August 23, 2004-- Home Textiles Today,
Kmart/Home Depot revise terms of deal
Revising a previous agreement, which called for Kmart to sell The Home Depot up to 24 stores for a purchase price of up to $365 million, the companies have now decided that Kmart will sell no fewer than 13 stores for $173 million in cash, and up to 19 stores for $288.5 million in cash.
Additionally, Kmart has been granted an option to sell certain stores which, if exercised, would increase the minimum number of stores sold to 15 and the minimum cash to be received to $214 million. The revision of the transaction was the result of certain closing conditions not being satisfied with respect to certain of the stores.
Sears hires Manto as sourcing guru
Sears, Roebuck and Co. has named former J.C. Penney executive Rodney Birkins Jr., to the post of senior vice president of sourcing, effective Sept. 1.
He will report to Gwen Manto, executive vice president and general manager, apparel. Birkins will oversee all sourcing, international buying operations and technical design efforts for Sears. Birkins most recently served as president of the international purchasing and import subsidiary of J.C. Penney Company, Inc., responsible for the company's sourcing operations including 31 international offices.
Federated seeing signs of life in textiles
Although soft home performed weakly during the second quarter, there are signs that it's beginning to pick up, analysts were told during Federated Department Stores' quarterly conference call.
And despite the fact that the new Macy's Home Store merchandising organization is still in transition, it is beginning to have some impact. "Product is looking good and Hotel (Federated's proprietary Hotel Collection brand) is doing extremely well," said Karen Hoguet, chief financial officer.
Stores that have been remodeled under Federated's "reinvent program" continue to outperform non-renovated stores, Hoguet said. Following a bump in the first year after remodeling, the reinvent stores settle into a performance that runs about one point better than other stores, she said.
Hanover puts tough 2Q behind it
While Hanover Direct's net income for the second quarter wasn't substantial — just $600,000 — it did represent the company's third profitable quarter in a row. Hanover eked out the gain despite an 8.9 percent drop in sales to $96.5 billion.
Tight vendor credit and lower borrowing availability kept second quarter inventories low, hampering sales, the company reported. With inventory flow sputtering, Hanover also suffered during the quarter from lower product fill rates as well as higher back orders and cancellations.
The company pumped up its liquidity last month with a new loan and amended credit facility, bringing liquidity to $25 million in the aggregate. The new arrangements "provide the company with adequate liquidity to support its business," said Wayne Garten, president and CEO.
May breaks its silence
May Department Stores Company did something new after releasing its quarterly results — it hosted a phone call with analysts. The practice is routine for many retailers, though not required. May decided to inaugurate the practice since its acquisition of Marshall Field's significantly increased the size of the company, according to Tom Fingleton, executive vice president and chief financial officer.
Home textiles turned in a lackluster performance during the second quarter ended July 31, executives said, and even underperformed the total store in what was a "softer" quarter than 1Q. On a positive note, Lauren and Tommy Hilfiger goods provided an up-tick "fueled by fashion, stripes and prints," according to Bill McNamara, vice chairman.
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