Kirkland’s Q4 profit falls
Nashville, Tenn. — Kirkland’s Inc. said Thursday that its fourth-quarter profit fell about 35% as its sales softened.
The company reported net income of $14.4 million for the 13 weeks that ended Jan. 29, compared with $22.1 million a year earlier.
The results included an $800,000 income tax benefit related to prior years’ taxes.
Quarterly net sales fell to $139.6 million, from $142.8 million in the prior-year period. Same-store sales were down 7.95%.
President and CEO Robert Alderson said Christmas sales were strong, and Kirkland finished the year with inventory levels on plan.
Magnacca’s role at WAG expands
DEERFIELD, Ill. — Walgreens has expanded Joseph Magnacca’s role at the drug store chain by appointing him president of daily living products and solutions.
In this capacity, Magnacca — the former Shoppers Drug Mart vet, who as chief merchant of Duane Reade proved instrumental reinvention of New York Vity’s homegrown drug chain, converting the stores to the talk of the industry behind a series of major enhancements — will oversee Walgreens’ marketing and merchandising operations, led by chief marketing officer Kim Feil and chief merchandising officer Bryan Pugh. Magnacca’s expanded role will unite the aforementioned operations to help enhance and carry out the company’s strategy to be America’s first choice for health and daily living.
Feil and Pugh also will help with Walgreens’ transformation to better cater to the evolving needs of its customers and patients.
Meanwhile, Magnacca will continue to lead the integration of the Duane Reade drug stores, Walgreens noted.
“We are bringing together and raising the profile of one of the strongest teams in retail to lead our marketing and merchandising efforts and enhance our daily living products business, much as we have already enhanced our pharmacy, health-and-wellness services and solutions business,” said Walgreens president and CEO Greg Wasson. “Joe’s exceptional strategic market focus, combined with the leadership, experience and expertise that Kim and Bryan have brought to our marketing and merchandising operations means we are now better positioned than ever to meet the daily living needs of our customers. In addition, the creative innovations and improvements that Joe brought to Duane Reade will now benefit and be extended across our entire organization.”
Small format countdown begins
The retail industry is abuzz these days with talk of small format stores; whether it is Best Buy Mobile, CityTarget or now Walmart Express. Bill Simon, president and CEO of Walmart U.S., added more fuel to the fire this week with comments about several 15,000-sq.-ft. test stores that would open during the second quarter in rural and urban locations. Simon also introduced the prospect of rapid organic growth and potential acquisitions even though the first stores have yet to open.
“The aim here folks is to get the right model so that we can rapidly roll these things out,” Simon said during a presentation at the Bank of America Merrill Lynch Consumer Conference. “At our peak, we built about 350 supercenters in a year, so when we get this thing right, these are going to come real fast and we’re real excited about this format.”
It is not a stretch to believe Walmart will get “this thing” right, as the company has a lengthy track record of operating highly-productive small stores in multiple international markets. What’s less clear is whether Walmart would ever be able to open enough of the small format stores to have a meaningful impact on its sales results.
Assume the stores enjoy an exceptionally high level of sales productivity, and just to keep the math simple go with $1,000 a square foot, which is roughly double that of a high volume supercenter. That would put annual sales of a 15,000-sq.-ft. at $15 million. Next, assume Walmart already has 1,000 such units operating, and their total annual sales are $15 billion. Even though that’s a big number, it would represent less than 6% of the $260 billion in sales the U.S. stores division generated last year.