated stores next year, down from the 36 it expects to open in 2008.

Penney had once planned 50 new stores a year through 2011, but backed away from that goal in April, when it set the target of 36 new locations this year. 

Kroger Agrees on Contract With Union
Nashville, Tenn. (June 25, 2008) Kroger Co. announced that it has reached a tentative agreement on a new contract with its Nashville, Tenn.-based union.

The agreement announced on Wednesday with United Food & Commercial Workers Union Local 1995 covers nearly 8,500 employees who work in 94 Kroger stores in Nashville and Knoxville and Huntsville, Ala.  

Goody's Hires DJM Realty for Store Disposition
Melville, N.Y. (June 25, 2008) Goody's Family Clothing, Inc., which recently filed for Chapter 11 to restructure its operations, has selected DJM Realty to manage the disposition project of 69 retail store leases located primarily throughout the Southeast.

During this process, Goody's will continue to remain fully operational and open for business as usual.

RadioShack Renegotiates HQ Lease
Fort Worth, Texas (June 25, 2008) RadioShack Corp. has agreed to assign its headquarters lease with its former landlord KanAm Grun to the new property owner, Tarrant County College District (TCC).

As part of the renegotiated lease agreement with TCC, RadioShack will remain in the approximately 400,000 sq. ft. it currently occupies with its headquarters staff through June 2011 with an option to remain in a portion of the complex through June 2013. 

Wal-Mart Launches Site for Marketside Concept
Bentonville, Ark. (June 25, 2008) Wal-Mart has launched a new site for its Marketside concept at www.marketside.com.

The site includes information about the concept, and also provides information on how to apply to positions within the stores and where the stores are located.

Report: Circuit City May Have Several Bidders
Atlanta (June 25, 2008) Circuit City Stores Inc. has received buyout interest from several strategic and financial bidders, including Blockbuster Inc., and a sales agreement could be announced over the next month, according to a Reuters report.

"I am very confident that we will be seeing who the buyer of Circuit City is in the next three or four weeks and what the price is," Mark Wattles told Reuters by phone after Circuit City's annual meeting in Richmond, Va. Wattles Capital Management owns about 6.5% of Circuit City stock.

Report: Fresh & Easy to Expand Work Force
Phoenix (June 25, 2008) Fresh & Easy Neighborhood Market plans to hire 750 additional employees over the next three months as a part of its continued expansion in Southern California, Arizona and Nevada, according to the Phoenix Business Journal.

The company will open its 62nd store in Manhattan Beach, Calif., July 2. 

Amazon.com Acquires Fabric.com
Seattle (June 25, 2008) Amazon.com, Inc. announced that it has acquired Fabric.com, an online fabric store that offers custom measured and cut fabrics, as well as patterns, sewing tools and accessories.

"Over the years, we've seen a growing interest in this segment from our customers," said Chris Nielsen, VP of the Amazon.com Home & Garden store.

Pier 1 Withdraws Offer to Buy Cost Plus
Fort Worth, Texas (June 25, 2008) Pier 1 Imports Inc. said Tuesday it is withdrawing its offer to buy Cost Plus Inc. for $88 million, according to Associated Press.

Pier 1 said it was unlikely it would be able to buy the company at a price that would make sense for its shareholders.

Safeway to Pay $2.7M Fine
Sacramento, Calif. (June 24, 2008) Safeway Inc. has agreed to pay $2.7 million to Sacramento County and an additional five counties, according to the Sacramento Business Journal. Safeway has been accused of construction violations and pricing inaccuracies.


Safeway, which did not admit any wrongdoing, was investigated following complaints that it failed to get proper remodeling and hot food station permits required by city, county, state and federal laws. The investigation also looked at pricing and weighing accuracy throughout California.

Wal-Mart Resizes Austin Store
Austin, Texas (June 24, 2008) According to a report in the Austin Business Journal on Tuesday, Wal-Mart will severely reduce the size of a new store in Northcross Mall as part of a widespread examination of new stores.

Wal-Mart already had city approval to build a 192,000-sq.-ft. store on the site at Burnet Road and Anderson Lane, in Austin, Texas, but the company has said it will reduce the store's footprint to 99,000 sq. ft. as part of a nationwide reevaluation of its new stores.

Giant to Offer Discount Drugs
Baltimore (June 24, 2008) Giant Food will offer 350 generic drugs for $9.99 each at its pharmacies in Maryland, Virginia, Delaware and Washington, D.C., according to a report in the Baltimore Business Journal.

Giant is among the latest grocery chains offering the service to compete with retail rivals such as Wal-Mart Stores and Target Corp.

August Hearing Set for Former Wal-Mart Exec
Bentonville, Ark. (June 24, 2008) Wal-Mart Stores announced Tuesday that a hearing has been set for Aug. 22 over whether convicted former Wal-Mart executive Tom Coughlin is entitled to his retirement package valued at up to $15 million.

Coughlin, who was convicted of embezzling from Wal-Mart, filed a counterclaim against Wal-Mart, accusing the company of conducting a "witch hunt" against him. Coughlin, the former vice chairman of Wal-Mart Stores Inc., was sentenced to 27 months of home detention, plus 1,500 hours of community service. He also had to pay $400,000 in restitution.

NY to Sue CVS and Rite Aid
Albany, N.Y. (June 24, 2008) Monday's announcement that New Jersey and Rite Aid had reached a settlement on claims that Rite Aid sold expired goods has now been updated on Tuesday with news from New York that it, too, will sue not only Rite Aid but CVS for selling expired food, medicine and baby formula.

The office of N.Y. Attorney General Andrew Cuomo reported earlier this month that the national pharmacy chains were selling expired products.  

Whitehall Jewelers Files Chapter 11
Chicago (June 24, 2008) Specialty jewelry retailer Whitehall Jewelers Holdings, Inc., announced on Monday that it, and its operating subsidiary Whitehall Jewelers, Inc., has filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filings were made Monday in the U.S. Bankruptcy Court for the District of Delaware.

To fund its continuing operations during the reorganization process, the company said it has negotiated an $80 million debtor-in-possession (DIP) financing from Bank of America, N.A., Wells Fargo Retail Finance, LLC, and GMAC Commercial Finance, LLC. This DIP credit facility would replace the company's previous $125 million revolving credit facility.

Rite Aid Settles Expired-Food Claim
Trenton, N.J. (June 24, 2008) In response to a suit filed by New Jersey's Division of Consumer Affairs, Rite Aid has agreed to pay $475,000 to settle civil charges that the drug store chain sold expired over-the-counter drugs, infant formula, baby food and other products.

The company, which also operates Eckerd stores, faces an additional $175,000 penalty if it fails to comply with the settlement terms during the next 12 months, the state Division of Consumer Affairs said on Monday. The state sued Rite Aid in October 2006, alleging it found expired merchandise being sold at 42 of the 104 Rite Aid stores that investigators visited in New Jersey.

Gas, Food Sales Push Kroger Profit Up
Cincinnati (June 24, 2008) Kroger Co. announced Tuesday that, aided by gas and food discounting, its profits exceeded company and Wall Street expectations for the fiscal first quarter. A sales boost accompanied the better-than-expected quarterly profit.

The country's largest grocery chain posted a fiscal first-quarter profit increase of 15%, or $386.0 million, compared with a profit of $336.6 million in the year-earlier quarter.

Report: U.S. Court Backs Best Buy, Others, in Gift-Card Suit
Washington, D.C. (June 23, 2008) A court that specializes in patent appeals ruled for Best Buy and a range of other companies on Monday involved in a legal fight over gift cards, according to a Reuters report.

RealSource, Inc. had accused Best Buy, Circuit City, Starbucks, Williams-Sonoma and its Pottery Barn unit, Costco, Lowe's and Seattle's Best Coffee of infringing on a patent for its method of putting value on gift cards, the report said.

Linens 'n Things Hires DJM Realty for Store Disposition
Clifton, N.J. (June 23, 2008) Linens Holding Co., the operator of Linens 'n Things, said Monday it hired DJM Realty to manage the disposition of 120 underperforming stores that the company had targeted for closure as part of its restructuring.

"We are pleased to announce our partnership with DJM Realty and look forward to a successful disposition of these stores. This is a great chance for retailers looking to expand their real estate," said Hugh Scullin, senior VP of real estate, store planning, construction and legal for Linens 'n Things.

Walgreens Sales Up in 3Q
Deerfield, Ill. (June 23, 2008) Walgreens said sales increased 9.6% to a record $15.0 billion for its third quarter ended May 31, and 10.2% to $44.4 billion for the first nine months.

Net earnings for the quarter rose 2.0% to $572 million from $561 million in the same quarter a year ago. Meanwhile, same-store sales were up 3.4% in the quarter, while front-end comparable drug store sales rose 4.6% in the quarter.

Jones Apparel Group Invests in GRI Group
New York City (June 23, 2008) Jones Apparel Group Inc. on Monday said it acquired a minority stake in GRI Group Ltd., an accessories and apparel brand-management and retail-distribution company.

Financial terms were not disclosed.

Amazon.com Opens Office-Supplies Store
Seattle (June 23, 2008) Amazon.com launched its online Office Supplies store (www.amazon.com/officesupplies) that offers competitive prices on hundreds of thousands of office-supply products.

"We are thrilled to offer our customers an easy and convenient way to find and discover everything they need to outfit their office or classroom," said Chris Rupp, director of merchandising for computers and office supplies.

Report: Wal-Mart May Set Up Back-Office in Bangalore
Mumbai (June 20, 2008) Wal-Mart Stores Inc. may set up a back-office center in India's technology hub of Bangalore to cater to its multiple functions across the world, the Economic Times said on Friday.

The report also said Wal-Mart may firm-up plans for the back-office unit only after the U.S. presidential elections later this year as the flight of jobs was a sensitive issue in the United States.

IKEA Opens First New York City Location
New York City (June 20, 2008) IKEA opened its first store in New York City, in the Red Hook section of Brooklyn, on Wednesday. The location is the Swedish retailer's 35th in the United States.

While the store has space for 1,400 cars, there is an emphasis on using public transportation to get there. Two city bus lines serve the area, and Ikea is offering free shuttle service from three of the nearest subway stations and a free ferry service from lower Manhattan.

Former Sears CEO Joins Sandwich Chain
Chicago (June 20, 2008) The former CEO of Sears Holdings Corp. will become the new CEO of the privately held Potbelly Sandwich Works chain. Aylwin B. Lewis succeeds Bryant Keil, the restaurant company's founder who will remain chairman of the board.

Lewis was an executive at fast-food chain Yum! Brands Inc. before he was hired to run Kmart in 2004. He later became president and CEO of Sears Holdings before abruptly resigning earlier this year amid massive restructuring.

Mothers Work Prepays $8 Million of Term Loan Debt
Philadelphia (June 20, 2008) Mothers Work announced that it has prepaid $8 million of its senior secured Term Loan due March 2013, pursuant to the optional prepayment provisions of the Term Loan.

Together with its Term Loan prepayment of $5 million on March 19, 2008, the company has prepaid $13 million of its Term Loan over the past three months. Pursuant to the provisions of the Term Loan, such prepayments were made without any prepayment premium or penalty.

Staples Launches Promotional-Services Site
New York City (June 20, 2008) Staples has launched a new site, www.staplespromotionalproducts.com, to help companies customize promotional items using Staples products. According to the Web site, Staples Promotional Products can develop personalized solutions for any business using its global network of factories and in-house graphic arts team.

"We have developed proprietary lines of apparel, headwear, bags and writing instruments that bring you the latest styles at the quality you demand at the value you deserve, and our in-house design team will ensure precise digitizing and decoration and consistent, high-quality brand application," the company said on the site.

Wal-Mart Exec Named Chief at U.K. Retailer
London (June 20, 2008) David Wild, who is currently serving as senior VP for new business development at Wal-Mart U.S., will join Halfords Group, a U.K.-based automotive- and leisure-products retailer, as CEO effective Aug. 4.

Wild has been serving in his current position since January 2007. Prior to this role, he was president and managing director of Wal-Mart Germany. Before joining Wal-Mart, Wild was with Tesco for 18 years.

First Australian Costco to Open in Melbourne
Melbourne, Australia (June 20, 2008) Costco's first Australian store is set to open in Melbourne, Australia. Jones Lang LaSalle, a property-services company, confirmed that the store will open next year.

Construction of the Costco store is expected to begin in September and to cost $60 million. The warehouse will offer a wide range of products including groceries and office supplies.

Apple: iTunes Customers Embracing Movie, Music Downloads
Cupertino, Calif. (June 20, 2008) Apple Inc. said Thursday customers are now renting or buying more than 50,000 movies daily. In addition, the company said that people have bought more than 5 billion songs from its iTunes online music store.

Apple said that based on data from market researcher NPD Group the iTunes store is the largest music retailer in the U.S. based on the amount of music sold during January and February 2008. More than 8 million songs are available on iTunes, as well as more than 20,000 TV episodes and more than 2,000 movies.

Saks Saleswoman Accused of Stealing $1 Million
New York City (June 20, 2008) A saleswoman at Saks Fifth Avenue's flagship store in Manhattan is accused of passing along more than $1 million in refunds to her most valued customers so she could rack up big sales bonuses for herself.

Cecile Villacorta is charged with grand larceny, forgery and falsifying business records, and faces 25 years in prison if convicted.

Pier 1 Imports Posts Quarterly Loss
New York City (June 19, 2008) Pier 1 Imports on Thursday posted a worse-than-expected quarterly loss, hurt by weaker traffic in March and April, according to the Associated Press.

The retailer, which has been trying to turn around its business with store closures, job cuts and reduced marketing spending, expects "modest net income" before charges for the full year, the report said.