Mervyns Chief Outlines Plan
June 2, 2008-- Home Textiles Today,
Mervyns plans to shuffle its real estate and launch into e-commerce as new ceo John Goodman — who joined the company in April from Levi Strauss & Co. — looks to generate cash and revive sales.
Mervyns will open five stores in core markets next year, for a total of 17 new stores opened since the retail chain was acquired from Target in July 2004 for some $1.65 billion by a group of private equity firms led by Cerberus Capital and Sun Capital Partners. Mervyns, which then numbered 257 stores in 13 states (and had 2003 annual sales of about $3.6 billion), currently operates 177 stores in seven states, concentrating on California and the Southwest.
The company — No. 25 on the HTT Top 50 Retailing Giants list, with 2006 home textiles sales of $193 million — will also sell off from five to 10 under-performing units in locations with high real estates values. The real estate sale is expected to fetch $25 million to $50 million, which will be used for operations and new initiatives.
In the fourth quarter of this year, Mervyns will begin selling goods online, looking to create a $50 million business.
Goodman, who was formerly president of the Dockers brand, wants to provide products and services targeting niche markets, particularly catering to Hispanic customers. The retailer will emphasize its heritage as a "neighborhood department store" through strategic hires and investments in store-level staff training, as well as targeted sourcing and buying.
"We are leveraging our base of strong merchandising talent and bolstering it with new team members both from within the department store channel, as well as other categories and specialty brands, to bring a new look to Mervyns," said Goodman. "We have the plan and are in a strong financial position, and we have adequate liquidity to invest into this downturn to recapture the loyalty of value-conscious shoppers."
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