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Coke accelerates efforts to re-invigorate growth

BY CSA STAFF

The world’s leading beverage company is intensify efforts to generate high single digit earnings per share growth after strategies introduced earlier this year have been slow to take hold and third quarter earnings fell 13%.

Coca-Cola Company CEO Muhtar Kent unveiled a new slate of actions to reinvigorate growth and cut expenses in conjunction with the release of disappointing third quarter results. Revenues were essentially flat with the prior year at $12 billion during the quarter ended Sept. 26 while earnings per share declined 13% to 48 cents from 53 cents.

“We are taking decisive action to position The Coca-Cola Company to continue delivering long-term value for our shareowners,” Kent said. “We have taken a hard look at our progress to date and realize that while the strategies we laid out at the beginning of the year are on the right track, the scope and pace of our actions must increase. In addition to announcing an expanded productivity program, we are streamlining our operations and further aligning our incentive plans to deliver against our growth objectives.”

Kent said the company expects the macroeconomic environment to remain challenging through 2015 while expressing confidence in the company’s ability to return to sustainable growth over the long term. He said the confidence was warranted by the attractive long-term dynamics of the industry in which the company operates and the unparalleled reach of brands and its global system. There are 17 brands in the Coca-Cola portfolio with annual sales greater than $1 billion.

Specific key initiatives he said the company would pursue include streamlining and simplifying its operating model to speed decision making and enhance local market focus. These organizational changes, along with the previously announced changes being made to long-term incentive metrics, will empower employees and link line-of-sight accountability to business results, according to the company.

In addition, Kent said the company would expand its current productivity program by targeting annualized savings of $3 billion per year by 2019. The productivity program will focus on four key areas including: restructuring the company’s global supply chain, including manufacturing in North America; implementing zero-based budgeting across the organization; streamlining and simplifying its operating model; and driving increased discipline and efficiency in direct marketing investments.

Other changes announced include refranchising the majority of company-owned North American bottling territories by the end of 2017 and a substantial portion of the remaining territories no later than 2020.
Marketing is also in for a change. Kent said Coca-Cola will strategically target brand and growth investments that leverage its global strengths. This includes previously announced plans to improve the quantity and quality of marketing, as well as making future investments that will target markets and categories where brands remain underfunded relative to the opportunity. Another key change involves incentivizing local operations by adding revenue growth as a new metric in incentive plans.

“While investments made in recent months are yielding early signs of progress, we recognize that our five strategic priorities and the initiatives announced today will take time to produce results,” Kent said. “We remain confident in the vibrancy of the nonalcoholic ready-to-drink beverage industry and are determined to make the necessary changes to sustainably meet or exceed our long-term growth targets. At the same time, we are cautious in our near-term outlook given challenging macroeconomic conditions. In this context, our 2020 Vision will remain focused on delivering value growth ahead of the industry for our system.”

The Company expects to be below its long-term earnings per share growth target in 2014 and, based on the current outlook, does not expect comparable currency neutral earnings per share growth in 2015 to be significantly different from 2014.

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Ascena’s “Tweenovator” to retire

BY CSA STAFF

Michael Rayden, an innovative merchant credited with developing retail concepts that catered to the tween demographic, has announced plans to step down as president and CEO of Ascena’s Justice and Brothers division.

Rayden will leave the company at the end of January 15 following a lengthy career in the apparel industry. Ascena said it has begun a global search for a successor.

“We have been very fortunate to have had the benefit of Mike’s insight and guidance. His contribution to the retail industry is immeasurable, including pioneering the fashion and retail space for the tween market with Justice, an organization he has guided for the past 19 years,” said Ascena Retail Group president and CEO David Jaffe. “Mike’s legacy will long be remembered, as will his commitment and dedication to building the self-esteem and self-confidence of a generation of young people through fashion.”

Rayden’s retail career spanned more than 45 years, the last 19 of which were spent building the Limited Too brand and then introducing the Justice concept. In 2008 he transitioned the entire fleet of stores to a single brand, Justice, which continues to offer forward fashion at accessible price points to tween girls. Most recently, he introduced a concept called Brothers and has successfully expanded the chain’s reach to tween boys.

“In addition to building a hugely successful brand that has dominated the tween market since its inception, Mike has mentored numerous executives and encouraged his associates to become involved in organizations that support the communities in which they live and to serve their tween customers in all aspects of their lives,” Jaffe said.

Rayden said he was grateful to have had a wonderful and fulfilling career that has provided tremendous opportunities to so many.

“We have proudly enabled tween girls and boys to feel good about themselves at a critical time in their healthy development,” Rayden said. “Our mission has always been to transcend fashion, to build confidence and provide a vehicle for expression. I’ve had the privilege of being surrounded by a great group of people, who have worked tirelessly to grow our business model, delight our tween customer, and achieve great success. For me, the time is right to shift my attention from fashion to family, allowing a new generation of talent to step into the spotlight and confidently lead the business into its next phase of growth and success.”

Ascena Retail Group operates more than 4,000 stores under banners such asLane Bryant, Cacique, Maurices, Dressbarn, Catherines and the Justice and Brothers brands that Rayden led.

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HanesBrands makes tasty board appointment

BY CSA STAFF

Former Snyder’s-Lance CEO David V. Singer is the newest member of the board of directors at apparel manufacturer HanesBrands.

Singer, 59, joins the 10 member board through the 2015 annual meeting when directors stand for re-election. He will serve on the company’s audit committee.

Singer had a successful career in the food and beverage and finance industries that spanned multiple decades. He retired as CEO from Snyder’s-Lance in May 2013 after creating a leading national snack food company through acquisitions and turning around the Charlotte-based company by leading the overhaul of its supply chain, sales, marketing and distribution functions.

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