LNT to shutter 17 stores
February 4, 2002-- Home Textiles Today,
While it generally closes three to four stores a year on average, Linens 'N Things announced that it will close 17 out of its 343 store locations this year.
In its fourth quarter and full year 2001 results conference call last week, Norman Axelrod, chairman and ceo, said the closings were an effort to "reallocate resources to more productive assets and to sharply focus on those initiatives that will improve and strengthen our operating performance."
The company will also work on three primary initiatives to drive sales and improve operating performance, one of which is to improve its textiles business, a critical area, Axelrod said. "There is considerable work in this area to return to the performance levels that we expect."
LNT believes now is the time to close the 17 underperforming stores, said Bill Giles, senior vp and cfo. They do not meet the company's "strict financial hurdles," are not strategically well positioned and are fairly dispersed geographically. Together, the stores produced $70 million in sales for 2001, or less than 4 percent of the company's total. Each store averaged $4.1 million in sales, compared to the company's average of $5.8 million.
Giles added that these closings will result in improving the company's sales per square foot, inventory turns and operating margins. The closings will begin this month and take up to 12 months to complete, he said.
Giles added that, despite the closings, LNT is "confident" that it will more than double the number of stores it currently operates in the long term and expects to have new store growth average more than 15 percent over the next three years.
Axelrod also outlined three initiatives LNT will implement for near- and long-term results, beginning with the textiles area. This effort, headed by Steve Silverstein, president, will build on introducing new products, sharpening price points, strengthening the accessories business and increasing marketing support.
The textiles business was underperformed this past quarter, said Silverstein, with December sales flat compared to last year, though improvements were supported by new product introductions and the rollout of Nautica Home.
LNT's merchandise initiatives will strive to "drive guest traffic and increase the average transaction," said Silverstein. It will improve its core product offering, he said, which includes repositioning major programs to provide better quality at the same or lower prices. It will also continue to grow its textiles accessories, including quilts and duvets, which are developed by and exclusive to LNT. It will also review its textiles assortments on a regional basis to optimize local market opportunities.
Another initiative is improving its in-stock positions. LNT will concentrate aggressively on inventory and supply chain management, and has developed a plan to improve it on a local store basis.
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