LNT Sees Light Ahead in Textiles

Top of Bed, Sheets, Pillows Showing Positive Trends

Struggling big-box specialty retailer Linens 'n Things reported yet another "disappointing" loss in its first quarter results — but its home textiles department is showing signs of a turnaround, chairman and ceo Robert DiNicola told financial analysts.

LNT is doing a good business in soft home "for first time in many years," he said, denoting fashion bedding, the pillow segment and sheets for special favor, while pointing to comforters, duvets, and blankets as sore spots.

"We see continued improvement ahead on textiles side," DiNicola emphasized, "as we round out the assortments."

Margins in the quarter were undercut by heavy promotions, with housewares being in the forefront of that activity, DiNicola said.

Both customer visits and average ticket were down in the quarter as shoppers cherry-picked promotional items and avoided taking home more regularly priced goods.

Now that the 573-store chain is shorn of more than $100 million in "distressed inventory," the leading LNT challenge is store traffic. DiNicola repeatedly referred to the 2007 back-to-school season as the first storewide test for full-assortment results for the company's recently firmed-up merchandising team.

While top of bed saw positive comps in the first quarter, and some soft home skus exceeded plan, DiNicola said home textiles as a whole has still to recover from its "loss of momentum" in previous seasons.

Inventory at the $2.8 billion chain is roughly flat for the quarter, while, store square footage grew 3.8%, yielding an inventory cut of 3.4% per square foot, almost on pace with the overall revenue drop.

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