Lorna Jane, Santa Monica Place, Santa Monica, Calif.
The mantra of “move, nourish, believe” occupies a prominent spot on the blue walls of Lorna Jane, Santa Monica, Calif. With its bright colors, fashionable accents, and welcoming atmosphere, the store has an upbeat, sporty-girl vibe that is very much in keeping with the Australian active wear brand’s positioning. Motivational expressions can be found throughout the space.
Lorna Jane, which is known for the eye-popping colors and innovative designs of its threads, operates 142 stores. The company entered the U.S. market in 2012, in Malibu, Calif. To date, it has opened some 17 stores here, primarily in Southern California. Most recently, it has started expanding into the Bay Area. Upcoming locations include Berkeley, Stonestown Galleria (San Francisco), Corte Madera and Santa Barbara.
99 Cents Only cleaning up inventory accounting
For the second time in the past six years, 99 Cents Only said it was unable to file its annual report within the timeframe specified by the Securities and Exchange Commission.
The company’s annual report on form 10-K for its fiscal year ended March 30 was due at the SEC no later than June 28. However, because of a range of inventory valuation issues identified by auditors and a new CFO, the company said it was unable to file the report without unreasonable effort or expense. The company did not indicate when it planned to file the report other than as soon as practicable.
Previously, 99 Cents Only had difficulty with the timely filing of its financial reports in 2006 and 2007. The company’s annual report for the fiscal year ended March 31, 2006 wasn’t filed until early 2007 which set off a chain reaction that caused the company to also file late quarterly reports for the second half of the fiscal year ended March 31, 2007 and the full fiscal year.
For the recently ended fiscal year, the company did shed light on its anticipated fourth quarter results. Sales were expected to increase nearly 10% to $435 million and same store sales were expected to increase 4%. About half of the comp increase was related to a shift in the timing of the Easter holiday. Full year sales were expected to increase 9% to $1.7 billion and same store sales were expected to increase 4%.
In addition, the company said it believes sales per stores increased to $5.3 million from $5.2 million and sales per sq. ft. increased to $321 from $309.
At the end of its fiscal year, 99 Cents Only operated 316 stores, consisting of 232 stores in California, 39 in Texas, 29 in Arizona and 16 in Nevada.
The most recent inventory and accounting issues follow a going private transaction completed in early 2012. A group led by Ares Management LLC, Canada Pension Plan Investment Board and the members of management, including CEO Eric Schiffer and his father-in-law and founder Howard Gold, bought the company for $22 a share.
However, earlier this year Schiffer and Gold parted ways with the company and seasoned retail executives Richard Anicetti and Michael Fung were tapped to fill the roles of interim CEO and interim chief administrative officer, respectively.
At the time of the change, Anicetti has served eight months on the company’s board. He previously held the position of president and CEO of Food Lion. Fung joined the company after previously serving as CFO for Walmart’s U.S. stores division.
To avoid future problems, 99 Cents Only is in the process of upgrading its systems for accounting for merchandise inventories, including implementation of an SAP system that will for the first time track inventory at each retail store on a perpetual basis by stock keeping unit. The SAP implementation process will begin in fiscal 2014, with all stores expected to be included by the end of fiscal 2015.
It was preparation for implementation of the SAP system that cause the company to uncover it had been overstating the value of inventories by as much as $20 million. The company is currently reviewing the nature of the overstatement of the inventory balance and its effect on the consolidated financial statements for current and prior periods, including whether any adjustments to prior periods that may be necessary are material to those periods.
In another development related to the changeover in management, beginning in the fourth quarter of fiscal 2013 the company also changed how it estimates its excess and obsolete inventory so that reserves include items that are at least 12 months old and are not expected to sell above cost within 12 months. As a result of this change in estimate, the company expects to record a non-recurring charge to cost of sales and corresponding reduction in inventory of approximately $10 million in the fourth quarter of fiscal 2013.
Campbell adds veteran R&D exec to leadership stock
CAMDEN, N.J. — Campbell Soup Company has appointed Carlos Barroso as the company’s SVP, global research and development. He will report to president and CEO Denise Morrison.
“Research & Development is an essential ingredient in our recipe for delivering the meaningful, consumer-focused innovation needed to change our company’s growth trajectory,” said Morrison. “Carlos brings extensive R&D food and consumer packaged goods expertise to Campbell at a very important time. His knowledge of emerging markets and open innovation, coupled with his experience in baked snacks and flavor science, makes him an excellent fit for our organization.”
Barroso joins Campbell with more than 20 years of experience as an R&D professional. Most recently, he ran his own R&D consulting practice, where he worked with many Fortune 100 clients. Previously, Barroso was SVP of R&D at PepsiCo, where he oversaw all R&D for PepsiCo Foods, including Frito-Lay North America and Quaker Foods and Snacks, a $27 billion business with more than 800 R&D employees. Prior to that, he held several roles of increasing responsibility within the PepsiCo Foods R&D organization in the United States and internationally. Barroso began his career at Procter & Gamble.
“I’m looking forward to joining Campbell and partnering with our business leaders, R&D associates and outside partners to accelerate innovation worldwide,” said Barroso. “Campbell is aggressively reinvigorating its innovation pipeline and reshaping its portfolio, and the R&D team must be a critical partner to help drive that growth agenda.”
The newest member of Campbell’s corporate leadership team, Barroso earned his bachelor of science degree in chemical engineering from the Georgia Institute of Technology, where he currently serves as chair of the external advisory board for the School of Chemical and Biomolecular Engineering. His significant expertise in flavor science has resulted in two patents while at PepsiCo. He has also published articles and presented at conferences worldwide on a variety of topics, including open innovation and globalization.
Campbell Soup Company is a manufacturer and marketer of soup and sauces, baked snacks and beverages. Founded in 1869, the company’s portfolio of brands include Campbell’s, Pepperidge Farm, Arnott’s, V8 and Bolthouse Farms.