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Will the Grinch(Economy) Steal Holiday Sales?

September 18, 2006

Analysis of:Early Holiday Outlook not Looking so Jolly | www.retailingtoday.com

As fears of terrorist attack, high gas prices, a slowdown in the RE market and a slip in consumer confidence proliferate the headlines; Holiday 2006 is not shaping up to be the revenue rich shopping season that retailers hope for and depend upon. As large and successful retailers like Costco, Lowe's, and Home Depot announced slower sales and earnings after somewhat lackluster 2nd or 3rd Quarter results, other retailers must at least brace for the same. Preparation for the upcoming season will be critical and multi-channel players can begin planning now for the best possible outcomes by understanding the implications of a soft holiday forecast:

1) Gains made in revenue, income and profits in the first half can be quickly eradicated by poor holiday sales, doorbuster pricing and heavy markdown season.

2) For retailers with heavy store presence in the Northeast, Midwest, and mid-South geography, the unforseen weather trends from November on can also wraek havoc in Q4.

3) Consumer spending has already begun to decelerate as evidenced by the revised forecasts already mentioned as well as inconsistent performance throughout various sectors during the recently completed Back to School season.

Office Depot Postures for Further Gains on Staples Revenues

September 13, 2006

Analysis of:Office Depot Announces Acquisition of Papirius; Leading Eastern European Business-to-Business Office Supplier Expands Company's International Operatio | mediarelations.officedepot.com

In yet another move geared at strengthening its position against Staples for international dominance, Office Depot has recently acquired Papirius, one of the largest B to B suppliers of office products and services in Eastern Europe. Although the financial terms of the acquisition were not disclosed, annual revenues of more than $56 million are gained in the transition through sales in the Czech Republic, Lithuania, Hungary and Slovakia. In February of this year, Office Depot acquired controlling interest in Best Office, a leading South Korean office supply company with annual revenues of $44 million. In mid-May, Depot announced the acquisition of Allied Office Products, the nation's largest independent dealer of office supplies with annual revenues of more than $300 million. The key implications of these recent acquisitions are:
1) Office Depot continues to strengthen its presence and global reach in both the domestic as well as international markets.
2) Shareholders and analysts can readily see that Office Depot continues to deliver on one strategy of the 2006 Business Plan, the growth of small to midsize businesses.
3) Office Depot continues to push ever closer to closing the $2 billion revenue gap between themselves and Staples that existed at the end of FY 2005.
4) Office Depot will widen the revenue gap between themselves and the already "distant third" player, OfficeMax.

Q4-When Bad Can Be Good for Multi-Channel Retailers

September 8, 2006

Analysis of:Analysts:Gas and Fear Likely to Fuel Holiday Sales | www.internetretailer.com

This article speaks to a positive outlook from retail analysts for online retailers in the upcoming Holiday season and certainly makes valid arguments for a couple of driving factors, i.e., high gasoline prices and fears of terrorist threats both here and abroad as compelling factors that will significantly drive internet sales higher TY. With the logic that that the price of a gallon of gas will lead to less travel due to cost and that less travel will ultimately translate into less footsteps into traditional brick-and-mortar stores, the argument can be made that there WILL be more to spend online given that the Holiday will be celebrated regardless, and that the gifts will need to be purchased somewhere despite high consumer prices for commodities and fear of attack. It seems a relatively simple theory and in reality it is, but the very best multi-channel retailers must also understand that the customer must first trust the Brand. Increases over LY are not a given for any retailer with a website and will come ONLY, if the following criterion are met:
1) Trust in the Brand
2) Ease and time efficiency of the site for the end user
3) Quality of the merchandise
4) Customer support/service before, during and after the sale

Consumer Electronics Are "Lighting Up" the BTS Season for Retailers

September 5, 2006

Analysis of:Back to school, with cellphone and laptop | www.nytimes.com

Big Box CE stores as well as the principals in the Office Supply sector have faced few, if any direct challenges with regard to sales of HOT electronics items during the BTS season. Falling retail prices may present the only obstacle, but at the same time, unit sales are bound to more than make up for the retail price declines that will energize consumer interest. Cellular providers such as SPRINT, Nextel, Cingular and Verizon have done nearly everything possible to promote phones to "must have" teens with equally appealing service rates; computer manufacturers like Dell and HP have added features to make laptops "cool" with fashion skins that personalize/individualize the notebook purchased to match the students dorm, bedroom, locker or classroom decor. All said, this season is shaping up to be one of the most exciting and profitable years for CE sales in history. On the flip side, due to significant decreases in retail pricing of technology due to drops in chip pricing and increased competition, suppliers and sellers will need a banner year in unit sales increases to offset the revenues created by the retail price erosion. I somewhat disagree with the quote in the NY Times article, "Back to School with Cellphone and Laptop" that states that "purchases are more necessity based at this time of year." Although many schools do require work done on a CPU, no school district will be able to mandate a computer purchase based on students demographic status and ability/inability to afford. What schools are banking on by requiring computer and inkjet produced work is that:

1) Most households already own a CPU
2) Community libraries and schools have CPU's that students can use for free.
 

Will Customization/Personalization of School Supplies Give OfficeMax an Edge?

August 24, 2006

Analysis of:OfficeMax Taps Into the Trend of Personalization | officemax.mediaroom.com

As the battle for market share in the OSS sector rages on, OfficeMax has added to its arsenal, a very unique/timely approach to selling the traditional BTS supply categories also sold in Big Box, Drug, supermarket and direct competition.--that weapon is personalization. Inside its retail stores is an area called "Creation Station" where students can create their own customized notebooks, filler papers, dividers and binders, thereby making the ordinary, the unique. Although the concept plays well into the fact that today's student is obsessed with individuality, what remains to be seen in terms of ROI for OfficeMax is:
1)Will the uniqueness of this concept be enough to lure students away from direct competition and other retailers selling school related items?
2)How successful will the Advertising campaign built around BTS be in delivering the message of customization exclusively at OfficeMax?
3)Has OfficeMax already missed part of the early BTS markets given the fact that the announcement of the campaign of differentiation began on August 8th?
4)Since this particular initiative is but a part of OfficeMax's new Advertising venue, "New Year-New You", how will the BTS portion ultimately evolve into a marketing strategy for the core consumer and small business customer in the upcoming Holiday/Basics/Tax Time seasons looming in Q4?

HP Invents More Ways to Drive Revenues Through the Back to School Teen

August 18, 2006

Analysis of:HP Invents More Ways to Drive Revenues Through the Back to School Teen | www.hp.com

Capitalizing on new technology and functionality designed to appeal to specific end users is nothing new for HP. After all, their one word Brand message "invent" pretty much sums it up for the consumer electronics giant. This year, however, HP has moved beyond new technology, features and benefits, and are attempting to be the provider of choice for the student market whose needs transgress technology and move into color, fashion and just plain "coolness." On August 8th, HP launched its 39gs graphing calculator designed to target the high school math student in hopes of stealing share from TI and CASIO. The features HP is counting on to do so are:
1)Trendy design with multiple connectivity options including wireless.
2)A modern grey and white look(sound like an IPOD?) whose stylish, clean lines will appeal to the fashion conscious student.
3)Users of the 39gss can create applications and save their work notes, sketches, equations, formulas and graphs on the calculator for later use.
4)Split screen for convenient side by side comparisons and a hard, slide on cover to protect the fragile screen.
5)A price that is comparable to popular styles from TI and Casio, but with all the bells and whistles mentioned above that are important to today's teen.

OfficeMax Delivers On Its Back To School Marketing Strategy

August 15, 2006

Analysis of:OfficeMax Launches Groundbreaking Back-To-School Campaign | www.finanznachrichten.de

On August 8th, OfficeMax finally rolled out their version of marketing the Back to School season/student. Although they were the last of the Big 3 within the sector to do so, analysis of the initiatives that comprise the campaign would make it appear that on the surface, the best may have been saved for last. Taking no shots at either Staples or Office Depot who had both previously done stellar work in their marketing efforts, OfficeMax may very well have upstaged much of what they have done with a truly fresh, timely, unique and "teen targeted" launch. The individual tactics comprising the marketing campaign aptly titled, "New Year, New You" gives them the edge in my opinion over both rivals due to the following:

1)Partnering with DDB Chicago, Hollywood Records, ABC Family, and teen singing sensation, Jesse McCartney, an original format TV show titled "Schooled", will air on 8/17. A limited edition DVD of the show featuring songs from McCartney's September release album as well as behind the scenes footage will be offered at all OfficeMax store locations. Google Video users will also be able to access the footage at video.google.com/schooled.

2)Customization of school supplies extremely unique and clever strategy that capitalizes on the individuality and differentiation students seek to distance them from classmates in terms of being unique.

3)Collaboration with personalization expert, Kelley Moore, to highlight creative ways that products from the BTS assortment at OfficeMax can further help students further personalize their lockers, notebooks and binders.

What Are the HOT Categories for Retailers in This Year's Back to School?

August 14, 2006

Analysis of:Rocking Your Locker | www.dsnretailingtoday.com

If any of the potential readers of this article are fortunate??enough to have school age children, then you will both relate and more enjoy the upcoming pain your kids will put you through in both time and money as you are dragged store to store looking for all the "cool" stuff the students need/want to level the playing field as they compete with peers. The competition categories are best dressed, best supplied, most organized, TRENDY, technologically prepared and just plain ready for the first bell. It used to be so simple in the past-a cheap canvass backpack, 2-3 pencils/pens, a 5 subject notebook, new shoes, 3 tops and 3 bottoms and life was good! Today, that is just not the case and students will spend whatever it takes to be part of the in-crowd. One thing for sure is that you might want to look into remortgaging the house if you have more than one school age child based on the following:

1) Need and requirements of technology-many schools now require CPU/Notebook connectivity and out of the gate, an investment of $399-$899 is required.

2) Don't forget that students also want (not necessarily need) cell phones, mp3, IPOD and PDA's to keep them networked, connected with friends/family and just to make the homework scene a lot less complex and time-saving for social activities.

3) Students today want colors, trends and gadget items loaded with features, so remove the thought from your mind that all your school shopping can be done with one stop at K-Mart or Big Lots. Get prepared for visits to Wal-Mart, Target, Best Buy, Sprint, and darn near every trendy soft goods retailer and shoe store at your hometown mall.

Gaining Share In the Back to School Season-What Retailers Are Doing to Promote Early and Sustained Sales

August 14, 2006

Analysis of:Retailers Get An A for Effort With BTS Promos | www.dsnretailingtoday.com

There is an old adage that most of us have heard countless times in our lives that goes, "All good things come for those who wait." In the business part of our lives, we also know that this phrase could not be further from the truth and are more closely aligned with the saying, "the early bird catches the worm." For Retailers, the latter has certainly been the choice in breaking marketing, advertising, set-ups and promotions, and this year, the season began just after the 4th of July holiday weekend in hopes of gaining early sales as well as showing off assortments when the serious shopping begins about two weeks in front of actual school start dates. Drug chains, mass merchants, supermarkets and OSS retailers all broke at about the same and the race has been on since, to see who will get the largest slice of the $17.6 billion school supply pie TY. The advantages of the early campaigns are:

1) Consumers tend to hit stores as soon as the promotions, doorbusters and buy one get one offers begin.

2) Although early business may in fact positively affect topline revenues and comps, the truth is, gross margins suffer due to the customers who "cherry pick" and buy only the specials. The real reward comes in the last few weeks when the frenzy begins as start dates near. Shoppers must now buy out of necessity and the time factor. At this time, need takes precedence over price and retailers will return pricing from promotional back to original/chain retail.

3) For a large proportion of national retailers on a fiscal calendar, the timing of BTS gives them 3 full months of selling(July, August, September) and a huge opportunity to use the strength and momentum, if gained in Q3 to propel them into the all important 4th Quarter.

How EASY is it to Sell a Million Buttons?

August 11, 2006

Analysis of:Staples Brand Makes Some Noise-Staples Sells its One Millionth Button... | www.staples.com

Consider for just a moment how difficult it would be for any company to sell any one item a million times in just a little over 18 months and when your mind clears from this boggling thought, consider that STAPLES has done it and done it superbly in terms of creating a cultural phenomenon, a consumer mindset, a charitable windfall, and finally(arguably), the strongest Brand image of any retailer in the industry. In a company who did just north of $16 billion in sales LY, the gross revenue of $5 million is insignificant; however insignificant from a revenue stream, what really counts is that it is not only monumental(considering the $4.99 button really doesn't make things EASY-er) but meaningful to Staples as they continue to build a Brand that someday, is hoped to be as recognizable as, Coke, Pepsi, 3M and General Motors. Aside from the lofty status in a name that means OFFICE SUPPLIES, Staples has fortified their position in gaining the following:

1.)Community/Corporate recognition-Staples pledged up to $1 million to the Boys and Girls Clubs of America in 2005 and 2006 from proceeds of sales of the EASY button. They are viewed as a pillar of the community in all the towns they are located in as a result.

2.)The EASY button and message are now the predominant differentiators they have against rivals, OMX and OD.

3.)Beyond the basic private brand strategy of boosting gross margins, Staples long term vision is even grander where development of the Brand is seen as a creator of new avenues of growth.

4.)As the Brand continues to develop and gain even more recognition, Staples can continue to look for other external outlets to sell their private brands as they have already done in large supermarket chains and college bookstores.

Back To School-A Huge Opportunity For CE, Big Box, Office Supply Retailers

August 11, 2006

Analysis of:Falling Prices, Strong Demand Bode Well For 2006 | www.dsnretailingtoday.com

As the school bells once again ring for students all across America, the competition and opportunity heats up across all retail segments to carry the correct assortments of basics, fads, and networking/connectivity products for today's tech-savvy students. In 2005, total CE spending according to National Retail Federation was $2.06 billion. This year, NRF estimates that spending in this channel will rise to $3.82 billion, a whopping 85% increase! Just which retailers capitalize on this increase and vie for more than their fair share will depend on the following:
1)Understanding of the fact that PC's are now a required vs a "luxury" item for teens aged 13-18 in grades 8-12.
2)Falling prices on CE products as well as the students needs to be trendy, to be connected and networked, and most importantly to make their lives easier through technology are vastly important.
3)Offering sharply priced CE products, free shipping, portable devices and customization of basic product will also be a boon to incremental sales opportunities.(HP and and Dell have recently introduced notebook computer "skins" that offer today's fashion conscious student an opportunity to cover their very basic laptop in a color pattern that most closely mirrors their color/fashion tastes as well as matching the classroom, dorm, bedroom or school locker decor.)

How Difficut Will Future Growth/Expansion Into Urban Areas Be For Wal-Mart, Target, Lowes, Home Depot?

August 11, 2006

Analysis of:Chicago Wage Ruling Snubs Large Retailers | www.dsnretailingtoday.com

On July 27th, Chicago has become the latest city attempting to regulate the wages and benefits packages paid out by America's largest retailers. There are sweeping ramifications based on the ultimate passage of this ordinance which include the following:

1)Potential effect on future inner-city growth plans for big box retailers. Target has already put 3 stores on the South Side on hold with an additional store on the North Side being reconsidered due to the ruling.

2)Even if there might be a way around the ordinance by altering the retail store footprint to less than 90,000 sq.ft., a politically charged situation has already been created pitting Mayors against city council, retailers against unions and division of both sides along racial and economic lines.

3)Creation of a "reverse effect" on employment and tax-base opportunities--whereas the politicians who voted to pass the ordinance did so with a fair living wage in mind assuming that big box retailers would continue to open inner-city stores, the opposite may now be true as companies like Target reassess the cost of doing business in areas where rents are already high and now, where salaries and benefits further affect profitabliity.

4)Lengthy legal proceedings are bound to arise based on the "singling out" of large retailers who happen to build stores over 90,000 sq.ft. The Illinois Retail Merchants Association is already preparing to launch a legal challenge to this ordinance even before it takes effect. In the meantime, growth opportunities for retailers are going to stay on hold" at least in city environments.

The Gloves Are Off-Staples "Comes Out Punching" in the Fight For Back To School Dominance

August 9, 2006

Analysis of:The "Most Wonderful Time of The Year" Returns to Staples........ | www.staples.com

With all the finesse of an experienced prize fighter, Staples has delivered a series of jabs, uppercuts and hooks over the past 8 days that are sure to deliver a KO punch to all who vie for a piece of the lucrative, revenue rich Back To School season. The flurry of punches began early last week with Staples announcing it's Geared 4 School promotion offering one lucky student a trip to Hollywood and a $10,000 shopping spree with Ashley Tinsdale, star of the Disney Channel and an immensely recognizable figure with the teen set. This was followed on successive days with the following public announcements on its website which are sure to add serious topline revenues to the upcoming  BTS season at Staples as well as to build brand recognition to students who graduate and move into the workforce:
1.Dateline, 7/25-Staples offers EASY tips to help graduates dress a resume for success.
2.Dateline, 7/26-Staples publishes on its website the Geared 4 School teen survey that gives the age 13-18 set a revealing look at how to become and stay organized.
3.Dateline, 7/28-Staples reintroduces its clever, "it's the most wonderful time of the year" advertising campaign featuring 15-30 second TV spots that this year, marries the enormously successful (and downright funny) campaign from LY with its immensely successful EASY message.

http://investor.staples.com/phoenix.zhtml?c=96244&p=irol-news

Should Electronics Retailers/Office Supply Chains Add Private Label Electronics To Assortments?

August 7, 2006

Analysis of:Budget Over Brand | www.chainstoreage.com

According to a recent study by Baltimore based, target marketer Vartis, entitled " customer focus 2006:home electronics", the time may be perfect for the CE and OSS guys to look for opportunity domestically and abroad for suppliers to produce Private brand technology. Given the implications of the following facts gathered in this study, Office Supply retailers could begin to add greatly enhanced gross margins in electronics just as they've done in basic supplies, furniture and consumables such as PL ink/toner:

1.)Only 29% of adults today consider brand name the most important factor when purchasing electronics as compared to 40% in 2004.

2.)Special offers such as discounts, coupons, rebates or simply lowering retail price points are the compelling factors of 19% of consumers today vs 15% in 2004.

3.)More women are making the electronics buying decisions today.

4.)28% of adults plan to purchase a notebook, CPU or printer in the next 12 months as compared to 21% in 2004.

5.)Offering up electronics  as a PL choice can further enhance both Brand image as well as add 10 or more points to gross margins.

OfficeMax Digital Signage-Yet Another "advantage" For The Advantage Prototype

August 7, 2006

Analysis of:OfficeMax Takes Signage To The Max | www.chainstoreage.com

OfficeMax recently announced that it will be expanding its in-store digital signage network. Based on the success that the initial deployment has had in its Advantage store prototype, the announcement will also encompass its mid-size stores as well. Advantages of the technology for OfficeMax will be:

1.)Serve as a differentiator for OMX against its rivals and continuation of building on its already award winning Advantage footprint as a store for now and for the future.

2.)An exciting, customer centric experience and a new way to reach out to its existing in-store audience.

3.)High resolution, directional sound speaker technology which delivers the audio in a targeted area(WiFi cafe) without disrupting customers outside the zoned area.

4.)The ability to deliver a mix of business news, branding, educational and promotional messages ultimately geared to creating extra selling and larger size market basket.

Additionally, digital signage creates playlists that are controlled by OfficeMax(exception being CNN news) and geared specifically to the store, audience, demographic, brand message or initiative du jour THEY choose to promote/dominate. By using a continual loop, they can generate playlists that are dynamically customized to a particular location, season, time of day and a particular customer based on individual store prime time(peak of traffic).

Retail Branding-Is Wall Street Utilizing Strength of Recognition As A Measureable Corporate Asset?

August 7, 2006

Analysis of:Looking For Winners | www.chainstoreage.com

In a recent article appearing in Chain Store Age, the topic of developing a Retail brand was covered in depth with some of today's best examples for differentiation and mass appeal to consumers. Companies like APPLE, Starbucks, Target and Whole Foods market were discussed as "poster children" for developing unparalleled loyalty through brand identity. Within my primary area of expertise, the Office Supply sector, I really began to soul search after reading the article, and wondered which of the 3 dominant players will take advantage up the upcoming Back To School season, market to their strengths, broaden the assortments to reflect the trends of today's teen set and overall do the very best job at securing as much of the foot traffic and dollars they can possibly take out of the season. The rewards for Building brand can play into the following:

1.National Retail Federated estimates the potential for a 31% increase in spending across all retailers during the 2006 BTS shopping season(July-mid October)

2.Students are more trend and fashion conscious and just like the soft goods sellers such as GAP, American Eagle, Old Navy, Office Supply retailers need to provide the students with style, color, functionality, assortment and "coolness." Students will spend whatever it takes to ensure that all the above criterion are met and that they fit well, style-wise, with their peers.

3.The BTS season is now the second largest shopping event for teens, second only to Christmas. A strong marketing campaign is vital to push the student footsteps in the door and take the money. Consider that the first year college student is prepared to spend up to $3500 to "dress up the dorm".

Home Depot's "Psalm Before The Storm"-Thou Shalt Prepare Stores

August 7, 2006

Analysis of:Hurricane Culture | www.chainstoreage.com

Just as many national retail chains make preparation for the "storm of customers" in the upcoming Back to School season, so too is Home Depot making plans for storms of a different type--the destructive wrath of hurricanes in the coastal areas of the southern US. With a multitude of stores in states such as Florida, Georgia, South Carolina, Mississippi, Alabama and Louisiana, the Home Depot is preparing for the worst and hoping for the best regardless of whether or not this hurricane season is busier than the last two. Borrowing from past experience and knowledge gained from how inefficient the catastrophe preparation model was in handling the 2004 hurricane season, Home Depot allocated $1 million to improve its operation before the start of the 2005 season. Deploying a standard set of contingency policies and procedures, HD incorporated its 18 action teams into a single command center. The outcomes of this strategy produced the following benefits in 2005 and for the future:

1.)Store shelves can be filled to satisfy customer needs before and after the storm. Inventory shipments are streamlined through integrated technology solutions, collaboration tools and shared POS data with suppliers.

2.)Utilizing Planalytics, a business weather intelligence provider, HD can merge weather records, trend forecasts, consumer data and product analysis.

3.)Recovery of warehouse inventory is quickly begun after the storm passes and prep for the next storm begins immediately. HD can even evaluate which regions will be hit the hardest and plan accordingly.

OfficeMax Takes Another Step in Meeting/Exceeding Turnaround Plan

August 7, 2006

Analysis of:OfficeMax Reports Second Quarter 2006 Financial Results | officemax.mediaroom.com

For the second consecutive quarter of FY 2006, OfficeMax has delivered better than expected results across all segments. Although Contract segment sales were flat in US operations and just slightly increased in international, gross margins improved by .3% reflecting benefits from enhanced assortments and greater penetration of Private Label sales. Operating incomes in Contract benefitted from continued cost reductions and efficiencies of operations, consolidation of DC's, tight controls on marketing and promotional costs and an improvement in Canadian operations.

In the retail segment, same store sales decreased (1%) but operating income swung positively by $33 million quarter over quarter. Gross margins increased by 4% over LY due mainly to leaner inventories, better instocks created through Supply Chain efficiencies, reduced shrinkage at store and DC level, and promotional activity that has moved from low to negative margin "doorbuster" offerings to core product offers geared at a more everyday low price strategy and small business.

Key implications of the successful 2nd Quarter include:
1.Increased cash flow and opportunity to invest in the areas of new store growth, store remodels and increased budget for Advertising and Brand marketing initiatives.
2.Opportunity to exceed 2006 Turnaround Plan expectations in Operating income margin from originally projected 2-2.25% to figures in the 3-3.5% range.
3.Continued shareholder and analyst confidence in the Turnaround Plan and subsequent effect on share price.
4.Future benefits that include continued cost efficiencies gleaned from the learning curve of the first half of TY; increased productivity per square ft.through reduction in labor costs; additional growth of Private Label offerings.

HP "Invents" A Bullseye Marketing Strategy For the Back To School Tech Student

July 26, 2006

Analysis of:HP Unveils Back To School PC's, Printers, Enhanced Tech Support; Students, Teachers Up to 15% Off | www.hp.com

With the release of its marketing strategy just in time for the the start of the '06/'07 BTS season, HP has positioned itself to be the Key CPU, notebook, and printer provider to the ever growing spending demographic, the tech student. Relying on its already remarkable image as the leader in over the counter sales in the aforementioned categories, HP becomes the first(and perhaps the only) player in the sector to capitalize on the revenue potential and seemingly endless spending power of today's teen BTS student. Aside from the offering of two new design styles in the notebook line as well as a notebook expansion base which offers desktop comfort to remote users, HP takes it a step further and offers custom cut PC "SKINS" so that today's fashion-conscious student can personally choose a style and color to blend in with their locker, dorm or classroom. HP will also offer a value loaded All-in-One featuring photo quality color, laser quality black text, that scans and copies in true to life color, all at a student friendly price of $79. Adding new offers in its tech support programs is just the icing on the cake. In rolling out this campaign, HP stands to gain the following benefits:
1.)Strong presence in the second largest teen retail shopping season, BTS, second only to Christmas.
2.)Relationship building with the ever growing, fashion conscious, trend following, cash laden demographic, the student.
3.)Potential to further enhance and drive market share in the most lucrative business of all for HP, Ink and consumables.
4.)Securing the "next generation" of future business leaders in the US by sowing the early seeds of quality, technology, fashion and price today for tomorrow's harvest.

Circuit City Turnaround-Can They Learn From The Best(Buy)?

July 24, 2006

Analysis of:Turnaround Top Priority For New CEO of Circuit City | www.retailingtoday.com

With 30 years of retail under my belt, I am no longer amazed at how many companies change top executives and announce that Turnaround strategies are the top priority for the year. Obvious questions that always coincide with such announcements are:
1.)If a company was executing its past business plans with some degree of success, would there be a need for a turnaround plan?
2.)Does changing of the guard at the very top of the food chain really make a difference when many of the same executives and most of the field organization are the same?
3.)When functioning under a turnaround plan vs within the spirit of a standard business plan built on recent past success, is there really any option other than to improve, add shareholder value and survive?
There are several positive implications of the turnaround plan at Circuit City:
1.)First Quarter results showed positive movement with comps at 14.6%. SG&A improvement-a decline of 174 basis points on the strength of payroll and rent leverage. Net earnings of 3cents/share vs net loss of (6cents)/share Q1 LY.
2.)Circuit has a strong E-commerce business and "best in class" merchandise pickup process at store locations.
3.)They've been around a long time and have seen their share of business peaks and valleys. With the right Leadership TEAM, the right business model, and most importantly, the flawless execution needed to see the model through, they can continue to grow the success they have shown since the end of FY 'O3 when they posted an EPS loss of .03/share.
To maintain the momentum, they need only to look at the current business model of their top rival to find the answer to continued momentum and sustained growth.

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