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BY CSA STAFF

RANDOM NOTES

Fast-fashion giant H&M debuted a new retail concept, called COS, in London. With a sleek design by William Russell, the two-story, 4,860-sq.-ft. space has an upscale feel, with white walls, modernist wood and metals, minimal fixtures and lounge areas with Scandinavian-styled sofas. H&M plans to roll out another 10 COS shops this year, with locations set to open in Germany, Belgium and the Netherlands. (For additional photos of COS, visit Picture This at www.chainstoreage.com.)… Tommy Bahama has expanded its retail brand with the opening of Relax in Naples, Fla. The 2,000-sq.-ft. store is devoted primarily to the Tommy Bahama Relax sportswear collection for men and also features women’s swimwear, cover-ups and accessories. The store design is clean and contemporary, with a light, white environment that contrasts with the bright color palette of the Relax line.… Abercrombie & Fitch opened its first store in Europe, a flagship on tony Savile Row in London. The store is located in a nearly 300-year-old building that was built as a private residence, but was altered over the years and eventually served as a branch of the Bank of England. It took 18 months to restore the space, and architectural features from the many different eras of the building were incorporated into the design. The store has the same club feel, pulsating music and dark look as the company’s Manhattan flagship.… Supermarket operator Publix is switching from its signature pastel colors to a more vibrant palette, with hunter green as the dominant hue. The new look includes nostalgic-themed murals.

NEW PROJECTS

Britain’s famed toy retailer Hamleys, founded in 1760, has retained Chute Gerdeman Retail, Columbus, Ohio, to design a new store prototype. The first store with the new look will open in Dubai next year. Chute Gerdeman also will translate the concept to Hamleys’ 45,000-sq.-ft. flagship on London’s Regent Street.

COMPANY/PERSONNEL UPDATES

Marco Retail Group (MRG), Northville, Mich., has been relaunched as an independent company specializing in international retail strategy, planning and design (Nick Giammarco remains the creative principal). The company, formerly known as Cubellis Marco Retail, has dissolved its association with Cubellis Inc., Boston.… Callison, Seattle, has added a new service: Callison Real Estate Strategies will offer strategic business and real estate analysis and planning.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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