LNT to leverage new allocation system
April 26, 2004,
NEW YORK — Linens 'n Things is looking to improve productivity this year in part through the rollout of a new merchandise allocation system, executives said this morning at the Lehman Brothers Retail Seminar here.
The system sorts according to climate, demographics and lifestyle, as well as regional considerations such as distinguishing beach and mountain communities, said David Coder, senior vice president of store operations. Currently, about 25 percent of LNT's departments are using to program for forecasting, with another 30 percent to 40 percent of departments to be added this year.
On the financial side, the company expects an accounting shift related to vendor allowances to impact full-year earnings, according to Bill Giles, executive vice president and chief financial officer.
LNT expects fully diluted earnings per share for the year to reach $1.67 to $1.72. Without the change, EPS would have been projected at $1.91 to $1.96, he said.
The company's first quarter profits, reported last week, plummeted 98.6 percent to $30,000 because of the accounting change, which affects the reporting of its operating costs as percentage of sales. LNT had previously applied vendor allowances to reduce those costs. Vendor allowances during the first quarter totaled $7.9 million.
Giles also said the retailer expects to achieve sales gains of 11 percent to 14 percent this year, with fiscal year comps expected to reach the low to mid single digits.
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