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True-Color Conversion

BY Marianne Wilson

The Yankee Candle Co. has implemented an energy-efficient lighting strategy in its South Deerfield, Mass., flagship that puts its colorful products in the best possible light. The 75,000-sq.-ft. store, which combines shopping, entertainment and dining, ranks as one of the Bay State’s most popular tourist attractions.

“We’ve been looking to upgrade the lighting throughout the facility for years. But for a big space like this, that can amount to a significant undertaking,” said Hugh Hall, retail store design manager, The Yankee Candle Co., South Deer-field, Mass., which operates some 400 stores throughout the United States.

For years, Yankee Candle’s lamp of choice was the incandescent. “We were 100% incandescent, with the exception of such areas as the stock room and offices,” Hall said.

Hall was eager to make a switch to a more efficient technology: ceramic metal halide (specifically, Philips Lighting’s MasterColor lamps, with fixtures from Amerlux Lighting Solutions).

Convincing others was not so easy. Many people, he said, liked the incandescent lights because of the lamps’ warm glow. While the glow can be an advantage in certain retail environments, it wasn’t that well-suited to Yankee Candle.

“Our product covers the entire color spectrum,” Hall explained. “Incandescents tend to flatten the warmer colors out. We really weren’t getting a true color for all the colors we had on display.”

Hall eventually won others over to the technology. About four years ago, Yankee Candle’s mall stores started using ceramic metal-halide lamps.

“The benefits quickly became clear to senior management,” he said. “There was an enormous reduction in the amount of energy consumed per store.”

There were other benefits as well. With the previous lighting system, there was a tremendous amount of heat gain, sot the HVAC system had to be oversized. The ceramic metal-halide system reduced that load. Plus, previously the stores had to constantly rotate merchandise to protect against UV degradation.

“The MasterColor lights and Amerlux fixtures provide UV protection, and as a result we have greatly reduced our loss of product due to fading,” Hall said.

But the biggest advantage had to do with aesthetics.

“It made our product look 100% better,” Hall said.

With the help of generous rebates from the local utility, Hall got approval for the flagship upgrade. In August 2006, the store converted to ceramic metal-halide lighting. The new system utilizes Philips’ 20-watt Mini MasterColor lamp in approximately 600 fixtures (Amerlux’s Cylindrix Series) and its 39-watt T6 lamp in another 850 fixtures (Amerlux’s Imperia).

“We received almost $170,000 in incentives from the local utility,” Hall said.

The impact on the store environment was dramatic.

“The change is just stunning,” Hall said. “The general manager of the store attributes at least a 7% increase in sales directly to the new lighting.”

Hall noted that the new replacement cycle is fairly predictable, resulting in labor and time savings.

“In a store the size of our flagship, lamp replacement can be a nightmare because of daily burnouts,” he explained. “Under the previous system, we could count on having several burnouts a day. That number has been reduced to almost zero.”

Hall said there is an increase in initial build-out costs with the new system. They are offset, however, by the resulting energy savings and other benefits.

“The general consensus is that it [the upfront cost] is well worth it,” he said. “Although lighting is a hard thing to grab hold of, we definitely feel our improved lighting has increased our sales.”

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FINANCE

Home Depot Projects Lower Profit in 2007

BY CSA STAFF

Atlanta, The Home Depot Inc. said Wednesday it will pump $2.2 billion into improving its business this year even as it expects lower earnings and slim sales growth. Home Depot said that for fiscal 2007 it expects sales growth in the range of flat to an increase of 2%, a decline in comp-store sales in the middle single digit percentages and an earnings per share decline of 4% to 9%.

Including the effect of a 53rd week in its fiscal year, consolidated sales are expected to increase by 1% to 2%, and earnings per share are expected to decline by 3% to 8%, Home Depot said.

CEO Frank Blake told investors at Wednesday’s conference that like last year, “2007 also will be a difficult year.” But he said it will be a year of focus on Home Depot’s priorities and a year with “hopefully less noise.”

The “noise” was apparently a reference to the investor furor over former CEO Bob Nardelli’s hefty compensation in light of the company’s lagging stock price. Nardelli resigned in early January after six years at the helm of the company. He took with him a severance package valued at $210 million.

To improve its business, Home Depot said it will invest $2.2 billion this fiscal year in key priorities, including the opening of 115 stores. The investment includes $1.6 billion in capital spending and $600 million in expense.

Home Depot said it will recruit master trade specialists, simplify its staffing model, use more technology to aid customer service, and redesign employee compensation and reward plans. It also will invest in new merchandise and review its pricing strategies. Additionally, the chain will spend money on customer loyalty programs, direct-ship programs, credit programs and other specialty sales initiatives.

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Federated Plans Name Change

BY CSA STAFF

New York City, Federated Department Stores on Tuesday said it would ask shareholders to approve changing the company’s corporate name to Macy’s Group Inc. A vote to amend the corporation’s charter to accommodate the new name will be held in conjunction with Federated’s annual meeting on May 18. If approved, the company will be known as Macy’s Group Inc., effective June 1. The move comes on the heels of the company changing most of its store nameplates to Macy’s.

“Macy’s Group is the appropriate name for our company, given that about 90% of our sales involve the Macy’s brand. That said, Bloomingdale’s is—and will remain—a very important part of our company,” said Terry J. Lundgren, Federated’s chief executive. Federated Department Stores also said stronger sales at established stores and lower costs drove a 5% rise in fourth-quarter earnings. For the quarter ended Feb. 3, net income rose to $733 million from $699 million the prior-year period. Sales fell 4% to $9.16 billion from $9.57 billion, as the company shuttered 80 “duplicative” store locations. Comp-store sales rose 6.1% in the quarter.

During the quarter, Federated lowered its selling, general and administrative costs 11% to $2.31 billion.

The company also announced a $4 billion increase to its stock buyback program and said it will immediately repurchase 45 million shares for $2 billion under the plan.

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