LNT puts stock in store-level managers
May 6, 2002,
Clifton, NJ — Highly centralized Linens 'N Things is undergoing a cultural shift, working to sharpen its inventory and in-stocks by training store-level management to handle selected merchandise decisions — a formula long embraced by rival Bed Bath & Beyond and one of a series of initiatives LNT is employing as it seeks to return to historic levels of profitability.
Allowing managers to oversee the replenishment of their inventories and giving them a "renewed sense of ownership" should enhance the chain's productivity, sales per square foot, and the general shopping experience over the long term, said senior vp and cfo Bill Giles.
"We know that the guest who needs help and gets it spends more than the guest who doesn't get it," he said last week during an address at Lehman Bros. Retail Seminar in New York.
Implemented during the first quarter, the program of "local inventory ownership" allows managers to review their unit's on-order positions and make adjustments based on their knowledge of the market and its conditions, Giles said. The program largely focuses ownership on best-selling skus. Managers also may "influence" assortments at the local level.
The changes will take time to fully implement, he said. But the company has invested in enlarging payroll in line with the increased responsibility surrounding store ownership, Giles said, as well as training.
And yes, he acknowledged, SG&A will take a short-term hit. "We believe we can leverage down as we improve our overall performance and improve operating margin," Giles said.
LNT is working to return to sales per square foot of $180 to $185, characteristic of its performance two years ago, Giles said. Longer-term, its target is $195 to $200 per square foot.
In a move that promises to be fully in place by the second half of the year, LNT's repositioning of home textiles is showing improvement, Silverstein said.
The company launched several new programs in February, bowing better quality goods at the same or better price points. A 300-count pima cotton sateen sheet replaced a 250-count program but remained at the same pricing, for example. LNT also sharpened prices on its best-selling sheet program, "which has accelerated its business," Silverstein said.
The company also continues to invest in specialty bedding, including quilts and duvets, many patterns of which are exclusive.
In addition, soft window is also a growing business opportunity that is relatively underpenetrated, Silverstein said.
The "things" part of the business has expanded categories as well, he said, including specialty foods, which in the fourth quarter was upgraded from a seasonal to a year-round category. The cleaning category, consisting of everything from consumables to vacuum cleaners, is helping to improve frequency. Decorative accessories, which includes candles and wall décor, has undergone a total overhaul, he said, and has begun to show some turnaround.
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