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Bebe to close 2b stores and website

BY Dan Berthiaume

Brisbane, Calif. – Bebe Stores Inc. will exit its 2b business by July 5, which is the end of the company’s fiscal 2014. The retailer says this will allow it to increase its focus on the core Bebe brand’s retail and outlet stores, e-commerce and international licensing business.

The 16 2b mall-based stores, including e-commerce business are expected to generate pre-tax losses of approximately $5 million-$6 million in fiscal 2014, excluding impairment charges. Bebe has also begun the implementation of a cost reduction program that will target both direct and indirect spending across the organization. This includes plans to reduce corporate and field management positions, in addition to workforce reductions from closing 2b stores.

The workforce reduction impacted approximately 9% of the company’s non-store employees, excluding the distribution center, and less than 1% of its store operations team. Employees affected by the workforce reduction have been provided severance. Bebe expects to achieve approximately $4 million in cost savings in fiscal 2015, while pre-tax severance costs are approximately $3 million during fiscal 2014.

Bebe has lost more than 40% of its value in the past year, and former CEO Steve Birkhold left the company June 12. In its most recent fiscal quarter, Bebe reported a shrinking net loss as well as declining net sales. The retailer expects to report negative same-store sales growth during the fourth quarter of fiscal 2014.

"The steps we are announcing today build on our turnaround efforts from the past year," said Jim Wiggett, interim CEO. "Through the closing of our unprofitable 2b brand, and the cost reduction program, we will be better positioned financially and structurally to focus on our core Bebe brand. Our objective is to drive long term growth and sustainable profitability. We will also continue to focus on our merchandising, marketing and operational strategies designed to reposition the Bebe brand."

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The Nook is Dead, Long Live Barnes & Noble

BY Dan Berthiaume

Betamax. Zune. Google Plus. These are just a few consumer technology applications that hit the market with a lot of hype and all failed to catch on for the same basic reason. It seems clear that the Barnes & Noble Nook e-reader tablet can now be considered part of this list, although Barnes & Noble has not yet accepted it.

The reason technologies like Nook and Zune failed to engage the consumer marketplace is that a competing device monopolized the space. VHS, iPod and Facebook did not leave enough room for Betamax, Zune and Google Plus, and the Amazon Kindle has become the de facto e-reading device for mainstream consumers. This type of market domination occurs for a whole host of reasons that rarely reflect upon the quality of the technology being squeezed out (Betamax in particular is generally seen as superior to VHS), but nonetheless makes competition futile.

Time to bid e-readers adieu

Barnes & Noble has partially recognized the difficulty Nook is having competing with Kindle by announcing plans to spin Nook off a separate company, but would be better served by accepting reality and exiting the e-reader market altogether. This would be the first of several IT-related steps Barnes & Noble should take to turn things around. Two other steps include:

Accept Amazon’s e-book dominance

Barnes & Noble’s insistence on hanging on to the Nook is part of a larger attempt to try to capture a larger share of the e-book market from Amazon.com. It won’t happen. Barnes & Noble can stay in the e-book space, but needs to realize that its future success does not hinge on e-book sales or even digital sales of physical books.

Rather than trying to beat Amazon at a game Amazon invented and continues to perfect, Barnes & Noble should refocus on its own game, serving the needs of dedicated readers who enjoy the physical experience of browsing and buying physical books. This is a shrinking but still vital market, and while Barnes & Noble may need to look at consolidating or closing stores, customers who find the Amazon experience dissatisfying are still its best hope. Better serving them will require Barnes & Noble to…

Refine and localize assortments

Amazon can only present a limited number of books to each site visitor, and despite advanced personalization cannot satisfy the needs of a browser who prefers to handle and examine a large number of books. Barnes & Noble can make its hands-on browsing experience more appealing by using advanced assortment planning systems to focus more on regional authors, books about local history, and other works of specific area interest. The retailer should also broaden its assortment to include more small press, older and “cult classic” books that are not typically promoted by Amazon but have positive social and online reader reviews and commentary.

Barnes & Noble is already doing some things to leverage its physical store advantage, such as offering in-store pickup of online purchases and in-store kiosks that simplify searches and increase access to inventory. But by recognizing the turf Amazon has already won and using analytics to improve its in-store assortments, Barnes & Noble can avoid the fate of Borders and win at its own game.


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Canada’s Supreme Court rules against Wal-Mart over store closing

BY Marianne Wilson

New York — The Supreme Court of Canada has ruled that Wal-Mart violated Quebec labor law by closing its store in Jonquiere, Quebec, in 2005.

In a 5-2 decision announced on Friday, the court ruled that the 190 employees who were terminated when the store was closed are entitled to compensation, according to CBC Montreal.

The closing came shortly after the United Food and Commercial Workers union was certified to represent the store’s workers in 2004. The store eventually closed in spring 2005, putting the 190 employees out of work. Wal-Mart said the store was not profitable. It has maintained that it did not close the store because it was being unionized.

This marked the union’s second time at bringing the retail giant into court over the store closing. In 2009, the Supreme Court ruled that the employees’ freedom of association rights were not violated when the company decided to close the store.

In 2013, however, the union filed a new appeal with the Supreme Court in which it argued that Wal-Mart violated a provision of the Quebec labor code by changing the workers’ conditions of employment without consent while the terms of the collective agreement were being negotiated, the report said. The court found Wal-Mart did not adequately prove the four-year-old store was in financial difficulty.

The court sent the case to an arbitrator to determine remedies, which will likely include compensation for the workers.

"We will review the decision carefully in order to determine what our next steps will be," Alex Roberton, Wal-Mart Canada’s director of corporate affairs, said in an email to CBC Montreal.

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