Linens 'N Things shifts its strategy
April 23, 2001,
CLIFTON, NJ — Linens 'N Things hopes to resuscitate its textiles area — the category that it had counted on to provide more than 60 percent of sales during the recently concluded first quarter — with three new initiatives, announced last week.
"Our core textiles category was disappointed, reflecting an overall weakness in the industry," said Steven Silverstein, president. "The performance of textiles had a significant impact on overall sales."
In addition, Silverstein announced a "new and improved" solid-color bath towel program. In the bedding area, it plans to strengthen promotional items.
All of these initiatives are part of Linens' overall goal to increase store productivity and the average store transaction. The company has set a target of achieving sales of $150 to $175 per square foot, he said. As previously announced, the percentage of proprietary product is still expected to reach 15 percent by the end of fiscal year 2001, he added.
However, Linens will not concentrate heavily on driving additional traffic into the store, Silverstein said. Instead, it looks to improve sales by increasing the average transaction and its productivity within the stores. Consequently, the advertising budget will remain flat compared to last year, company ceo Norman Alexrod said.
Analysts liked the addition of a name brand to the stores but hesitated on the other initiatives. It was "impressive that they got the Nautica brand," said Shelly Hale, analyst, Banc of America, San Francisco. "Though it's not exclusive, it is a well-known brand," and a good step forward. The textiles category is a mature business, she said, and one that hasn't had strong growth in a number of years, making it a difficult category for retailers.
"Clearly, they're looking for a catalyst for reviving that area of business. Nautica might not solve all of the problems, but it is a good start," Hale added.
Joan Bogucki, analyst, WedBush Morgan Securities, Los Angeles, felt that the Nautica addition was positive, but wasn't sure whether it would solve the real problem, she said. "It's always important to change the merchandise, but you should always do that...Fundamentally, I think it's a merchandising issue."
Increasing the proprietary percentage of the merchandise will also be "challenging," she said, as Linens tries to develop new international sources. "They still need to gain experience in that area. Crate & Barrel and Pottery Barn do an excellent job of this."
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