May 14,
2006 by in UnCategorized 
By Home Furnishings Business in Bedding on May 2006
The board of directors of Select Comfort Corp. has authorized the company to repurchase up to an additional $150 million of its outstanding stock through 2008.
Over the last seven quarters, the specialty bedding retailer has spent about $90 million of internally generated cash from operations to repurchase about 4.1 million shares of its common stock, representing 10 percent of outstanding shares. The average repurchase price per share is $21.77, more than a 40 percent discount to the company’s stock price.
“Our share repurchase program, which has been accretive to earnings per share, has historically been opportunistic in nature,” said Bill McLaughlin, chairman and chief executive officer. “Based on a detailed analysis undertaken by the company over the past several months, we concluded that a prudent, consistent and systematic share repurchase program should serve as a core element in our philosophy to provide superior investment returns to our shareholders.”
In addition, the board approved a 3-for-2 stock split of its outstanding shares of common stock effective June 8.
The stock split is a first for the company. Stockholders of record on May 25 will receive one additional share of Select Comfort common stock for every two shares of common stock owned at the close of the financial markets on that day. The additional shares will be distributed through Wells Fargo Shareholder Services, the company’s transfer agent, beginning June 8.
As a result of the stock split, the number of outstanding shares of Select Comfort common stock will increase to about 54 million from about 36 million. After adjusting for the split, the company’s earnings per share guidance for 2006 is between $0.91 and $0.95, compared to previously stated full-year guidance of between $1.37 and $1.42 per diluted share.
The company reaffirmed its long-term growth targets, which includes revenue growth of between 15 percent and 20 percent, same-store sales growth of between 7 percent and 12 percent, and earnings growth of between 20 percent and 25 percent. Over the past three years, revenues have increased at a compound annual growth rate of 27 percent, with operating earnings increasing at a compound annual growth rate of 48 percent.
Select Comfort operates more than 400 company-owned retail stores nationwide.
May 14,
2006 by in UnCategorized
By Home Furnishings Business in Case Goods on May 2006
Dan Bradley has joined high-end case goods, occasional and upholstery supplier Ferguson Copeland as president and chief executive officer. He takes over those posts from Darrell Ferguson, who continues as chairman.
The move reflects Ferguson Copeland’s determination to meet the operational demands of its business model, which blends sourced case goods—some finished overseas and some at its Morganton, N.C., facility—with leather and fabric upholstery. It also frees up Ferguson, who co-founded the company in 1996, to concentrate on what he views as his strongest skill set—product development and design, and marketing.
Previously, Bradley had been president of Baker Furniture Co. since 2002, and before that was vice president of operations at Henredon.
“Dan’s background and expertise are in operations, and that’s what we need at this point,” Ferguson said. “With the logistical issues a business like ours faces, that’s a critical piece of our success.”
Bradley, based in Morganton, also has an ownership stake in Ferguson Copeland.
“Having Dan with us will allow me to do what I most enjoy – design and marketing,” Ferguson said. “On numerous levels, this will be very positive for us.”
Ferguson also noted that Bradley has developed strong partnerships throughout the design trade during his tenure at Baker.
“As we pursue expansion of the Guy Chaddock line, it’s so designer-driven, and he has great relationships in that area,” he said.
Ferguson Copeland acquired intellectual rights to Guy Chaddock, a renowned maker of high-end reproductions, in October 2004. Bradley also will assume top management responsibilities of that division.
April 30,
2006 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on May 2006
When Century Furniture found itself sometimes disappointed with how its goods looked once they hit retail floors, the company looked outside the furniture industry for an opinion on how to proceed.
Like many suppliers, Century spends a huge amount of time and money in preparing its market showroom to present new collections in an environment that makes the goods shine. Pinpoint detail from accessories and wall treatments, to paint colors and lighting creates the supplier’s own vision of how it would like to see the furniture sold.
Given the huge variety in store sizes and ages, and retailers’ own merchandising preferences and operational limitations such as amount of space available and floor plan, though, suppliers do end up believing their products might not be getting the best shot before the consumer.
For high-end companies such as Century, where romancing the goods to consumers is critical, that potential disconnect can mean missed sales for supplier and retailer alike.
These issues led Century to Callison Architecture, a Seattle-firm whose specialties include retail design, and whose clients include Nordstrom and Pottery Barn.
“If we want furniture sold as a luxury product, we have to provide a luxury experience. With Callison, we went outside the industry to see how an architectural design specialist would go about enhancing the furniture-buying experience,” said Ed Tashjian, Century’s vice president and corporate marketing director. “The fundamental conclusion Callison came to is that the High Point experience doesn’t translate to the retail level. What isn’t translated? First, the nature of the architectural elements in the showroom, as well as the accessories and flooring. Second, the story-telling aspect of how home furnishings can make people’s lives better is missing.”
Century and Callison developed a program called Compelling Retail Design (CRD).
After starting in late 2004, Century now has 14 complete installations of the program ranging from 2,500 to 5,000 square feet with various retailers across the country and another six in development. Tashjian anticipates a total of 25 CRD displays by the end of this year.
The program includes major architectural elements, story-telling point-of-purchase kiosks and other displays, consumer take-aways, flooring, paint selections, even ceiling treatments. The total investment for CRD is around $15,000, and Tashjian said Century splits that cost with the retailer. Design is case-by-case with each customer.
“This program focuses on the experience as much or more than the furnishings alone,” Tashjian said. “There’s a whole different level of architectural resplendence—it’s more than painting the walls. It’s new flooring, ceiling treatments and wall installations.”
I Want That
It’s not unusual for a retailer to come to High Point market and get excited about a new collection of furniture, and in the showroom say something to the effect of, “This the way I want it to look on my floor.”
Problem is, while the supplier has only its goods to worry about at market, with a showroom merchandising plan that was months in development, most retailers deal with an abundance of vendors, and re-creating what they saw at market can be pretty complicated.
More manufacturers are providing dealers with very specific merchandising plans for their goods, with paints, accessories and flooring all identified down to the source’s product number for each piece of the room puzzle.
Bernhardt’s Martha Stewart Signature Collection, for example, which operates as a separate brand within the company, has extensive merchandising specifications for retailers carrying the line.
Bernhardt, however, also produces style guides for each new collection. The more extensive guides include specific wall, trim and ceiling paints; carpets and area rugs; lighting and accessories and bedding. The company also provides elevations with architectural and structural details to create a setting appropriate for individual collections.
The most obvious disconnect between market showroom and retail presentations is space, said Heather Bloom, director of brand development for Bernhardt.
“Where we might show two or three settings of bedroom and dining, a retailer might have one or two, so that depth of presentation isn’t there,” she said. “Timing of a collection is another issue—the retailer might want to re-do their showroom just once a year.”
At High Point market in October 2004, Theodore Alexander got into the licensing arena with Althorp, a collection based on pieces in the ancestral English estate of the Earl of Spencer. As part of the introduction, the company put together its first retail merchandising package, which now shows up in 90 Theodore Alexander accounts.
That package was a key piece of the business plan for the collection, since Theodore Alexander was determined that retailers and consumers wouldn’t pigeonhole Althorp as just a “stately home” collection.
“The whole stately home thing has been cliched to death,” said Anthony Cox, group vice president and creative director. “The collection’s based on old furniture from a historic house, but one inhabited by contemporary people living a contemporary lifestyle. We wanted to give dealers a vision on how to set (Althorp) up on their floor.”
Theodore Alexander wanted to avoid overdone environments with Althorp.
“While it might look great in the showroom, it doesn’t translate to the retail floor,” Cox said. “The key is the support materials that allow retailers to create the atmosphere in a way that’s appropriate to their floor space and region—we have customers carrying Althorp from California to Minneapolis to the East Coast.”
For that reason, Althorp’s showroom environment is not estate-like at all—a minimalist space with white walls, and modern music in the background in an atmosphere more reflective of a New York Soho townhouse than a country manor. Each piece has a story tag with an acrylic holder on a metal stand for almost a museum presentation that focuses on the furniture. Banners give a taste of Earl Spencer and family’s modern sensibilities.
The collection has an 850-square-foot minimum retail footprint, but it takes 5,000 for a full-on presentation.
Merchandising Sophistication
Lexington Home Brands once had many thousands of retail accounts, and those didn’t always follow through on the company’s long-recognized showroom presentations. Nowadays, dealers have to commit to certain levels of merchandising sophistication to land brands like Liz Claiborne.
At April market, Lexington highlighted the Tommy Bahama Experience, a 4,000-square-foot retail model representing the six-year-old license’s existing collections and selections from this spring’s addition, Jimbaran Bay.
Some point-of-purchase images are the same ones consumers would see in a Tommy Bahama apparel store—an $800 million retail operation in its own right. The Lexington concept even uses scent machines to create the island/casual feel of the brand.
Linda King, retail development manager at Lexington Home Brands, spends a third of her time on the road visiting retailers, and said the company wants retailers to adopt an appeal to all the senses in merchandising its brands on the floor.
In translating Tommy Bahama, for example to retail, she said color is the most typical problem.
“There are a lot of random colors in Tommy Bahama, and sometimes the paints don’t really match up,” she said. “A lot of retailers have open floors now, too, and it’s hard to create an environment when a bed is sitting out in the middle of a huge space.”
The ideal retail Tommy Bahama Experience retail presentation starts around 3,000 square feet, but Lexington can help create an island environment half that size through suggested wall coverings, paints and selected accessories.
It costs money to refit a retail floor, but King noted that the program includes Tommy Bahama-licensed rugs from Shaw; top-of-bed goods from Sferra; and lighting from Emerson.
“These all are things the retailer can make money on,” she said. “A lot of the cost of the display involves items the retailer can actually sell.”
Cost indeed is one reason the market showroom vision might not make it to the retail floor—especially in a soft retail environment, many dealers are hesitant to invest in more detailed merchandising.
“When business booms and the cash flow is good, I don’t think there’s anyone who won’t spend the time and money for a powerful presentation on their floors,” Bernhardt’s Bloom said. “But when times are tough, that’s when you really need to set yourself apart. It’s a chicken-and-egg question.”
Retailers Know Their Business
It can be a fine line between offering merchandising support and telling retailers how to run their business.
“There are some retailers who make a better presentation than we do ourselves,” said Mike Spece, executive vice president of merchandising and design for Hooker Furniture. “If you look at someone like Robb & Stucky, they are the best lifestyle merchandisers out there, and there’s not a lot we can tell them.”
Spece knows both sides of the fence. Before joining Hooker eight years ago, he spent 28 years in retail with Gabberts, where he eventually became head buyer and merchandise manager for case goods. He said that although Hooker’s rolling out SmartLiving—a new merchandising program for the line already in place at a dozen retailers, with about 23 more installations expected by the end of the year—Hooker’s case is a little different from some of the high-end suppliers.
“Most manufacturers like to see all their product shown together,” he said. “We’re category killers, though, so we’re happy with retailers who want to show our goods by category. In my heart, I believe that’s the way consumers shop, for an entertainment center, or other specific piece. At times, the lifestyle retailers can make it more difficult to help the consumer buy what they need. I think our customers shop Hooker by category as well.”
For that reason, SmartLiving can set up by category as a “store within a store.”
Guy Walters III at SLF, an importer of promotional to mid-price case goods, is more emphatic about staying out of the dealer's way.
“We don’t consider ourselves to be in the retail business—our scheme is to make life easier and more profitable for retailers,” said Walters, group vice president and general manager of SLF’s Signature division. “We don’t have a brand name, and we don’t dictate price points. We’re trying to ship quick and put a screaming value on their floor. Some of the best retailers I’ve ever worked with are in our price spectrum. These people have great merchandising schemes, but when it comes to their price points, you’re not selling an $8,000 dining room.”
For those retailers who do want to re-create what they saw last month in High Point on their floors, suppliers make their staffs available. Century’s Compelling Retail Display program offers designer services to retailers and so do others.
“We do have an in-house designer that retailers can utilize to create strong in-store merchandising of our collections,” said Bloom at Bernhardt. “She handles showroom design, and between markets goes out to retailers to work with them free of charge.”
Hooker’s visual director, Patricia Adams, also spends time between markets working with retailers on their merchandising of Hooker product.
“She custom designs a display for each one, and she’s an incredible resource” Spece said. “In our case, concentrating on independent dealers, it’s more difficult to re-create (the showroom atmosphere). You’re dealing with the customer’s own space, and each one is different.”
The Althorp merchandising support program has worked well enough for Theodore Alexander to develop a similar package to help dealers better display last October’s introduction, Replica.
“The Replica support program will be ready after April market,” Cox said. “We know the template we created for Althorp works.”
Having a support program in place for Althorp from the get-go was a key to the collection’s success, and so far has kept Theodore Alexander pretty pleased with how it’s being floored in stores.
“I’ve visited 28 stores carrying Althorp, and the only issue I had was the misuse of the name—(the late princess) Diana, Charles’ sister, keeps cropping up every so often,” Cox said. “She lived there, of course and is part of Althorp’s history, but there is so much more to Althorp.”
Lexington’s King is working with dealers to get consumers in the mood for Tommy Bahama, organizing Tommy Bahama Experience parties on-site in stores. The next is scheduled for June 22 at Norris Furniture in Ft. Myers, Fla.
“Those get consumers and the retailer in the mood for the brand,” she said. HFB
April 30,
2006 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on May 2006
Every consumer wants to feel wanted, to feel as if they’re valued. And just coincidentally, most retailers, who want to stay in business for the long term, cross their fingers that their customers want to return to spend a few more bucks.
Combine the two desires together, and you get a loyal customer base who returns time and again to the same retailer for all their needs.
But the intermittence of shoppers returning to a furniture store on a more frequent basis remains an obstacle the retailing side of the home furnishings business continues to face. Purchases are usually of the variety of which replacement is years away from occurring.
Creating an atmosphere of furniture as fashion, a lifestyle choice rather than an item of necessity, may pull a few customers on the shopping fringe into the store more often than they once did, but not nearly as frequently as other industries—such as consumer electronics—have managed to lure in their customers in the last few years.
Replacing even a high-priced item, such as the last version of an iPod for the newest edition of the portable digital music player, happens much more frequently than someone opting to purchase the newest sofa collection to replace last season’s.
Loyalty programs have been used more frequently in recent years in other fields of retailing and services to pull customers into the store. Most have succeeded in producing a loyal clientele, who use a credit card-sized indicator of who they are and what they purchased. With the acceptance of a reduced price or other perk, consumers would have to offer up their buying history with that retailer—from Hallmark to OfficeMax to CVS Pharmacy to American Airlines—to obtain an acknowledgment of their continued patronage.
A Trade Off
A retailer issues a card to a regular customer who signs up for it by supplying personal information. They then use it as a form of identification when making transactions. The purchaser is usually entitled to either a discount on the current purchase, or an allotment of points for a future purchase. Customers walk out with a deal and the desire to return again, while the retailer builds loyalty and gains pertinent customer information to add to its data base to adjust its advertising and stocking.
Thanks to a chain’s loyalty card program at most supermarkets he works with, consultant David Livingston, the principal of DJL Research, said customers walk out with discounted product, while the retailer builds loyalty and gains pertinent information—including names and addresses—to help ensure measures are made to get the consumer to come back.
Livingston, who helps medium-sized regional supermarket chains facilitate these programs, says the information provided helps provide a company with valuable data to better identify and retain their best customers, who without the card would be anonymous.
“You make sure the store manager knows the Top 100 customers by name,” he said. “These are really good customers. It’s no different then if you’ve got a client and he’s a good client. Whether you’re in the supermarket business or the furniture business, you’ve got your best customers, and you don’t want them to be somebody else’s customer.”
The knowledge of who is shopping for what helps, he says.
“We’ll take the sales information about each customer and code by neighborhood,” Livingston said. “Then we’re able to see how much sales each store is getting by neighborhood. It seems like a win-win for all. But building a loyal customer by rewarding them for their faithfulness, with this type of loyalty program may have helped in other retail industries, but not so far in the realm of furniture.
Why Not Home Furnishings?
C. Britt Beemer, chairman and founder of America’s Research Group, says studies conducted by his company show the demand in furniture for such loyalty programs is currently low among those polled.
“Only about 14 percent of shoppers feel a loyalty card would have any impact on their furniture shopping because it’s just an infrequent process,” he said. “For a concept to be viable, at least 25 percent of America has to want it.”
The cash-and-carry, destination-purchase nature of the business, combined with the lack of high instance of repeat and multiple purchases in home furnishings creates a tough situation that would make the use of a loyalty card an expensive proposition.
“When it comes to furniture, we have not found anyone who has made it successful,” he said.
Despite the lack of interest so far in furniture, research in other retail industries shows someone who is being rewarded for their continued patronage is not only coming back again, but offering up that information freely.
Retail consultant Bob Amster, the principal of Retail Technology Group, has been involved in retail systems design and management since 1971. He says obtaining customer information is the most valuable reason to initiate a loyalty program. The cost for obtaining and using the information could cancel out the expense put into launching the program.
“It’s the only way a brick-and-mortar retailer has of getting information about a specific customer and what they’re buying and some of the demographics,” Amster said. “You’re not allowed to ask otherwise for name and address. You can no longer cross reference a credit card with a customer’s name and address. That’s out. An e-retailer on the Web automatically gets information about a customer because a customer has to fill in their name and their address to receive the product.”
How Would It Work for Furniture?
Forth & Towne, the Gap’s newest clothing store brand aimed at women 35 and up, offers its shoppers the Indulge Membership. Sign up while shopping, and you reap the benefits, including advance notice of special savings, invitations to private events, and special offers for shoppers and their friends. Once a customer spends $500, they become a member and are eligible for 5 percent off all purchases, complimentary alterations and access to exclusive promotions.
A loyalty program such as Forth & Towne could lure shoppers to furniture stores more often, says consultant Don Delzell, principal of Retail Advantage. Delzell, a recognized expert in merchandising, product development and integrated planning who has had direct experience with leading mass market, department store, specialty store and grocery accounts for more than 20 years, said research has shown the perception of value, good delivery and adequate financing for products creating the highest satisfaction in customers buying furniture are the leading factors in what brings them back again. According to Delzell, a loyalty program that could work for furniture retailers would be a long-term program, one in which a customer could re-decorate their home piece-by-piece, get deals for the next piece of furniture and have design assistance along the way.
“The challenge of a loyalty program (for home furnishings) is sustaining and motivating customers’ behavior over time and rewarding them,” he said. “Each time they successfully complete payment on a set of furniture, they have the opportunity to go in and buy the next thing they need. Each new increment there is an incentive to add it. It would be coupled with a decorating plan where the retailer works with a customer to say what do you need to start with first.” HFB