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Fitch stays fresh

Though Abercrombie & Fitch plans to open more stores to support existing brands, new concepts will be the chain’s primary sales driver, executives said on a conference call. The company will launch its eagerly anticipated fifth concept next January and will have seven stores operating by March, said Mike Jeffries, chairman and CEO. Sources say the new concept is likely to focus on lingerie or accessories. Abercrombie & Fitch invested $7.5 million in starting up the concept last year, and it plans to spend an additional $12 million to $15 million developing it this year, Jeffries said.

The decision to forge ahead with the concept was based largely on the success of the retailer’s fourth concept, Ruehl, which launched in 2004 and currently has 12 units, said Jeffries. “From a productivity standpoint, the average Ruehl store averaged $22 million in sales in fiscal 2006,” he said. The company plans to boost its square footage some 12 percent this year by opening six Abercrombie & Fitch, 27 Abercrombie, 67 Hollister Co. and 10 Ruehl stores.

Whole Foods bulks up

Whole Foods’ $565 million deal to buy rival Wild Oats will make it competitive against Wal-Mart and others looking to enter the $13.8 billion U.S. natural-foods market, Whole Foods Chairman and CEO John Mackey told investors last week. The deal, which adds 110 stores and four banners in the U.S. and Canada to the Whole Foods portfolio, offers critical mass in Colorado, Florida and the Pacific Northwest, three regions where the company currently has little representation, he said.

Whole Foods will close, rebrand, relocate and remodel some of the Wild Oats stores. Whole Foods, which posted $1.2 billion in sales in 2006, reported a 7 percent increase in same-store sales for the fiscal first quarter (ended Jan. 14), down from 13 percent for the year-ago period. Even so, said Mackey, “we are producing higher sales growth, comps and sales per square foot than our public competitors. Given our record store development pipeline, continued anticipated acceleration in store openings and now the announcement of our pending merger with Wild Oats Markets, we believe we are even better-positioned to achieve our goal of $12 billion in sales in fiscal year 2010.”

Landlords applauded the deal. “Acquiring instead of building,” said Glenn J. Rufrano, CEO of New Plan Excel Realty, “is a good way for Whole Foods to grow without risking same-store sales.”

Mexx heads for the exit

Liz Claiborne plans to shut its remaining U.S. Mexx stores by July and use the real estate for brands with more growth prospects. Claiborne, which operates about 400 Mexx stores in 66 countries, closed seven U.S. Mexx stores early last year because of sales weakness. This leaves Mexx with only four stores in New York City and Washington. These, including a 9,000-square-foot flagship on Fifth Avenue, will probably be converted to one of the company’s more recognized brands, sources say, such as Juicy Couture, Lucky Brand or Sigrid Olsen.

Container Store sale?

The Container Store is for sale, which spells the end of a 30-year reign of family ownership. Chairman Garrett Boone says a strong market for retail mergers and acquisitions was a factor in the decision. Since its beginning in 1978, the Coppell, Texas-based storage-products retailer has grown to 38 stores, with sales projected to reach $500 million for fiscal 2006. Sales have grown by about 15 to 20 percent a year on average since the company’s inception. Remaining private has limited its expansion, however. “When you’re private, where does the money come from for expansion? Out of your own pocket,” said Howard Davidowitz, chairman of Davidowitz & Associates, a New York City retail consulting firm.

“We’re not talking about playing with funny money. If you want to grow, it’s hard to continue with your own money. It’s part of a normal evolution where the company has to reduce the risk and provide future capital by going outside.” The company hired JPMorgan as financial adviser and is searching for a buyer. Davidowitz says a deal is probably near and will be completed within the next six months.

Penney: Malls matter

J.C. Penney’s off-mall stores are not cannibalizing sales from its mall-based stores, executives said on the retailer’s year-end earnings call. The chain reported a same-store sales increase of 3.7 percent at its department stores for 2006, on top of a 2.9 percent increase in 2005. Penney now operates 400 of its 1,033 stores in open-air centers. Fifty of those opened over the past four years.

“We were quite surprised at the limited transfer there has been — it is even half what we thought it would be,” said Chairman and CEO Myron (Mike) Ullman. “It really speaks to the fact there is a certain difference in terms of the cadence in the way people shop. Off-mall stores tend to be closer to their neighborhood and maybe more of a mid-week experience.” And mall stores come into their own in other ways, he added. “We have the best of both worlds, almost the only company that really has a good balance. We have 640 stores anchored in the best malls in America, because that is where the business tends to be during key selling times at Christmas or back to school, Mother’s Day, Father’s Day.”

Maggie, Marble pair up

A battle between ice-cream parlor operators is heating up. Cold Stone Creamery, the current leader in the hand-mixed, premium-ice-cream restaurant sector, will be facing a more formidable competitor now that conglomerate NexCen Brands has acquired its two chief rivals: Maggie Moo’s and Marble Slab Creamery. New York City-based NexCen paid a total of about $37.1 million for the two quick-serve chains. “With 520 existing stores and 225 stores in the pipeline on a combined basis, these two brands will place us solidly as the No. 1 player in quality and the No. 2 player in the number of franchise units,” said Robert W. D’Loren, NexCen’s president and CEO, in a press release.

D’Loren says NexCen plans to open more Maggie Moo’s and Marble Slab units worldwide through its existing franchise networks in 40 countries. NexCen also owns and franchises The Athlete’s Foot and Bill Blass brands. Combined, Marble Slab and Maggie Moo’s post about $140 million in sales yearly. NexCen says it plans to boost that by about 20 percent this year. Scottsdale, Ariz.-based Cold Stone Creamery operates some 1,400 stores in the U.S., Japan and South Korea. The chain reported about $408 million in sales for 2005.

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