Gottschalks Sees Marketing Results

Fresno, Calif. — At the onset of its board of directors' evaluation, which includes exploring the possibility of selling the company, Gottschalks Inc. recently embarked on a new marketing campaign intended to help improve, among other things, its lagging home store area.

The home product categories that have had the most success so far, since the holiday campaign kicked off just prior to Thanksgiving, have been gifts, housewares and some electronics, said president and ceo Jim Famalette, ceo on the company's third-quarter call to analysts.

"We're getting very strong reactions to the specific items we are promoting — but in general we're seeing a little bit of an uplift to those areas, so that we are becoming, I think, more convinced that by focusing on the marketing of key items versus more generalized marketing of home product, we will be able to more successfully drive consumers," he explained.

The 61-unit regional department store operator reported a third-quarter loss of $2.7 million, worse than the net loss of $1.6 million for the same period one year ago. Sales for the quarter were $148.8 million, down 1.6% from $151.3 million last year, while comp-store sales rose 0.5% for the quarter.

The chain is measuring consumers' reactions to the items being marketed on a day-to-day basis.

"The changes in the home won't be as fast as in apparel, because you have to buy the product further out, but we're starting to see the success of [the marketing] and we're anxious to see how it goes in next 30 days," he continued.

Also helping was the post-Thanksgiving event, described by Famalette as "very strong," of which the home store area was "a strong part. It's very early still, but it was good to see something positive come to light after all of our efforts."

During the third quarter, sales of home furnishings remained "challenging and unfortunately overshadowed the sales gains we generated in our soft lines categories," Famalette said.

For this quarter, Gottschalks will support its new marketing campaign with heavier promotions than in previous quarters to drive sales during the holiday.

"We continue to believe there are opportunities to turn around [the home store merchandising departments] in the near term," he said.

Inventory is also an area of focus in the home area. The retailer has begun to shift out of home and more into other soft lines, such as cosmetics, shoes and accessories, which are all performing more strongly.