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Thomas Russell

Retail briefs

Wal-Mart testing EPCs

Wal-Mart and eight product manufacturers last week began testing electronic product codes, or EPCs, at select Supercenters and one regional distribution center in the Dallas/Fort Worth metroplex.

This trial follows what the company said was extensive testing at its RFID lab and months of collaborative preparation by Wal-Mart and its suppliers. Field equipment testing has been underway in Texas since mid-month, but nothing with an RFID tag was placed on store shelves, the company added.

The eight manufacturers participating in the first phase of the trial are: The Gillette Company, HP, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestle Purina PetCare Company, The Procter & Gamble Company and Unilever.

Wal-Mart has set a January 2005 deadline for its top 100 suppliers to begin placing RFID tags on cases and pallets destined for Wal-Mart stores and Sam's Club locations in the Dallas/Fort Worth metroplex area.

Kmart and Martha work out new deal

Kmart and Martha Stewart Living Omnimedia have forged a new agreement that extends Kmart's exclusive relationship with the Everyday brand to 2009, amends some minimums demanded under a previous contract, and will expand the brand into furniture.

The revised agreement extends the Martha Stewart Everyday distribution agreement by two years. It also eliminates minimum guarantees by product category, although the aggregate minimum guarantee in the contract remains the same, the parties said in a joint statement.

In addition, Kmart also said it will withdraw the February lawsuit it filed in bankruptcy court against MSO IP Holdings Inc. At the time, Kmart claimed MSO was demanding excessive royalties.

MSO responded that Kmart was attempting to shave $4.5 million from the $52 million it owed on sales of Everyday merchandise during fiscal year 2003 and wanted to pare its advertising in MSO media properties by $1 million to $2 million. The announcement did not clarify how those issues were resolved.

Fred's lowers 2004 expectations

Fred's Inc. now expects earnings for the year to be in a range from 97 cents to $1.00 per share, as compared with its previous estimate of between $1.03 and $1.10 per share.

The revised guidance represents earnings growth of between 14 percent and 18 percent over year-end 2003 earnings of 85 cents per share.

Fred's is reducing its earnings guidance because of lower-than-expected sales trends in the first quarter, which reflect an increasingly competitive sales environment and the dampening impact of continuing sluggish economic conditions and rising prices on customers in the discount store sector, stated the company. Fred's also said it faces cost increases for expenses such as freight and logistics.

The company plans to report full financial results for the first quarter of 2004 on May 20.

Kmart opens N.Y. design office, Schultz to head

Kmart Holding Corporation is opening the Kmart Design Group Office in New York. The office, located on Eighth Avenue, is the first product design presence Kmart has held in New York and will be the base of Lisa Schultz, senior vice president and chief creative officer, stated the company.

In the fall of 2004, Kmart will unveil its first collection that has been redesigned in-house by the Kmart Design Group.

Schultz joined Kmart in September 2003 and is responsible for the creative vision of Kmart. Prior to her position at Kmart, Schultz was executive vice president of product development and design at Gap, Inc. for 14 years and has held executive positions at Ralph Lauren and Calvin Klein.

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