Virginia Drosos took over the top leadership spot at Signet Jewelers Ltd. during a low point for the national retailer.
“The last few years have been challenging,” Drosos acknowledged in a recent interview.
She stepped up when Mark Light stepped down as chief executive officer for health reasons last summer after 35 years at the company. The firm has about 2,000 employees at its Akron campus.
At the time, Signet, whose brands include jewelry stores Kay, Jared and Zales, was embroiled in publicly embarrassing lawsuits and national media stories alleging gender discrimination and widespread sexual harassment at the company. Financial underperformance hurt the stock price, with the company losing more than half its value.
Also, like other retailers, Signet is dealing with changes in how customers buy goods and services.
With Light’s resignation effective on July 31, Drosos, a member of Signet’s board of directors since 2012, transitioned to CEO a day later. She’s a Georgia native with years of executive experience at other Ohio companies.
Less than a year into the Signet job, she’s dealt with unexpected, costly problems selling off the company’s credit portfolio, signed off on a key acquisition and led the company in a cultural and financial transformation.
There are signs the transformation plan already is paying off.
“Signet is far and away the market leader in what is a large and fast-growing, fragmented category,” Drosos said. “The U.S. jewelry business is over $90 billion in sales and growing 3 to 4 percent every year. We have about a 7 percent share, which is larger than any other competitor by three times.”
But market share needs to grow, she said.
Path to Brilliance
Enter the Signet Path to Brilliance announced in March.
“Path for Brilliance is a transformation plan. It’s a bold plan, named by our employees,” Drosos said. It’s not about the shine of a diamond but “to bring the shine and luster back to our company,” she said.
The plan has three key strategies, she said.
“I developed the plan through really intense listening and study of the business over my first six months as CEO,” Drosos said.
The three strategies:
• Customer first.
• Omnichannel, or smoothly integrating online shopping with bricks-and-mortar.
• Building a culture of agility and efficiency.
“The strategy is not nearly as hard as the execution and the culture,” Drosos said. “We’ve broken down all of our strategies into very clear action plans, some of which we can accomplish this year, some of which will take us a couple of years to get fully in place.”
Based on its latest financial report, Signet appears to be moving in the right direction.
The company this past week posted stronger-than-expected first-quarter results and reaffirmed its outlook for the year, including sales of $5.9 billion to $6.1 billion.
Signet’s share price soared on the news, bouncing well up from 52-week lows. Industry analysts said they like what they see so far.
“We are most encouraged by management’s deep commitment to uphold their 3-year transformation plan of ‘Signet Path to Brilliance’ to transform the business,” Oliver Chen, analyst with N.Y.-based investment firm Cowen International, wrote in a June 6 note to clients.
“We appreciate management’s dedication to improve and modernize the business in a rapidly changing jewelry industry to capture demand,” Chen said.
That modernization includes adapting to how customers, particularly millennials, prefer to shop for jewelry, Drosos said.
A customer’s journey to buy a diamond engagement ring can involve seven to nine steps, she said.
“More than half the time, the journey starts online,” Drosos said. “And more than 90 percent of the time, the journey ends in-store.”
Work to create a seamless customer journey speaks to Signet’s $328 million purchase last August of longtime business partner R2Net, largely for the New York company’s innovative online shopping technology.
“I’m very proud of that acquisition. It was my first decision really as CEO of the company,” Drosos said.
Some of R2Net’s technology allows Signet to market 100,000 diamonds online through a virtual diamond vault, letting customers first see diamonds from all angles and at large magnification on computer screens. It’s in 70 Jared stores so far.
Signet technology also lets people virtually try on rings over a computer screen via a scan of their hands and fingers.
Signet is making other changes. It plans to close 200 underperforming stores this year, many in malls, while trying out new formats, Drosos said. The closures still leaveSignet with about 3,500 stores.
Drosos and Signet has been busy elsewhere.
Six of company’s 12 directors are now women, where the board had been predominantly male not too many years ago. The senior executive suite also has an increasing female presence.
Last week, Signet announced the hiring of Mary Elizabeth Finn as chief people officer. Responsibilities include fostering diversity and inclusion and leading training and development in the company. The areas of responsibility touch on issues raised in litigation against Signet.
Finn, former chief human resources officer at $6.2 billion Nielsen, reports directly to Drosos.
When Drosos was first brought onto Signets’ board of directors six years ago, the company cited her executive experience and expertise in branding, marketing, global operations and business expansions.
Drosos, who is 55, said her skill set and experience proved the perfect fit for Signet when Mark Light decided to step down.
Her background includes being president and CEO of Assurex Health, an Ohio company founded in 2006 that specializes in pharmacogenomics, the study of the interaction of a person’s genetic makeup with medicines. Before that, she was a longtime employee at Procter & Gamble.
Building a diverse board and leadership team is about creating an environment to make great decisions, Drosos said.
“You really want diversity of experience, diversity of gender” and diversity in other areas, she said. Signet now has one of the most gender diverse boards among publicly traded companies, she said. In addition, the company lists Drosos and four other women among its top 10 senior executives.
“When you surround yourself with a diverse team, you see in all directions,” she said.
Drosos said she considers herself a continual learner and an empowering and pragmatic leader who gets inspiration from the people around her.
“I think I have the ability to set a very clear vision for the organization,” Drosos said.
“I’m really all about moving aside the barriers so we can execute excellence.”
LOS ANGELES: Marc Pritcher sat at the electric piano with his back to the patrons milling around the Guitar Center, unaware of the audience slowly gathering behind him.
Most mornings, the 66-year-old talent manager tries to make it into one of the retailer’s stores to play. In the last five months alone, he has written 30 songs, almost all while sitting at a set of keys in a Guitar Center.
On this day, Pritcher was working on In Your Loving Arms, an original country pop composition, when he started to hear the strains of background vocals.
Behind him, two customers were taking stabs at the chorus, which quickly led to an impromptu concert aided by 20 fellow customers.
“It would have gone viral. It was so cool,” remarked Pritcher, as he tapped the keys on the $1,700 Yamaha piano at a Sherman Oaks store. “Music is the greatest — it doesn’t matter color, age, language. It just gets through to everybody.”
Little did he know it, but that’s the spirit Guitar Center executives are counting on as they try to engineer a turnaround of the retailer.
The plan is to make the stores more welcoming to budding and veteran musicians alike who are ready to spend money on equipment, supplies and other goods and services.
The privately held company has been on a perilous financial path, with analysts recently raising concerns that the California-based retailer might run out of money. In mid-April, S&P Global Ratings lowered Guitar Center’s corporate credit rating to selective default, signaling that the world’s largest music-instrument retailer was at risk of bankruptcy.
Guitar Center staved off those concerns for a few years when later that month it refinanced its $1 billion-plus debt from a 2007 leveraged buyout. Two days later, S&P upgraded the company’s credit rating to “CCC+” — junk bond territory but a recognition the retailer had bought itself some time.
Guitar Center has 14 locations in Ohio, including a store in Fairlawn, according to its website.
The company’s viability now depends on how well management can execute its turnaround strategy, which includes expanding into higher-margin services and growing its Music & Arts business, which sells band and orchestra equipment, according to an S&P analysis.
Guitar Center has seen some recent success: Same-store sales were positive the last two quarters of fiscal 2017 after negative trends for the previous two years. That’s particularly encouraging in an industry where scores of retailers have gone under in recent years as they struggle with online competition from Amazon and others.
Since January 2017, the number of high-profile bankruptcies has been staggering — Toys R Us, Vitamin World, Gymboree, Payless ShoeSource, RadioShack and The Limited don’t even complete the list.
“We had a really strong year last year,” said Guitar Center Chief Financial Officer Tim Martin. “We’ve been progressively getting better each quarter, and that’s not something a lot of retailers can say right now.”
Whether it can sustain that growth is another question.
Guitar Center got its start in 1959 when former accordion and car salesman Wayne Mitchell bought the Organ Center, a small appliance and home-organ store in Hollywood. Mitchell later began carrying amplifiers after the Beatles’ landmark 1964 visit to the United States. He renamed his store the Guitar Center in 1971 to reflect the evolution of its stock.
Guitar Center moved into a flagship store on Sunset Boulevard, expanded and in 1997, with 28 stores mostly on the West Coast, went public and started rapidly opening stores across the United States.
Ten years later, Boston-based private equity firm Bain Capital Partners took Guitar Center private in a highly leveraged $2.1-billion buyout.
The timing couldn’t have been worse: The 2007 deal saddled the retailer with heavy debt just as sales in the music industry stalled amid the financial crisis and Great Recession.
Los Angeles financial firm Ares Management took control of Guitar Center in 2014 in a $500 million debt-for-equity swap. There has been some talk of Ares taking Guitar Center public again.
“Guitar Center is a good business, and the Bain Capital guys paid a premium on it, expecting continued market growth,” said Brian Majeski, editor of Music Trades magazine. “The industry growth didn’t materialize.”
Bain Capital declined to comment. Ares did not respond to a request for comment.
Signet Jewelers shares soared Wednesday as the national jewelry retailer reported better-than-expected first-quarter results and revised its earnings guidance for the year.
Shares closed up $8.12, or 18.4 percent, to $52.27. Shares have traded in a range of $33.11 to $77.94 over the past 52 weeks.
Signet Chief Executive Officer Virginia Drosos said she expects the company, which has its headquarters in Akron, to continue making financial and operational improvements.
Shares soared even though Signet reported a loss of $574.2 million, or $8.48 per share, on revenue of $1.48 billion for the first quarter ended May 5. The loss was driven by a one-time, noncash impairment charge of $448.7 million, or $6.44 per share.
The company’s adjusted earnings showed a profit of 10 cents per share.
The results compare to net income of $115.3 million, or $1.03 a share on revenue of $1.4 billion for the first quarter a year ago.
Sales at stores open at least a year were up slightly, while e-commerce sales totaled $146.5 million, up 80 percent from a year ago.
Net income and revenue beat analyst expectations.
Shareholders liked other news coming out of the company, which owns Jared, Kay, Zales, Piercing Pagoda, James Allen and other brands.
“In the first quarter, we saw signs of stabilization in our overall sales and once again achieved double digit growth in e-commerce,” Drosos said in a prepared statement.
“Looking ahead, we expect second quarter revenues to be impacted by a tougher prior year same store sales comparison and calendar shifts,” she said. “We are maintaining our full year 2019 guidance and are intensely focused on laying the foundation to support improved performance in the holiday season. While progress will continue to be gradual and incremental, we are confident Signet is on the right path to achieve long-term sustainable, profitable growth.”
Unanticipated costly problems with selling the company’s credit portfolio appear to be largely over with, Drosos told industry analysts in a conference call.
The company is implementing the Signet Path to Brilliance transformation plan announced earlier this year, she said.
“We are only two months into implementing our transformation plan and expect to earn the vast majority of our operating profit in the fourth quarter,” Drosos told analysts.
The company reiterated its fiscal 2019 sales projections of $5.9 billion to $6.1 billion.
The company said it now expects to lose $7.30 to $7.90 per share for the full year, compared to previous guidance of zero earnings to a profit of 60 cents per share. The anticipated loss is attributable to non-cash goodwill and intangible impairment charges, the company said.
Adjusted earnings are expected to remain as previously forecast at $3.75 to $4.25 per share.
Signet said it expects to close on the sale of its nonprime receivables in the current second quarter. Sales price is expected to be $420 million, with proceeds to be used to repurchase shares. The company recognized a first quarter loss of $143 million, or $2.05 per share, related to reclassifying nonprime receivables.
Signet also announced the hiring of a chief people officer and a chief supply chain officer, both of whom will report to Drosos. The chief people officer will work to improve workplace diversity and inclusion and lead employee training and development.
West Point Market has filed for Chapter 11 bankruptcy, citing in large part significant revenue loss caused by delays in opening an on-site bakery.
The specialty family-owned supermarket filed for bankruptcy protection Thursday morning, court documents show.
The store relocated in 2016 to a new building off Shiawassee Avenue in Fairlawn after decades of operation in Akron’s Wallhaven neighborhood.
The bankruptcy filing says the supermarket expects to continue to remain open while reorganizing and will come out of the process “as a strong and viable company.”
Owner Richard Vernon said he anticipates the court process should last no longer than six months.
“Our main goal is to keep operating and keep everybody employed,” he said.
Vernon also said that while a critical on-site bakery has been delayed, it could be up and running in perhaps three weeks pending permit approval and final inspection.
“All the equipment’s in and installed,” he said.
Customers should not notice any changes in the store while the Chapter 11 process is underway other than when the in-store bakery begins producing West Point Market’s signature breads, pies, brownies and other goods, Vernon said.
All of the store’s 25 employees have been told about the bankruptcy filing, Vernon said. They will continue to be paid and receive benefits, according to a court filing.
“They took it well. We’re a team here,” Vernon said. Some of the store employees have been with the business for 30 years, he said.
The supermarket is leasing about 10,000 square feet of space at its new location.
Delays hurt finances
According to the bankruptcy court documents, “the trigger towards bankruptcy for the debtor [West Point Market of Akron LLC] can best be described as a series of unfortunate events and delays beyond the debtor’s control.”
The early triggers included a contractor that left in July 2016 while construction was underway of the Fairlawn location, the court documents show. That delayed the opening of the full market by five months, past “the usually lucrative holiday season in 2016,” the filing said. In addition, West Point Market paid $120,000 to its employees over that period “without any revenue to support the cost.”
Most recently, West Point Market said it submitted plans for an on-site bakery in July 2017 to the Summit County health department and obtained loans for the project.
The county health department then said it needed new drawings showing additional work not in the original plans, resulting in permits not being issued until Dec. 27, 2017, the court filing says. (The county health department is a separate entity and not under the county executive.)
The court filing says the market is still waiting for bakery-related permits to be granted by the county.
“In the face of these many delays, the debtor’s revenues have suffered,” the court filing says. “The debtor estimates the lack of an on-site bakery is costing $10,000 to $15,000 in sales per week. Thus the debtor’s debt burden is unsustainable.”
Opening the bakery is the third of five phases in the market’s long-term business plan. The fourth step is the building of an on-site kitchen, with the fifth phase opening a second store.
West Point Market is leasing kitchen space from the Akron Women’s City Club to make its baked goods and ready-to-eat foods.
A court hearing is scheduled for 2 p.m. Friday in the Ralph Regula Federal Building and U.S. Courthouse in Canton, where the West Point Market will petition for permission to keep operating.
The bankruptcy petition estimates West Point Market has between 100 and 199 creditors. Filings show that liabilities exceed assets by slightly more than $540,000.
West Point Market of Akron is owned entirely by Vernon. He is the third-generation owner; the market was founded in 1936.
Vernon closed the long-standing Wallhaven store in December 2015. The Fairlawn site opened on a limited basis in December 2016.
The former West Point Market building was demolished to make room for a shopping plaza anchored by a Whole Foods 365 market.
A new public green is blossoming in Akron’s Northside District, transforming under-used pavement into a colorful sort of ground mural lined with potted plants, trees and benches.
No parking places in this busy, creative neighborhood nook near downtown — a cut-off slice of what was once part of Akron’s Main Street — were sacrificed for the transformation.
But the extraordinarily wide area to maneuver around the spaces has narrowed as the new, colorful green carves a path between the spaces where vehicles once parked nose-to-nose, said Sharon Gillberg, communications director with Downtown Akron Partnership.
Akron artist April Couch of Totally Tangled Creations designed the mural, her first.
“It’s really a very enlarged version of what I do on a very small scale,” Couch said Thursday.
Couch — whose art is available steps away from the mural at Northside Marketplace and at Summit Artspace — also works nearly exclusively in black and white.
But when the downtown partnership approached her, leaders had a vision. They wanted something organic that would also reflect that this was once a street.
“I decided on the curves, like meandering on a road,” Couch said. Then she went back and added the texture of the city with chevrons, twirls and bits that she says look like “little squished marshmallows.”
Afterward, she filled the mural with seven colors.
The scale sample she presented the partnership was about 14 inches long by three inches wide.
Akron artist Mac Love, whose murals have sprung up throughout the city in recent years, then drew the outline of the design to scale in the parking lot, something Couch said she couldn’t even imagine.
On Wednesday, about 40 volunteers showed up to fill in the design with paint. On Thursday, a second round of 40 volunteers continued the transformation.
The downtown partnership launched the project — which also includes benches designed by Akron artist Kai Wick of Wick Studio — with a grant from the John S. and James L. Knight Foundation.
A grand opening isn’t scheduled for the green until June 2 between 7 and 8:30 p.m. It’s an RSVP event that soon will be posted on Eventbrite.
But many got an early, bird’s-eye preview when local developer Joel Testa posted a drone-recorded video on social media showing just how much had been accomplished Wednesday.
Couch said Thursday she was humbled by the experience.
“When I woke up this morning, I had to pinch myself,” she said. “I had to go out there and make sure this mural was real.”
Amanda Garrett can be reached at 330-996-3725 or [email protected].
WASHINGTON: U.S. retail sales rose at a solid pace in April, a sign that consumers may be rebounding from weak spending earlier this year and driving stronger economic growth.
Retail sales increased at a 0.3 percent rate in April, the Commerce Department said Tuesday, down from a 0.8 percent gain in March, which was revised higher from 0.6 percent. The spending gains were spread across most retail categories, with especially big gains at furniture and clothing stores.
Consumer spending has rebounded in the past two months after a weak January and February, a trend that could accelerate growth in the April-June quarter.
“Consumption growth is on track for a big rebound in the second quarter, which should push overall GDP growth up to more than 3 percent,” said Michael Pearce, senior U.S. economist at Capital Economics. That would represent an improvement from the January-March quarter when the economy expanded at a 2.3 percent annual rate.
A strong job market, which is showing early signs of lifting Americans’ incomes, could help drive spending gains in the months ahead. Tax cuts have also left most U.S. households with more money to spend, though that extra cash has been eroded in recent weeks by sharply higher gasoline prices. The unemployment rate has reached a 17-year low of 3.9 percent. And measures of consumer confidence remain mostly healthy, despite higher gas costs and a rocky stock market.
The Commerce Department’s retail sales data showed that clothing-store sales, fueled by price cuts, jumped 1.4 percent. Sales at home and garden stores rose 0.4 percent. A category that includes online and catalog sales increased 0.6 percent.
Consumer spending climbed at a 4 percent annual rate in the final three months of last year, the sharpest increase in three years. Americans then cut back in January and February before rebounding in March.
Gas station sales rose 0.8 percent in April, less than some analysts forecast, largely reflecting price increases. Prices at the pump have risen in the past year, lifted mostly by oil price gains. Tuesday’s figures suggest that the price increases haven’t yet dragged down other spending. But that could change. Analysts expect gas prices to keep rising as the summer driving season gets underway.
The average price for a gallon of gas nationwide reached $2.88 Tuesday, up 17 cents from a month earlier and 54 cents from a year ago, according to AAA.
Retail sales are closely watched by economists because they provide an early read on consumer spending, the principal driver of the U.S. economy. Store purchases account for about one-third of U.S. consumer spending. Spending on services, such as haircuts and mobile phones plans, makes up the remaining two-thirds.
Acme Fresh Markets’ Fuel Rewards program is running out of gas.
The Akron-headquartered grocery chain quietly stopped issuing the rewards last fall.
Acme will honor rewards accumulated before the program ended in October over a two-year period ending Oct. 31, 2019.
Acme began the program in 2009, hoping it would increase store sales while competing with other groceries’ fuel programs.
But customer response to the loyalty program declined, Acme spokeswoman Katie Swartz said this week.
“Our customers weren’t responding to fuel rewards,” she said. “They were telling us with their actions that they wanted straight up lower prices so that’s the direction we went.”
With the program, Acme teamed up with Circle K, allowing customers to earn free gasoline at that convenience/gasoline chain by buying select items.
Each week, green and yellow shelf tags at Acme’s 16 area stores let customers know of the fuel savings on thousands of items. A large number of the items were private label brands such as Food Club and Top Care.
Fuel Rewards ranged from 5 cents to more than $20 (on large purchases, such as patio furniture) and shoppers could turn savings into free tanks of gas. Customers earned the rewards using their Acme Fresh Market Savings Card, and the savings were automatically added to the rewards card.
Swartz said instead of offering the rewards, Acme is now lowering the prices on thousands of items, using yellow and red tags to identify “low price” items.
“We’re taking the value from fuel rewards and putting it back into lower prices in our stores.”
She declined to say how much the privately held company was spending on the rewards program.
She said Acme and Circle K, based in Tempe, Ariz., “mutually agreed” to part ways. “It wasn’t the result of any sort of contract negotiations,” she said.
Acme’s move came last fall as competitor Giant Eagle beefed up its fuelperks loyalty program.
Last fall, the grocery store chain launched its new fuelperks+ that allows customers to redeem points on groceries — for up to 20 percent off — inside Giant Eagle stores, including Market Districts.
With the old Giant Eagle fuel program, customers had not been able to redeem points at the grocery. Also, customers can earn points when fueling up at Giant Eagle’s GetGo stations. Previously, customers could not earn points at the pump.
OVERLAND PARK, Kan.: Sprint is having its worst week in almost four years on Wall Street after announcing another attempt at merging with rival T-Mobile.
Shares had already tumbled more than 20 percent on news of the $26.5 billion deal that many see as a longshot. They’re not recovering before the opening bell Thursday, after Sprint announced a change in company leadership.
The company said Wednesday that CEO Marcelo Claure is stepping aside from day-to-day operations to become executive chairman at Sprint, and the chief operating officer at Softbank Group Corp., the Japanese company that holds a controlling interest in Sprint.
Chief Financial Officer Michel Combes is the new Sprint CEO.
It is Sprint’s biggest sell-off since shares fell 24 percent in August 2014.
WASHINGTON: Another company, this one among the largest ammunition makers in America, is distancing itself from firearms following the massacre at Marjorie Stoneman Douglas High in February.
Vista Outdoor Inc. has been pressured for months by retailers that sell its other goods like Bell bicycle helmets and CamelBak water carriers, to stop manufacturing firearms.
The Utah company said Tuesday that it will be seeking buyers for its firearms manufacturing business, and will focus on products for outdoor enthusiasts. It will continue to sell ammunition, its biggest core businesses.
REI, the national outdoor retailer, suspended all orders from Vista in March after it refused to say if it would continue to manufacture weapons. REI said it’s aware of Vista’s announcement, but did not say if it would resume doing business with the company.
During a conference call Tuesday, Vista CEO Cristopher Metz said that the company was already moving in the direction of shedding its firearms business, “way before any of the noise came about eight weeks ago.”
In the aftermath of the Parkland, Florida shooting, Dick’s Sporting Goods banned the sale of assault-style rifles and the sale of all guns to anyone under 21. Other retailers followed with similar restrictions, including Walmart, Kroger and L.L Bean.
In March, Citigroup became the first bank to put new restrictions on firearm sales by its business customers, requiring its clients and business customers not to sell a firearm to anyone who hasn’t passed a background check or anyone under the age of 21.
Also in March, the investment firm Blackrock said it would be canvasing gun makers and retailers to determine how they will act following the shooting in Parkland, Florida. BlackRock, which manages over $6 trillion in assets, is a major shareholder of gun manufacturers Sturm Ruger, American Outdoor Brands and Vista Outdoor through indirect investments.
In mid-February, 14 students and three educators were killed and 17 were wounded in a hail of gunfire. Former student Nikolas Cruz has been charged in the deaths using an AR-15 style semi-automatic rifle.
Vista last year had revenue of $2.5 billion. It is looking for buyers for its Savage and Stevens firearms brands, and other product lines not related to firearms.
NEW YORK: Amazon has cut a deal to sell voice-controlled TVs at Best Buy, the latest attempt by the online retailer to get its burgeoning suite of tech products out where people can see and touch them.
Best Buy already sells the Amazon Kindle and other gadgets, but the deal announced Wednesday makes the electronics retailer the only other place where you can walk in and buy a TV powered by Amazon’s Fire TV software. Investors seemed to like the partnership: Best Buy’s stock rose 4 percent Wednesday, close to an all-time high.
Amazon has begun to make its physical presence known, buying the Whole Foods grocery chain last year and opening more than a dozen bookstores.
In addition to its own stores (an Amazon Go cashier-less convince store opened its doors earlier this year), Amazon is creating partnerships with traditional retailers in a sector that is threatened by its dominance.
Kohl’s carved out space for Amazon shops in some of its department stores and Sears sells Kenmore appliances on Amazon.com.
This summer, Best Buy will begin selling 10 models of the Fire TV in the U.S., and later this year in Canada. The new TVs are made by Toshiba and Best Buy Co.’s own brand, Insignia.
The TVs come with a remote that has Amazon’s Alexa voice-assistant built in, so users can press a button and say out loud which shows you want to watch, or what channel you want to switch to. The TVs can be paired with Amazon’s smart speakers, meaning you don’t need to pick up a remote.
Charlie O’Shea, a retail analyst at Moody’s, said the “win-win” deal will boost traffic at Best Buy and it gives Amazon another brick-and-mortar space to show off its products.
Associated Press Writer Michelle Chapman in Newark also contributed to this story.
NEW YORK: Nine West Holdings Inc. has filed for bankruptcy protection, the latest retailer to do so as it attempts to restructure its debt and refocus on its more successful products.
The shoe chain said Friday the bankruptcy filing was made to ease the sale of its Nine West and Bandolino footwear and handbag business, and so it can focus more on its growing businesses, which include One Jeanswear Group, The Jewelry Group, the Kasper Group and Anne Klein. Nine West said it has a “stalking horse” agreement — an effort by a bankrupt company to determine the market for its assets — with Authentic Brands Group for the Nine West and Bandolino brands.
Nine West joins the many retailers that have sought bankruptcy protection, closed stores or plan to go out of business entirely as more people shop online. Claire’s and Bon-Ton filed for bankruptcy earlier this year, after several dozen others did so last year. That includes Toys R Us, which has now started liquidation sales.
Owned by private equity firm Sycamore Partners since 2014, Nine West was among about two dozen distressed retailers that Moody’s Investors Service put on a watch list earlier this year of companies with poor credit ratings or liquidity, weak credit and what it calls challenged competitive positions.
Many retailers face similar challenges, including big debt loads. Toys R Us, for instance, was weighed down by $5 billion in debt that hurt its attempts to compete as shoppers moved to Amazon.
Nine West Holdings CEO Ralph Schipani called the bankruptcy filing the “right step to address our two divergent business profiles.”
“Once we complete the reorganization process, our company will have meaningfully reduced debt and interest costs and be well-positioned for the future,” he said in a statement.
Nine West has received $300 million in financing and has a restructuring agreement with parties that hold or control the vast majority of its secured and unsecured term debt. The company said the financing will give it the cash it needs to maintain its operations during its Chapter 11 process.
Authentic Brands Group LLC, backed by private equity and investment groups, has well-known names such as Frye, Juicy Couture and Jones New York. The intellectual property corporation also manages licensing and merchandising for celebrity brands including Elvis Presley, Marilyn Monroe and Muhammad Ali.
The J.M. Smucker Co. is spending nearly $2 billion to add Rachael Ray to its pet food holdings while also looking at divesting its U.S. baking business that includes Pillsbury, Hungry Jack and other brands.
The Orrville company on Wednesday said it has an agreement to buy Ainsworth Pet Nutrition, which makes the Rachael Ray Nutrish brand. Smucker said the cash deal is valued at $1.9 billion, with final costs at $1.7 billion after an estimated tax benefit of $200 million.
The Nutrish brand accounts for about two thirds of Ainsworth Pet Nutrition’s sales.
The announcement was made after the stock market closed. The deal, expected to close shortly after the company’s fiscal year begins May 1, adds to Smucker’s pet food holdings in what the company said is a $30 billion annual “center of the store” market.
J.M. Smucker’s other pet food brands include Meow Mix, Milk-Bone, Kibbles ‘n Bits, Natural Balance, and 9Lives. The company first added pet foods to its portfolio in a $5.8 billion deal in 2015 to buy Big Heart Pet Brands.
Smucker faced criticism earlier this year when it withdrew some shipments of dog food because they could contain traces of a drug, pentobarbital, used to euthanize animals.
Ainsworth is expected to add about $800 million in annual revenue and $110 million in annual earnings to J.M. Smucker in its first full year after the deal, the company said in its announcement.
“Ainsworth Pet Nutrition is an excellent strategic fit for our company, as the Rachael Ray Nutrish brand adds another high-growth, on-trend brand to our pet food portfolio,” Mark Smucker, chief executive officer, said in a news release.
Nutrish is one of the most recognizable premium pet food brands in the United States, Smucker said. Ray, 49, is a celebrity businesswoman, author, talk-show host and cook.
Ainsworth is a privately held company based in Pennsylvania with about 700 employees and manufacturing facilities in Pennsylvania and Kansas.
Also Wednesday, J.M. Smucker said it is reviewing strategic options, “including a potential divestiture,” for its U.S. baking business, including its factory Toledo. The business accounts for about $370 million in annual revenue.
The review is expected to be completed by the end of the first quarter of the company’s 2019 fiscal year that starts May 1.
The U.S. baking brands include Pillsbury, Martha White, Hungry Jack, White Lily and Jim Dandy.
“Pillsbury, Hungry Jack, and Martha White remain iconic brands, and this well-run business has been a solid contributor to our financial performance over the years,” Smucker said. “However, our current strategic priorities include an increased emphasis and allocation of resources toward growing our coffee, pet, and snacking food businesses.”
Smucker’s Canada-based baking brands, including Carnation and Eagle Brand, are not part of the review.
Last month, J.M. Smucker called off its proposed $285 million purchase of the Wesson oils brand after the Federal Trade Commission said the purchase would create a monopoly. Smucker owns the Crisco oils brand.
Reporter Jim Mackinnon covers business and county government. He can be reached at 330-996-3544 or [email protected].
A data breach at department store chains Saks Fifth Avenue, Saks Off Fifth and Lord & Taylor has compromised the personal information of customers who shopped at the stores.
The chains’ parent company, Canada-based Hudson’s Bay Co., announced the breach of its store payment systems on Sunday. The company said it was investigating and taking steps to contain the attack.
The disclosure came after New York-based security firm Gemini Advisory LLC revealed on Sunday that a hacking group known as JokerStash or Fin7 began boasting on dark websites last week that it was putting up for sale up to 5 million stolen credit and debit cards. The hackers named their stash BIGBADABOOM-2. While the extent of its holdings remains unclear, about 125,000 records were immediately released for sale.
The security firm confirmed with several banks that many of the compromised records came from Saks and Lord & Taylor customers.
Hudson’s Bay said in a statement that it “deeply regrets any inconvenience or concern this may cause,” but it hasn’t said how many Saks or Lord & Taylor stores or customers were affected. The company said there’s no indication that the breach affected its online shopping websites or other brands, including the Home Outfitters chain or Hudson’s Bay stores in Canada.
The company said customers won’t be liable for fraudulent charges. It plans to offer free credit monitoring and other identity protection services.
There is evidence that the breach began about a year ago, said Dmitry Chorine, Gemini Advisory’s co-founder and chief technology officer. He said the prolific hacking group has previously targeted major hotel and restaurant chains.
The breach follows last year’s high-profile hack of credit bureau Equifax that exposed the personal data of millions of Americans. This newest breach, however, more closely resembles past retail breaches that have targeted the point-of-sale systems used by companies from Home Depot to Target and Neiman Marcus.
Chorine said the hackers’ typical method is to send cleverly crafted phishing emails to company employees, especially managers, supervisors and other key decision-makers. Once an employee clicks on an attachment, which is often made to look like an invoice, the system gets infected.
“For an entire year, criminals were able to sit on the network of Lord & Taylor and Saks and steal data,” he said.
Chorine said most of the stolen credit cards appear to have been obtained from stores in the New York City metropolitan area and other Northeast U.S. states.
NEW YORK: Toys R Us is opening its doors with a going-out-of-business sale, offering clearance discounts at all 735 stores, including Babies R Us.
The company did not say Friday how big the discounts will be or when it expects stores to shut down. Last week, the company said it would close or sell all its stores after operating from months under bankruptcy protection.
Customers will be able to use their gift cards until April 21, but the store will no longer accept coupons. Toys R Us credit cards can also be used, but shoppers won’t get the discounts that typically come with it.
There are no returns on items bought during this final sale.
NEW YORK: Charles P. Lazarus, the World War II veteran who founded Toys R Us six decades ago and transformed it into an iconic piece of Americana, died Thursday at age 94, a week after the chain announced it was going out of business.
“There have been many sad moments for Toys R Us in recent weeks, and none more heartbreaking than today’s news about the passing of our beloved founder, Charles Lazarus,” the company said. “Our thoughts and prayers are with Charles’ family and loved ones.”
Lazarus, who stepped down as CEO of Toys R Us in 1994, transformed the industry with a business model that became one of the first retail category killers — big stores that are so devoted to one thing, and have such an impressive selection, that they drive smaller competitors out of business.
More recently, Toys R Us found itself unable to survive the trends of the digital age and announced last week that it would close or sell its 735 stores.
Lazarus modeled his business after the self-service supermarkets that were becoming popular in the 1950s, stacking items high to give shoppers the feeling it had an infinite number of toys.
The chain has its roots in Children’s Bargain Town, the baby furniture store that Lazarus opened in his hometown of Washington, D.C., after returning from World War II. He began selling toys after a couple of years when customers began asking for them and concluded toys were more lucrative.
He opened his first store dedicated to selling only toys in 1957, calling it Toys R Us with the “R” spelled backward to give the impression that a child wrote it. Shopping carts stood ready for customers to fill up themselves, supermarket-style.
Lazarus was inducted into the Toy Industry Association’s Hall of Fame in 1990.
NEW YORK: Toy company executive Isaac Larian and other investors have pledged a total of $200 million and hope to raise four times that amount in crowdfunding in a bid to save potentially more than half of the 735 Toys R Us stores that will go dark in bankruptcy proceedings.
The unsolicited bid faces a number of hurdles like finding other deep-pocketed investors, as well as getting a bankruptcy judge to approve such an unusual plan. It is the first known plan to keep the Toys R Us brand alive.
The long-shot bid would be a huge benefit to Larian. Nearly 1 in every 5 sales made by Bratz doll-maker MGA Entertainment, where Larian is CEO, is rung up at a Toys R Us store.
Larian says he and the other investors, which he declined to name, believe that saving part of Toys R Us will be good for the toy industry, customers and workers.
The announcement last week that Toys R Us would be lost generated an enormous outpouring of nostalgia. (hash)SaveToysRUs became a trend on social media.
The group now trying to save a remnant of the toy chain is hoping that with Toys R Us on the brink, it can reach its goal of raising $1 billion in funding. The website savetoysrus.com directs consumers to a GoFundMe campaign to do that.
Toys R Us sought court approval last week to liquidate its remaining U.S. stores, threatening the jobs of some 30,000 employees and spelling the end for a chain known to generations of children and parents for its sprawling stores, sing-along jingle and Geoffrey the giraffe mascot.
The store has an iconic place in American culture, said Larian. “We can’t just sit back and just let it disappear.”
Larian, a billionaire, is using his own money, not MGA funds, for the bid.
How could Larian save a store that has labored to remain relevant in the age of Amazon.com? For one thing, Larian would be free of the $5 billion in debt that hampered the current owner of Toys R Us. The other reason is self-preservation.
The toy industry needs a national presence like Toys R Us, where designers can get real world reaction to new toys that children pull from shelves.
The demise of Toys R Us will have a “devastating effect” on the toy industry, said Larian, who believes that 130,000 U.S. jobs could be lost when layoffs at suppliers and logistic operations are included.
A total Toys R Us liquidation could mean layoffs at an MGA plant in Ohio that makes the Little Tikes toy vehicles. That brand accounts for 25 percent of MGA total sales.
Trouble at Toys R Us has already shaken big toy makers like Mattel and Hasbro. MGA, based in Van Nuys, California, is the world’s largest privately held toy company. The planned liquidation would have a bigger impact on smaller toy makers that rely more on Toys R Us for sales.
“People do not realize the hole that can’t be filled by other retailers,” said Larian. “The pipeline is too big.”
If as many as 400 stores can be saved, it is Larian’s hope that a third of the 130,000 jobs he sees as lost could be rescued.
The shuttering of Toys R Us stores in coming months would be the final chapter of a company undercut by shifting currents that range from online shopping to mobile games.
When it filed for Chapter 11 bankruptcy protection last fall, Toys R Us pledged to stay open. But in January, after what CEO David Brandon called a “devastating” holiday shopping season, 182 stores were marked for closure. Last week, a total liquidation was announced.
The company is trying to bundle its Canadian business with about 200 U.S. stores and find a buyer. Larian has personally aligned with another investor in a separate bid for those operations.
Toys R Us will likely liquidate its businesses in Australia, France, Poland, Portugal and Spain. It’s already shuttering its business in the United Kingdom. That would leave it with the stores in Canada, as well as in central Europe and Asia. It operates more than 700 stores outside the United States.
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NEW YORK: The liquidation of Toys R Us is adding to the clutter of “Store Closing” signs as department stores, mall chains and other retailers close poorly performing locations.
But beware. Liquidation sales may sound like a deal-hunter’s dream, but they don’t always offer the best discounts. Shoppers need to compare prices as they navigate the sales racks, and carefully check the quality of the merchandise since they can’t return items.
“Not everything is a great deal,” said Jerry Robertson, a San Antonio, Texas-based store closing consultant who manages the liquidation sales of small retailers. “Just be careful of what you buy. Do your homework.”
Shoppers also need to understand the store’s policy of redeeming gift cards. When stores go into bankruptcy, they petition the court to decide whether gift cards can be honored — and for how long, says Shelly Hunter, a representative of Giftcards.com, which has tracked gifts cards from stores like Borders to Coldwater Creek in bankruptcy.
Toys R Us honored gift cards while it was trying to reorganize under bankruptcy protection. But after the chain said it would liquidate its remaining 735 U.S. stores March 15, it says that the cards will be worthless after April 20.
Here are four tips that shoppers should follow:
• Check out prices before the liquidation sales: The goal for liquidators is to squeeze as much money as they can from a sale. Robertson says many liquidators, particular those who manage sales of big chains, increase the prices to the manufacturers’ suggested level and then take a discount. That creates the illusion of a better deal. So checking out prices before and after the actual liquidation sale starts is a good idea.
• Use price comparison apps: Robertson says most of the big liquidators start at about a 20 percent discount and lower prices from there. Shoppers should keep checking the store being liquidated to keep track of the discounts. But if they wait too long, they might not get the best selection, he says. Robertson says bigger discounts can be found on clothing and toys, which have larger profit margins. In comparison, consumer electronics have razor-thin margins.
Lindsay Sakraida, director of content marketing at DealNews.com, a price comparison website, says shoppers shouldn’t buy impulsively when they see a big liquidation signs.
“These ‘Everything Must Go’ signs make you have a sense of immediacy,” she said. “Take a minute.”
• Use gift cards immediately: When shoppers have gift cards from a store that’s in financial trouble, experts recommend using them immediately. Hunter points to when Borders shuttered its stores in 2011. The courts initially acknowledged that gift card holders were due a settlement, but it didn’t tell them to file claims. So when the deadline passed, the courts ultimately ruled it was too late to file a claim.
And gadget seller Sharper Image stopped accepting gift cards when it filed for Chapter 11 bankruptcy in 2008. A month later, it said they would be accepted only if the holder spent double the value of the gift card in redeeming it. That resulted in a class-action suit, which the company ended up settling. Sharper Image, which shut its stores, has been revived and now sells gadgets online.
And shoppers should beware that when a new buyer comes on board and buys a company in bankruptcy, gift card holders are often left in the cold. That’s what happened with Coldwater Creek. After private equity firm Sycamore Partners, which owns such brands as Talbots, bought the brand in 2014 and relaunched the website, the gift cards became useless.
• Examine the merchandise carefully: Liquidation sales generally last five to seven weeks and most often sales are final. Toys R Us said that shoppers can’t return items once the liquidation begins. So shoppers should scrutinize their items to make sure there are no defects.
RPM International Inc.’s Rust-Oleum Group has sealed a deal to buy a California company.
The company, Miracle Sealants, based in Arcadia, makes sealers, cleaners, polishes and related products primarily for tile and natural stone.
Terms of the acquisition were not disclosed.
Miracle Sealants has annual net sales of approximately $25 million, Medina-based RPM said in a news release.
Miracle Sealants has broad national distribution in tile shops across the U.S., as well as big box retailers, such as Home Depot, Lowes and Menards, RPM said.
“Miracle Sealants is an excellent strategic fit that adds another platform within Rust-Oleum’s hard surface care product portfolio,” Frank C. Sullivan, chairman and chief executive officer of RPM, said in a news release.
NEW YORK: Claire’s, the mall chain that has pierced the ears of millions of teens, has filed for Chapter 11 bankruptcy protection.
The company said Monday that its stores will remain open as it restructures its debt.
It’s just the latest retailer to seek bankruptcy protection, close stores or go out of business entirely. Toys R Us announced last week that it would close or sell all its stores after filing for Chapter 11 bankruptcy protection last year.
Claire’s said Monday it is “confident” it will emerge from bankruptcy protection in September, having reduced its debt by nearly $2 billion. It said it can compete with the shift to online shopping, arguing that its “iconic ear piercing services are unmatched and cannot be replicated online.”
Claire’s, based in Hoffman Estates, Illinois, said it has pierced more than 100 million ears since it began offering the service 40 years ago. The company was founded in the 1960s.
This story corrects that the company was founded in the 1960s.
NEW YORK: Walmart doesn’t just want to sell TVs and furniture — it wants to send a professional home to set them up, too.
The world’s largest retailer is expanding a deal with on-demand online services platform Handy.com, allowing shoppers to hire helpers at 2,000 of its stores nationwide to mount a TV on their wall or assemble a bookcase.
Other retailers offer similar services as they seek to make shopping more convenient so customers buy more. Wayfair, the online furniture seller, also offers Handy’s services. And Ikea bought Taskrabbit last year and is rolling out the service to its stores.
Walmart, which first tested Handy in 25 stores in Atlanta, said Monday shoppers can hire a Handy professional when then check out at a store or on its website.