LNT: We're tough, but fair

CLIFTON, N.J. — When it comes to chargebacks and demands for allowances, Linens 'n Things has a reputation for being relatively less avaracious than some other major retailers. So what does LNT receive in exchange from vendors?

Not enough, executives said last week following the company's annual shareholder meeting.

Although LNT merchants don't leave the bargaining table until they feel they've wrested the best deal possible, according to Norman Axelrod, chairman and CEO, the retailer would prefer to follow the Wal-Mart mode of negotiation: tough as nails up front, no unjustified surprises afterward.

However, "If we cannot identify the benefits from that approach," the company may have to change its stripes, Axelrod said.

LNT holds three primary expectations for its relatively restrained use of the chargeback cudgel, said Audrey Schlaepfer, executive vice president and chief merchandising officer. The retailer wants to receive the first deliveries on fresh goods, preferential treatment on introductions and preferential treatment during periods of inventory shortages, she said.

"Right now, we're receiving it by vendor but not across the board," she added.

On the subject of home textiles, in particular, executives acknowledged that bankruptcies and liquidations in the home textiles industry have been disruptive — in both narrow and broad terms.

The post-Pillowtex bath towel department is still evolving, Schlaepfer said, although she expects the process to be completed by fall.

On the larger scale, the erosion of a domestic supplier base is helping propel LNT's global sourcing efforts. The biggest challenge isn't finding product, it's getting the supply chain in order, executives said. The company is aggressively working on supply chain logistics, and, to that end, its merchandising and supply chain officers recently returned from a field trip to Asia.

LNT is one year away from being able to move easily in and out of the world's major ports, said Tony D'Onofrio, senior vice president and chief supply chain officer.

"We're in the middle of the game," he added. "We have the skills. Now we're migrating our infrastructure."

In the merchandising realm, LNT continues to pursue regionalization opportunities, Schlaepfer said. These are being aided by the rollout of both the store-level inventory ownership program — which gives managers authority over the best- and worst-selling skus — as well as the new merchandise allocation system.

However, she emphasized, a large percentage of the store's skus are appropriate to the entire country.

Categories best suited to regionalization include fashion bedding, wall art, and some seasonal goods, added Schlaepfer.

"It's about doing it where you get credit for it and where it's appropriate for the guests," she said.

The same calculation holds true for private-label merchandise, which currently makes up about 18 percent of the retailer's mix. Schlaepfer said LNT plans to increase that number.

"As more and more home textiles companies go away, there is a void," she said.

Separately, William Giles, executive vice president and chief financial officer, emphasized that private-label development is a priority with the company, and said LNT hopes to grow that business to between 25 to 30 percent of the chain's merchandising mix in both soft and hard products.