Fred’s revamps merchandising team after weak holiday sales
New York — Regional discount retailer Fred’s is making some big changes to its merchandising and operations groups to begin 2014 and has retained several firms to review strategic opportunities.
On the heels of a 1.4% same-store sales increase in December, driven by its pharmacy business, Fred’s said it had retained BofA Merrill Lynch and Peter J. Solomon Company to review strategic opportunities to enhance shareholder value. In addition, the operator of 701 stores throughout the Southeast, gave CFO Jerry Shore additional responsibilities as COO and said CEO Bruce Efird would lead the merchandising and marketing team and strategy.
"The merchandising and marketing team has been revamped and now will report directly to me,” Efird said. “We have developed new pricing, marketing, inventory management and profit strategies that are designed to drive greater profitability throughout the year, with a key goal of re-energizing fourth-quarter results in 2014.”
In addition, Fred’s will continue to implement the successful elements of a reconfiguration plan, a key aspect of which involves the addition of pharmacies to its discount stores. The company plans 150 to 200 conversions in 2014, which will leave it with pharmacies in 60% of its store by the end of 2014.
The moves come as Fred’s experienced a challenging sales climate throughout 2013. The company’s year-to-date sales increased 1% to slightly more than $1.8 billion, while same-store sales declined 0.9%.
"While December sales were in the range of our expectations, they were driven primarily by the strong performance of our pharmacy department, as the discretionary departments in general merchandising fell short of plan,” Efird said. “The positive impact from our reconfiguration plan continued in December, driven mainly by our hometown auto and hardware department. However, in spite of the success of our reconfiguration program, Fred’s 2013 fourth-quarter promotional strategy, which was centered on Black Friday, did not produce the incremental gains we expected.”
Deceleration in traffic and sales cut into Lululemon’s Q4 forecast
Lululemon planned to start 2014 with a new CEO and flat comparable store sales for the fourth quarter. Despite being on track to hit its numbers, however, a significant dip in traffic and sales in January has prompted the company to cut its fourth quarter forecast.
The company now anticipates that net revenue in the fourth quarter will be in the range of $513 million to $518 million based on comparable-store sales in the negative low-to-mid single digits on a constant-dollar basis. The company’s previous guidance of net revenue for the quarter was in the range of $535 million to $540 million based on flat comparable-store sales on a constant-dollar basis. The company also now expects diluted earnings per share will be in the range of $0.71 to $0.73 for the quarter. The previous EPS guidance for the fourth quarter was a range of $0.78 to $0.80. EPS guidance continues to assume 146.0 million diluted weighted-average shares outstanding and a 30.0% tax rate.
"As we end 2013, we are starting to see the results of the significant investments we made throughout this past year to strengthen and enhance our back-of-house product operations structure,” said CFO John Currie. “While we realize that it will require continued investment and time to get to best-in-class status, with our new leadership in place we are very focused on building on this stronger foundation to execute our long-term growth strategies."
Management will be meeting with analysts and investors and presenting at the ICR XChange Conference in Orlando, Fla., this week.
RadioShack appoints Dollar General exec as CFO
New York — RadioShack is enlisting specialty retail industry veteran John W. Feray to help the company execute its turnaround strategy and has appointed him executive VP and CFO, effective Feb. 6.
Feray joins RadioShack from Dollar General, where he has been SVP of finance and strategy since 2008 under both private equity ownership and as a public company. With responsibility for financial planning and analysis, long-term strategic planning, real estate market planning and operational improvement activities, he has been credited as a key contributor to Dollar General’s growth.
"We are extremely pleased to have a finance professional with John’s experience join us as we move forward with our turnaround plan,” said CEO Joseph C. Magnacca. “John worked as a key member of the finance team that was responsible for the significant financial improvement at Dollar General, and has the strong operational orientation needed to contribute to our strategic efforts. We will benefit from his leadership and insight as we look to increase our operational efficiency and re-build the business in 2014 and beyond."
"I look forward to working with Joe and the entire RadioShack team on the transformation of this iconic American retailer,” added Feray. “I believe my experience at Dollar General is directly applicable to RadioShack and I am delighted to have the opportunity to help the company accomplish the turnaround plan that is underway."
Prior to joining Dollar General, Feray served as senior VP and CFO of First American Payment Systems. Before that he spent several years as senior VP and CFO of Haggar Corporation, the menswear manufacturer and retailer. During his tenure, he oversaw Haggar’s transition from a public to a privately owned enterprise. He has an extensive background in financial management which began at Arthur Andersen where he served as an audit manager. Feray is a graduate of Sam Houston State University and a certified public accountant.
Feray is the latest addition to the company’s new leadership team, which in the last year, has included a new chief marketing officer and chief merchandising officer as well as senior VPs of store concepts, franchise, global sourcing, and inventory planning and allocation.
RadioShack’s Interim CFO Holly Etlin will continue to work with the company as a member of the AlixPartners team advising the company on its operational turnaround.