Arts and crafts retailer makes two key digital moves
A.C. Moore Arts and Crafts is ramping up its digital offerings with an acquisition — and an investment.
The retailer’s parent company, Nicole Crafts, has acquired Blitsy, an online retailer of arts and crafts products that was founded in 2011. Blitsy will operate largely as an independent subsidiary of Nicole Crafts and remain based in Chicago, with access to A.C. Moore’s infrastructure and scale. A.C. Moore will leverage Blitsy’s e-commerce expertise and relaunch acmoore.com in 2018.
“We are joining the A.C. Moore family because there is a huge opportunity to utilize each other’s strengths and move faster toward our vision of delivering a truly rewarding and holistic experience to customers, teammates, and brand partners,” said Ross Petersen, co-founder and CEO of Blitsy.
In a second initiative, the A.C. Moore parent company secured an exclusive partnership as part of a major investment in handcraft marketplace Zibbet, a marketplace of some 50,000 independent artists, crafters and vintage collectors.
“A.C. Moore is entering a period of unprecedented growth,” said Anthony Piperno, owner and chief marketing & merchandising officer at A.C. Moore, which operates 135 stores across the East Coast. “These dynamic additions to our company can rapidly accelerate adoption of our proprietary product across a global audience of creative consumers and position our family as industry leaders among arts and crafts enthusiasts everywhere.”
A.C. Moore was advised on both transactions by EGL Holdings, an Atlanta-based boutique investment banking company.
Party City’s Q3 hit with hurricanes and Web performance issues
Party City reported third quarter profit in line with expectations even as its sales fell short due to Web problems and the impact of hurricanes.
Total revenues rose 0.6% to $560.1 million for the quarter ended Sept. 30. Its results included a $5 million hurricane-related headwind.
Retail sales increased 4.7%, driven primarily by increased store count through acquired franchise stores (36), one acquired independent store and new store growth (20 net new Party City stores) in the past 12 months. Same-store sales fell 1.2%.
Party City’s comp performance was impacted by problems on its Web platform that negatively affected traffic levels on its site. The company said it is “aggressively addressing these issues.”
Net income totaled $10.1 million or $0.08 on a per share basis, compared to $10.2 million, or $0.08 per share in the prior year period. Adjusted earnings per share increased to $0.13 from $0.12 in the year-ago period.
“Our bottom-line performance in the third quarter once again demonstrated the inherent benefits of our unique vertical model,” said CEO James M. Harrison. “Despite modest topline growth, and slightly softer than expected retail brand comps, in part driven by the hurricane disruptions, we delivered solid financial performance which was largely in-line with expectations, as we focused on the core fundamentals of gross margin expansion and disciplined cost control, resulting in adjusted EPS growth of over 8%.”
Based on its year-to-date performance, Party City is updating our full year guidance. It expects full-year earnings in the range of $1.21 to $1.25 per share, with revenue in the range of $2.36 billion to $2.39 billion.
“Looking ahead, we remain focused on executing our retail initiatives as well as elevating our e-commerce capabilities which, combined with the power of our vertical model, will drive sustainable top and bottom line improvement,” Harrison said.
The company’s retail operations include over 900 specialty retail party supply stores (including approximately 150 franchise stores) throughout North America operating under the names Party City and Halloween City, and e-commerce websites, principally through the domain name PartyCity.com.
J.C. Penney surprises in Q3
J.C. Penney gave its investors — and the retail industry — some good news on Friday, topping Street estimates and reporting better than expected sales for its third quarter.
Analysts had been expecting the worst: Two week ago, Penney cut its annual forecast and estimated that third quarter same-store sales would inch up 0.6% to 0.8%. But on Friday, the chain reported a 1.7% increase in same-same stores, resulting in a positive two-year stack of 0.9 %.
Penney’s total net sales fell 1.8 % to $2.81 billion in the quarter, ended Oct. 28, better than analysts’ estimates of $2.77 billion. The decline was attributed primarily the result of the 139 stores closed this year through the end of the third quarter.
Penney, similar to many other retailers, heavily discounted apparel in the third quarter to clear room for holiday merchandise. Those actions, combined with some other charges, took a toll on the company’s profit. Penney’s net loss rose to $128 million, or a loss of 41 cents per share, from $67 million, or a loss of 22 cents per share, a year earlier. Adjusted earnings came in at a net loss of 33 cents a share. Analysts had expected a loss of 43 cents per share.
“During the third quarter, we took aggressive actions to clear slow-moving inventory, primarily allowing for an improved apparel assortment heading in to the holiday season,” said Marvin R. Ellison, chairman and CEO. “While these actions had a negative short-term impact on profitability in the third quarter, we firmly believe it was the right decision for the company as we transition into the fourth quarter and fiscal 2018.”
The top performing divisions during the quarter were home, Sephora, footwear and handbags, women’s specialty and salon. Geographically, the Gulf Coast and Midwest were the best performing regions of the country.
On the chain’s quarterly call with investors, Ellison said Penney’s appliance business, an area of expansion this year, had more than doubled versus last year.
“The sales demand at appliance showrooms had opened in 2016 delivered a plus 30% comp in the third quarter,” Ellison said. “We are clearly winning share in this category and excited to drive significant gains in the holiday season as well.”
Another targeted area of expansion, Penney’s salon services, is also up.
“Our salon business had another outstanding quarter with our continued investment to rebrand existing J.C. Penney salons to the Salon by InStyle along with improvements in technology we are committed to modernizing this very important business,” he said.