The following selections were culled from Chain Store Age headlines.
YOU KNOW IT’S BAD WHEN…
Starbucks Posts First Quarterly Loss, cuts 1,000 support Jobs, eliminates COO Position
It seems that people finally figured out that they needed to put food in their mouths and gas in their cars versus having a $4 cup of joe. Howard Schultz is on the right path, slowing store expansion, closing underperforming stores and cutting expenses. Too bad the former CEO took an amazing brand and drove it into the ground. Starbucks will rise again under Schultz.
Kmart Partners with Reality TV to Rock Back-To-School Sales
Oh boy. Taking a page from Sears, who recently hitched itself to LL Cool J and MTV in a desperate attempt to attain relevancy among teens, Kmart, one of the sponsors of the ABC reality show, “High School Musical: Get in the Picture”, just announced that various scenes from the show would be filmed in Kmart stores and Kmart products would be featured.
Disney’s “High School Musical” is one of the hottest movie franchises out there. Andrew Stein, Kmart’s interim CMO, issued a statement that the partnership with ABC and “High School Musical: Get in the Picture” will “showcase Kmart as a modern, hip, fun brand.”
The problem: Kmart isn’t modern, hip or fun.
My modern, hip, and fun niece and nephew are High School Musical groupies. Their mother wouldn’t be caught dead in a Kmart, not to mention that they don’t even have Kmarts in their city anymore. Andrew Stein should hook up with Sears’ CMO who put together the Sears/MTV LL Cool J deal – they could both share great stories about their desire to continue to put lipstick on a pig.
Mervyns Files for Chapter 11
Another one bites the dust. Though not a liquidation, the end could be near for this irrelevant discount retailer. It’s already pulled out of Washington and Oregon. Looks like California may not be far behind. Levi Strauss is the company’s biggest unsecured creditor which means that a big chunk of their apparel product offerings are no longer. In fact, many vendors have stopped shipping to Mervyns. It’s tough to run a retail store without any merchandise.
Office Depot Posts Quarterly Loss
The company reported a second-quarter loss on Wednesday as declining spending by smaller businesses and retail customers hurt sales. The company said there was weakness in smaller business demand in Florida and California, which account for about 30% of the segment’s sales. As California goes, so goes the U.S. This doesn’t bode well for the overall economy.
Court Reverses Whole Foods-Wild Oats Ruling. Whole Foods can acquire Wild Oats. “No it can’t” says court as the combined company would stifle competition in organic foods category.
The Federal Trade Commission argued that the transaction would stifle competition by combining the two leading organic supermarket chains and lead to higher prices. The company has already sold 35 of Wild Oats’ 110 stores and closed 12 more. About 20 of the remaining Wild Oats stores have been converted to Whole Foods outlets, leaving only 40 remaining Wild Oats stores in Whole Foods portfolio. This decision, based on the fact that the original Wild Oats chain is barely intact is our judicial system at work (not its best work however). Last time I checked, every grocery store chain across the U.S. was rapidly expanding its organic offerings, with Trader Joe’s leading the pack. And those competitors were offering better prices, leading to more competition IMHO.