Coldwater Creek Ices Expansion Plans
Sandpoint, Idaho Following a dismal third-quarter performance, Coldwater Creek announced Monday that it would slash new store openings in 2009 by more than 60%. The retailer, which opened 43 stores this year (and 66 stores in 2007), expects to open only 15 stores next year.
“While we continue to believe in our retail-expansion strategy, we are reducing our store-growth plans for 2009 in light of the current market conditions,” stated Dan Griesemer, president and chief executive of Coldwater Creek. “We now plan to open approximately 15 new stores, down from our previous plan of approximately 40 new stores. Additionally, our analysis of any new store opportunity will take into account a higher hurdle rate as a result of the challenging retail environment.”
Coldwater Creek also announced Monday that third-quarter sales were expected to be approximately $225 million, which would reflect a decline in same-store sales in the low twenties. Same-store sales were down 19.0% in the first quarter and fell 13.7% in the second quarter.
At $225 million in sales, the third quarter would be the lowest-performing quarter of the 2008 fiscal year, following first-quarter sales of $271.1 million and second-quarter sales of $241.1 million. It would also be the worst third-quarter performance of the last three years, following third-quarter sales of $271.2 million in 2007 and $256.4 million in 2006.
However, Griesemer remained optimistic for the future and stated, “We remain confident in our overall business model and are committed to controlling expenses and managing inventory. We strongly believe that we are positioned to achieve improved results when consumer spending improves.”
He noted that Coldwater Creek had experienced a significant deterioration in traffic and sales beginning the second weekend in October, which he attributed to the “unprecedented consumer environment.”
Newspapers suffer circular setback
Every Sunday throughout the Tampa Bay area, the St. Petersburg Times and the Tampa Tribune dispatch small armies of people clad in brightly colored t-shirts to the region’s busiest intersections where they hawk newspapers to motorists. Such are the extreme measures required of the nation’s newspapers these days as they look to maintain circulation figures in an era when websites such as Craigslist.com and Monster.com have eroded the once lucrative classified advertising business. The Sunday newspaper remains a viable means of distributing Sunday circulars for many retailers, but only if circulation levels can be maintained. And even then the circular could fall victim to more efficient means of consumer communications.
For example, Target still distributes 50 million circulars each week, but the same ad is posted on the company’s Web site and visitors can also sign up to have the ad emailed to them. Target estimates that 60 million Web site visitors will view the weekly ad online this year, which is a 40% increase from the prior year. As if that weren’t troubling enough for newspapers, when the company opened its newest store in Wasilla, Alaska this October its circular was only available online.
“This online only approach not only saved us the cost of procuring and running a print circular, it gave us the opportunity to address price issues specific to the market as well as to offer some of the unique assortments to our Alaskan guests,” Target’s executive vp of marketing, Michael Francis, told analysts late last month. “An online circular also offers us an antidote to the steady decline in newspaper circulation.”
Affordable fashion comes to Wasilla
If only Target had opened its new store in Wasilla, Alaska a few months sooner. Perhaps then, the city’s former mayor and Republican vice presidential candidate Sarah Palin could have loaded up on affordable fashion and avoided spending $150,000 on designer duds at Neiman Marcus and Saks. The revelation proved to be one of the more embarrassing moments of the presidential campaign, but Palin didn’t have an opportunity to shop at Target prior to October when the company opened its first two Alaska stores.
The new units were among a group of 45 new stores.
Hawaii is the only state where Target doesn’t have a presence, but that situation will change next year when the first new Target stores open in the Aloha state.