Cost Plus to knock down price points, reconfigure textiles
By Staff -- Home Textiles Today, 5/19/2006 12:55:00 PM
Oakland, Calif. – Convinced that its price points have gone too high, Cost Plus plans to “get back to a diversity of price points in line with customers’ expectations,” the company’s chief executive said late yesterday afternoon.
The retailer’s margins declined by 260 basis points during the first quarter ended April 29, with heavier-than-expected markdowns on the ailing furniture and textiles businesses, which took the biggest bite out of margin. The company reported a net loss of $4.8 million, or 22 cents per share. Sales rose 6.5% to $213 million. Comps declined 4.3% compared to a 1.9% slide in last year’s first quarter.
The 274-unit chain’s top 50 stores recorded a 3.3% comp-store gain during the first quarter, but the bottom 50 stores recorded comp declines of 15.2%, president and ceo Barry Feld said during the company’s quarterly call with analysts.
The company is making “tough choices” as it repairs its business, he added. Cost Plus has decided to delay the opening of a flagship store in the New York City area and hold off on expansion into the Northeast. Its catalog project has also been suspended.
The retailer has formed task force teams around five key initiatives: intense focus on stores and markets that are underperforming; redefinition of its pricing and promotion strategy; integration of merchandise advertising and marketing; strategies to boost customer traffic; and inventory optimization.
The company will take a one-time charge of 20 cents per share to cover the pricing adjustment, with some 18 cents per share dedicated to markdowns. Feld pointed to decorative pillows (most priced over $20) and bedding as two representative areas where price points have risen too high.
“We need to get underneath the cost of our merchandise to ensure we are at the right price points,” he said. “Given our size, I believe we are not taking full advantage of our purchasing power to drive down the cost of merchandise, and I’m going to reinforce this with our suppliers.”
The company continues to interview candidates for its open chief merchant position, Feld added, and may wind up with two chief merchants – one focused on home and the other on food/wine.
We would love your feedback!
-
Bon-Ton Stores Improves Net Loss in 2Q
Sep 13, 2011 -
Stein Mart's home business makes a comeback in Q1
May 17, 2012 -
Bon-Ton Stores improves net loss in 2Q
Aug 18, 2011 -
Baby Steps
May 24, 2011
Featured Company
-
Brandwise Inc.
Brandwise serves a model - not just an industry - by integrating, automating, and optimizing the entire sales channel, from wholesale Suppliers to their Reps and the Retailers they service. In short, our software helps Reps and Suppliers sell more and create... more
