Author Archives: New World Staffing Inc.

Guns, ammo drive Cabela’s 12% Q4 comp

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February 14, 2013 | By Mike Troy
Strong sales of guns at ammunition at Cabela’s contributed to a 12% same store sales increased and enabled the company to report record sales and profits for the fourth quarter and full year.

“Every area of our company performed at very high levels in the fourth quarter,” said Tommy Millner, Cabela’s CEO. “Sales and profit per square foot at our next-generation stores were 40% higher than our legacy stores. Comparable store sales, aided by a surge in firearms and ammunition, increased 12%, a new record, and our direct business grew 1.7%, the first increase in 11 quarters.”

So substantial was the impact of firearms and ammunition sales, Millner said if the company had experienced a normal level of activity the fourth quarter comp increase would have been 5%. For the quarter, excluding firearms and ammunition, merchandise margin increased 60 basis points. Merchandise margin increased in each of the company’s 13 merchandise sub categories, including firearms and ammunition. Ongoing focus on Cabela’s branded products, improved markdown management and greater vendor collaboration contributed to the improvement. Consolidated merchandise gross margin declined 20 basis points as a direct result of the mix effect from the firearm and ammunition surge.

Total sales for the quarter increased 15.2% to slightly more than $1.1 billion and profits increased 19.7% to nearly $90 million. Retail stores were responsible for most of the growth. Retail store revenue increased 26.3% to $664 million, direct revenue increased 1.7% to $385.5 million and financial services revenue increased 7.2% to $83.2 million.

“During the quarter, we made significant additional omni-channel investments in advertising,” Millner said. “These investments helped accelerate comparable store sales and growth in Direct revenue. This acceleration has continued into the first quarter of 2013. Additionally, we are very encouraged with increases in new customers as it further expands our market share and has a positive long-term impact on our consumer franchise.”

Chipotle likely to increase menu prices midyear

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Company has not determined amount and exact timing of price increases
Feb. 6, 2013 Lisa Jennings
 

Chief financial officer Jack Hartung said commodity inflation hit “harder and faster than expected.”

Chipotle Mexican Grill Inc. indicated during an earnings call on Tuesday that it would likely increase menu prices midyear to offset rising commodity costs.

After reporting a 6.8-percent increase in profits for the fourth quarter ended Dec. 31, Jack Hartung, Chipotle’s chief financial officer, said commodity inflation hit “harder and faster than expected.”

Though food inflation leveled off a bit in December and is expected to moderate over the next few quarters, Hartung said menu price increases would likely be warranted for the 1,410-unit chain this year. The amount and exact timing of the increase has not yet been determined.

Food costs during the quarter rose 130 basis points, or 1.3 percent, to total 33.5 percent of sales. Much of the commodity inflation was blamed on beef, but the higher cost of white corn and tomatoes used in salsas, as well as dairy products, also contributed to the increase.

Chipotle also reported that its restaurant level operating margin was 24.6 percent in the latest quarter, a drop of 150 basis points, or 1.5 percent, from a year ago. The company said the decrease was also the result of higher food costs.

Rather than jumping to pass that cost increase onto consumers, however, Hartung said the company prefers to wait. “The most important thing to us right now is to build customer loyalty and to build transaction momentum,” he said.

“As we hit the debt ceiling crisis and you know how people are feeling with their payroll tax increasing, we’d rather be more patient,” he added. “We’d rather see what happens with the economy, what happens with our transaction trend. If we’re a little late in the game in raising prices, that’s okay.”

The amount of the menu price increase will be determined once the company has a better picture of commodity costs for the year ahead, same-store sales trends and general economic and consumer confidence, he said.

The chain likely take one price increase this year, rather than inching prices higher a little at a time, because guests are more likely to notice multiple price hikes, said Steve Ells, Chipotle’s co-chief executive. “We’d rather not nickel and dime,” he explained. “We’d rather have the conversation (with guests) one time.”

If the chain decides to match inflation at 4 percent to 5 percent, for example, from a menu standpoint, the price increase would only add about 25 to 30 cents to the cost of a burrito, “which is not that much,” said Ells.

CVS names head of digital initiatives !

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WOONSOCKET, R.I. — CVS Caremark has announced the appointment of former Staples executive Brian Tilzer as SVP chief digital officer.

In his new role, Tilzer will develop and lead teams driving CVS Caremark’s company-wide digital innovation efforts and will focus on connecting current and future digital initiatives.

Tilzer has more than 20 years of experience in strategic business development, operations and information technology, with a deep concentration in corporate and e-commerce strategy. Prior to joining CVS Caremark, he was the SVP of global e-commerce with Staples, where he developed and led several multi-channel digital innovation strategies.

“We know that digital tools — such as mobile, social media and other online platforms — are a convenient and easy way for our customers to manage their health and access our products,” stated Helena Foulkes, EVP and chief health care strategy and marketing officer of CVS Caremark. “Brian has a proven track record of developing innovative strategies that build business and enhance customer service. I am confident that his experience with digital innovation will help us engage with our customers even more, helping them on their path to better health.”

Hiring surge begins for home improvement retailers

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February 6, 2013
Home Depot expects to be busy this spring and is hiring 80,000 seasonal employees, 10,000 more than last year, to keep pace with the demand.

The hiring announcement by Home Depot follows a similar announcement by Lowe’s two weeks earlier that it planned to hire 45,000 seasonal employees. The increased hiring levels suggest the nation’s two largest home improvement retailers are optimistic about consumers demand amid a recovery in the housing market.

“Spring is always a special season for us, when we can offer employment opportunities for literally tens of thousands of Americans,” said Tim Crow, EVP of human resources for Home Depot. “We find some of our best associates during our peak season, and many of them have built long, meaningful careers with us.”

Home Depot operates 2,256 stores in the U.S., Canada and Mexico.

Two weeks earlier, Lowe’s said it planned to hire approximately 45,000 seasonal employees as well as 9,000 permanent part-time employees at its 1,745 stores in the U.S., Canada and Mexico.

Seasonal employees typically work between 20 and 25 hours per week throughout the spring and summer when Home Depot and Lowe’s stores are busiest with contractors and do-it-yourselfers are taking on indoor and outdoor projects. Many of the positions entail demanding, physical labor, but with the nation’s unemployment rate stubbornly hovering around 8% both retailers are likely to have plenty of interest from job seekers.

Johnny Rockets owner considers sale

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Asking price could range from $100 million to $150 million, source familiar with offer says
Feb. 5, 2013 Lisa Jennings
 
 
Johnny Rockets

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Johnny Rockets’ parent company is considering a sale of the classic Americana-themed burger chain.

Officials confirmed Monday that parent Red Zone Capital Management Co. LLC has hired North Point Advisors to explore a possible sale of the nearly 300-unit casual-dining concept.

Cozette Phifer Koerber, vice president of brand management and communications for The Johnny Rockets Group Inc., based in Aliso Viejo, Calif., said the company could offer no further details on the process.

John Gordon, principal of Pacific Management Consulting Group in San Diego, said he was familiar with the offer and that the company’s asking price was in the range of $100 million to $150 million, which would be about nine to 13 times earnings before interest, taxes, depreciation and amortization, or EBITDA, of about $12 million.

“To get those kinds of numbers, one must demonstrate growth or potential growth,” Gordon said.

Founded in 1986, Johnny Rockets is known for its diner-style burgers, sandwiches, fries served with a ketchup smiley face and milkshakes. Tableside juke boxes play 1950s-era music, and servers are encouraged to dance and sing along.

The 75-percent franchised concept grew rapidly in the 1990s but later became mired in debt. Toward the end of the decade, growth was put on hold while the company closed underperforming locations.

Red Zone bought Johnny Rockets in 2007 from former owners Centre Partners Management LLC and Apax Partners Inc., two private-equity firms that owned the chain along with heirs of late founder Ronn Teitelbaum, who died in 2000. The acquisition price for the chain was not disclosed, though it was described by company officials at the time as “a high single-digit multiple” of corporate cash flow.

Red Zone is the investment vehicle of Daniel Snyder, an owner of the Washington Redskins football team and Six Flags amusement parks.

In recent years, Johnny Rockets has been aggressively building its presence overseas, opening for the first time in Nigeria, for example, where five units are planned over the next seven years. The company has also struck franchise agreements in Colombia, Honduras, Costa Rica, Nicaragua, El Salvador, Guatemala, Pakistan, Indonesia and the Philippines.

Johnny Rockets has restaurants in more than 16 countries. Growth in the U.S., however, has been slow.

For the fiscal year ended April 2012, Johnny Rockets had 223 restaurants in the U.S., including 26 company-operated locations.

The chain had U.S. systemwide sales of $212.7 million, which was virtually flat, or down 0.1 percent, compared with the prior year, the company reported.

In recent years the company has experimented with dual branding and new formats, adding alcohol service to some restaurants.

Last year, a Johnny Rockets franchisee in Phoenix began testing a new fast-casual variant called JR’s Burger Grill, featuring smaller dishes at a lower price point that would compete with the growing number of fast-casual burger concepts that have threatened to eclipse older brands like Johnny Rockets.

New Pizza Factory CEO targets better margins, traffic.

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Mary Jane Riva puts several changes in motion after becoming CEO and president in September
 
 
Jan. 11, 2013 Alan J. Liddle

 

 

CEO Mary Jane Riva hopes advertising, direct mail and other strategies will help reduce costs and drive traffic.

Mary Jane Riva

Mary Jane Riva, co-owner, president and chief executive of franchisor Pizza Factory Inc.

Photo credit: Jana Buzbee Photography.

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Pizza Factory is working to reduce operational costs and drive additional guests into its stores through TV commercials and direct mail, among other strategies, according to the chain’s new co-owner and chief executive.

Mary Jane Riva became president and chief executive of the Oakhurst, Calif.-based pizzeria chain in September after she and her husband, Bob Riva, acquired the Pizza Factory Inc. franchising system from founders Daniel and Carol Wheeler and Ronald Willey.

Terms were not disclosed for the deal that brought the Rivas the 111-unit chain, which has average annual sales per unit of about $540,000 and saw 2012 systemwide sales climb by 4 percent compared with 2011.

The Rivas have franchised Pizza Factory restaurants for 24 years and currently own single units in the Southern California communities of Temecula and French Valley. For several years prior to the sale, Mary Jane Riva also was a nonpaid member of the chain’s marketing team and an area developer for the brand as an independent contractor.

“In 2013, my biggest goal is to reduce costs and increase the bottom line for franchisees,” said Riva, adding that she also aims to help them attract new business.

In order to help meet those goals, Pizza Factory recently streamlined its menu and reduced the number of mandatory products to reduce menu printing and paper costs. The move also aims to give franchisees the flexibility to discontinue the slower selling foods that can hinder operational efficiency and inflate inventory.

Also new to Pizza Factory are systemwide schedules of offer-free, brand-building TV commercials to increase awareness of the brand, which Riva said was lacking. The brand recently ran spots on the Fox Sports network, said Riva, and benefitted from about “$80,000 in freebies” from the network, including 1,200 additional spots at no additional cost.

The TV commercials were paid for by the ad fund for the chain that, with the exception of one company restaurant, is otherwise entirely operated by franchisees in Arizona, California, Idaho, Nevada and Washington.

Supervalu splits in half

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January 10, 2013 | By Michael Johnsen
MINNEAPOLIS — In a move that will reunite all Albertsons stores under one operator, Supervalu on Thursday morning announced a definitive agreement under which it will sell 877 stores across the Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market banners and related Osco and Sav-on in-store pharmacies to AB Acquisition, an affiliate of Cerberus Capital Management, in a transaction valued at $3.3 billion.

Following the sale, Supervalu will consist of its wholesaler business, which serves 1,950 stores across the country; Save-A-Lot, the largest hard discount grocery chain in the United States, with approximately 1,300 stores across 35 states; and Supervalu’s regional retail food banners Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s. Across these three revenue streams, the new Supervalu is expected to generate annual revenues in excess of $17 billion. Going forward, Supervalu will be concentrating on right-sizing its operations and maximizing efficiencies, the company noted.

The sale will consist of the acquisition by AB Acquisition of the stock of New Albertsons, a wholly-owned subsidiary of Supervalu, which owns the banners, for $100 million in cash. New Albertsons will be sold to AB Acquisition subject to approximately $3.2 billion in debt, which will be retained by New Albertsons. As part of the transaction, AB Acquisition-owned Albertsons will reunite its Albertsons stores with the acquired NAI Albertsons stores.

In addition to the sale, within 10 business a newly-formed acquisition entity owned by a Cerberus-led investor consortium called Symphony Investors will conduct a tender offer for up to 30% of Supervalu’s outstanding common stock at a purchase price of $4 per share in cash. The tender offer represents a 50% premium to Supervalu 30-day average closing share price as of Jan. 9.

“I cannot stress enough that the sale and tender offer collectively make Supervalu a strong company,” Supervalu’s current president and CEO Wayne Sales told analysts in a conference call Thursday morning. “I will leave the CEO position knowing we have made good process following the turnaround effort.”

Following the closing of the transactions, Supervalu will name grocery retail veteran Sam Duncan president and CEO, replacing Sales. In addition, effective upon the closing of the transactions, five current Supervalu directors will resign. Immediately following the closing of the transactions, the size of the board will be reduced to seven members from the current 10 members. This seven member Board will consist of five current Supervalu directors and two board members designated by Symphony Investors, one of whom is Robert Miller, former Rite Aid chairman and current president and CEO of Albertsons, who will serve as non-executive chairman of the board. Miller and Duncan have worked together before at Fred Meyer. Following the completion of a search process, the board will be increased to a size of 11 directors, with the four new directors to consist of Duncan, an additional director appointed by Symphony Investors and two additional independent board members to be selected by the initial seven directors.

Duncan is expected to assume Supervalu leadership in late February. He most recently served from 2005 to 2011 as chairman, CEO and president of OfficeMax. Prior to joining OfficeMax, Duncan served from 2002 to 2005 as president and CEO of ShopKo Stores.

Miller presently serves as the CEO of Albertsons, a North American grocery company with approximately 192 retail grocery and drug stores across eight states. Albertsons is majority-owned by Cerberus Capital Management. Prior to joining Albertsons in 2006, Miller was chairman of Wild Oats Markets based in Boulder, Colo. In December of 1999, Miller was hired as chairman and CEO of Rite Aid, and led a successful turnaround of the nearly-bankrupt pharmacy operation. He continued to serve as chairman of Rite Aid until June 2007 and as director until 2011.

Krispy Kreme hires Patricia Perry to head U.S. franchise development

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New hire signals company’s plans to ramp up domestic expansion efforts

 

Krispy Kreme has hired Patricia Perry to become its next vice president of U.S. franchise development, the company said Monday.

Perry’s hire signals Krispy Kreme’s desire to revamp its U.S. expansion efforts, said Cindy Bay, senior vice president, U.S. operations and franchising at the Winston-Salem, N.C.-based company. “We have expressed our intention to re-focus on domestic franchise growth at the appropriate time, and we are now ready to begin executing a focused strategy of franchise expansion in the United States,” she said in a statement.

Most recently, Perry had served as director of franchising and development at Church’s Chicken, according to LinkedIn. From 2001-2006, she also owned Jasabar Southern Cuisine Restaurant. Because she has experience on the corporate side and has owned her own restaurant, she brings a unique perspective to Krispy Kreme, the company said in a statement.

“The team we are building to grow our U.S. franchise network is impressive,” said Krispy Kreme chief executive James H. Morgan in a statement. “Patricia brings current knowledge of the franchise development market, along with years of restaurant experience.”

Most of Krispy Kreme’s more than 730 locations are outside the U.S. In early December, the company said it had opened its 500th international store, a franchise location in Aguascalientes, Mexico. Krispy Kreme has 96 company-owned and 142 franchised locations in the U.S.

Krispy Kreme, which took a hit from increasingly health-conscious consumers even before the recession, has begun to turn around. The company’s shares hit a multi-year high on Friday, according to the Associated Press.

“Krispy Kreme brought in new management, closed stores, lowered its debt and changed its business model to cut costs and improve profitability,” the AP reported. “Its financial performance and share price have been slowly but steadily improving since 2009.”

In November, the company reported that its same-store sales for company-owned units had increased 6.8 percent year over year during the third quarter. It was the company’s 16th consecutive quarter of positive same-store sales growth.

No one at Krispy Kreme, including Perry, was immediately available for comment.

Gap widens its reach, acquires new brand

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January 3, 2013
SAN FRANCISCO — Gap has added one more brand to its existing portfolio, purchasing Intermix Holdco for approximately $130 million in cash.

Intermix is a New York-based multi-brand specialty retailer of luxury and contemporary women’s apparel and accessories. It operates 32 boutiques across North America, along with an e-commerce site, offering a mix of luxury brands, including up-and-coming designers. Gap intends to expand Intermix’s network of stores, as well as add significant visibility and enhancements to its online site.

“Intermix has a distinctive position in this growing market with clear competitive advantage,” said Glenn Murphy, chairman and CEO of Gap. “Their record of merchandising with a keen eye towards mixing multiple designer labels, complemented with exclusive product, is appealing to their loyal customers. This strategy reflects the strength of their brand vision and leadership team.”

Gap acquired Athleta in 2008 and the multi-brand, premium product offering at Piperlime. With Gap Inc.’s guidance in the past four years, Athleta has expanded its e-commerce platform and grown its brick-and-mortar presence, with about 35 retail stores opened in the past two years.

“We’re thrilled to have found a partner that has the global scale and infrastructure required to support our vision for growth,” said Khajak Keledjian, co-founder of Intermix. “Gap Inc. shares many of our entrepreneurial roots, passion for innovation and customer experience. Together, we’ll continue to shape the future of retail by offering the most exciting fashion trends with the finest designers in the world.”

Keledjian will remain CCO and Adrienne Lazarus will remain president, and will report to Art Peck, president of Gap’s growth, innovation and digital division.