FINANCE

Staples swings to profit but sales fall

BY Marianne Wilson

Framingham, Mass. — Staples reported net earnings of $135.2 million for the third quarter ended Nov. 2, compared with a loss of $596.2 million a year earlier.

Sales fell to $6.11 billion from $6.35 billion as the retailer was challenged by soft demand for its products and closed stores in Europe and North America. Same-store sales in North America, excluding sales through Staples.com, fell 3%.

"We continue to face weak demand for core office supplies, but we’re driving growth online and in new categories, while aggressively managing expenses," said chairman and CEO Ron Sargent.

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REAL ESTATE

H.J. Martin and Son helps Penney complete in-store shops project

BY Marianne Wilson

Green Bay, Wis. — H.J. Martin and Son helped J.C. Penney add two new in-store shops: Disney and GiggleBaby.

Fifty crews of two people – 100 total – from H.J. Martin were dedicated to the project, which spanned two-and-a-half weeks from mid-September until early October. In all, H.J. Martin performed the work in 218 Penney stores across the United States, with the exception of the south and southeast.

Work in each location was performed over a two-day period while the store was open, requiring H.J. Martin staff to exhibit the soft skills they are known and trained for. Crews installed wall graphic panels, assembled and positioned the new wall and floor fixtures, and hung ceiling signs in both shops.

In approximately 100 of the Penney stores, H.J. Martin personnel also hung a sign over the Carter’s in-store shop.

Before starting each store, the H.J. Martin crews coordinated the de-merchandising of the existing materials in the new Disney and GiggleBaby locations with Penney personnel. They also unloaded and inventoried the delivered Disney materials, and coordinated the missing or damaged items with store leaders.

“We appreciate the confidence J.C. Penney showed in us,” says Bret Woodland, who oversaw the work for H.J. Martin. “This particular project took a great amount of coordination between our employees and those of J.C. Penney to complete it within the desired window. It was a company-wide effort to get it done.”

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FINANCE

FTI Consulting forecasts 4.9% increase in holiday sales

BY Marianne Wilson

West Palm Beach, Fla. — FTI Consulting predicts a 4.9% increase in sales this holiday season in its 2013 Holiday Retail Report. Despite slowing discretionary spending growth in recent months and anxiety over political turmoil in Washington, FTI retail and consumer products industry professionals anticipate a potential silver lining to this holiday season.

"Our forecast for 2013 holiday sales indicates that this will be an average year by historical standards, but, nonetheless, one with which we suspect most retailers will be pleased," said Bob Duffy, global leader of the firm’s retail & consumer Products practice and global co-leader of the corporate finance/restructuring segment. "Historically, there’s been a trend of resiliency in the sector, even in years of economic weakness or mild contraction, and we expect this to continue during the holiday season as retailers actively court consumers through aggressive promotions."

FTI Consulting believes that retailers’ gross margins will continue to be pressured by aggressive promotional activity. Retailers focused on the bottom-line must decide how to approach holiday markdowns without jeopardizing the profitability of the season. Declining EBITDA margins among retailers during the last two holiday seasons show that large retailers are willing to sacrifice gross margins to achieve incremental sales growth, and margin pressure has continued through the first half of 2013.

The promotional strategies of certain large chains in the sector could quickly ripple through the lower-end and mid-market retail sectors. Furthermore, the ambitious turnaround efforts of several struggling chains could impact this season’s sales and margins for the entire middle market sector.

"Department stores continue to be a closely watched segment of the retail sector given their challenge to stay competitive in today’s value-oriented shopping environment, and these retailers need a strong holiday season to validate that their strategies are working," said Duffy. "Moreover, the relevance and viability of some longstanding retailers will be closely watched this season and could prove pivotal to their future as going concerns. Ultimately it is the customer that wins in this type of environment, as promotions and pricing transparency create better deals for shoppers with long shopping lists and relatively fixed spending budgets."

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