Thursday, March 19, 2015

The Bean Boot Marches Forward

In these pages and elsewhere, one reads story after story of retail debacles involving venerable, old-school retailers. One after the other, once-golden brands such as Sears, Radio Shack, and JC Penney seem to be imploding and disappearing in the face of more nimble competition and the inexorable rise of online retailing - not to mention their own missteps and miscalculations.

But among the tidings of failures, there are a few retail success stories. One old-school retailer with a classic name is striding confidently into the future on the strength of, among other things, a 104-year-old boot invented by an outdoorsman from Maine with the unlikely name of Leon Leonwood Bean.  Over that 104 years, L.L.Bean, Inc., headquartered in Freeport, Maine, has grown from a one-man operation to a global organization with 2014 revenue of $1.61 billion, up 3% from the previous year, with online sales up 7%.

The signature boots sell out every winter; this past winter, a particularly difficult one for New England, Bean sold approximately 450,000 pairs, a new seasonal record, and Bean boots are are back-ordered until spring or even summer. The boots are still made the same way they were 100 years ago: hand-stitched in Maine. They’re top quality, and they’re backed up with top-quality customer service.

Bean built itself as a catalog as well as a brick-and-mortar retailer, committed to above-average service.  As the Bean sites notes, “L.L. learned the value of personally testing his products, of honest advertising based on firm convictions, and of keeping the customer satisfied at any cost”. The reason the company that bears Bean’s name continues to thrive is because it learned early on to do things right. Here are three ways in which Bean has been acknowledged recently for doing things right:

Valuing and Rewarding Employees:
Recently Bean announced that based on its higher revenues last year, it plans to pay 5% bonuses to its nearly 5,300 employees.  Bean was designated one of Fortune's 100 Best Companies to Work For in 2015, a designation based on employee surveys. Bean ranked 56th overall, and was among the top 10 retailers and number one among outdoor retailers.

Embracing Online:
Bean embraced ecommerce early, and learned to do it well. Bean was #32 in the Internet Retailer 2014 Top 500 Guide. In the most recent Stella Benchmarks, a quarterly ranking of customer service performance from StellaService Inc.,  Bean was ranked among the top three retailers for providing the best overall customer service during the holiday season, and earned consistently high ratings for phone support, e-mail support, live chat support, shipping, and handling of product returns. Bean was also an early adopter and savvy user of social media platforms.

Sensible Expansion & Store Sizing:
As reported in our Accelerating News section, Bean plans to more than triple its number of US stores over the next 5 years, with a goal of at least 100 by 2020, up from its 26 current US stores. According to a story on, this is the largest number of store openings in the history of a company that “has moved cautiously when it comes to retail stores”, and had never opened a store outside of Maine until the early 2000s. Also, in an era when retailers of many types – including Walmart and Target - are downsizing store footprints, Bean will build smaller stores, ‘‘more efficient and more productive” stores of around 15,000 square feet apiece, in marked contrast to the megastores opened by outdoor retailers such as Bass Pro Shops or Cabela’s.

After five years of steady growth, in which brick-and-mortar performance has sometimes outpaced its online performance - and with the continuing popularity and style profile of its signature boots – the company started by Leon Leonwood Bean is ready to step off toward the future.

Other Retail Success Stories:
In addition to L.L. Bean, there are a handful of other retailers who are marching forward with strength and confidence; among them the following:

Kohl's reported a profit of $369 million, or $1.83 a share, in the most recent quarter ending January 31, while revenue climbed 3.9%, to $6.34 billion. The company's shares have risen more than 33% over the last year. According to a Piper Jaffray report on female shoppers' spending habits which surveyed more than 1,000 women, Kohl's is women's favorite place to shop for clothes, ahead of Macy's, JCPenney, Wal-Mart, Amazon, Target, TJ Maxx, Old Navy, Sears, and Levi's. Kohl's has been the first choice among women for the last four surveys.

ULTA Beauty:
Ulta recently posted an 11.1% jump in same-store sales, and reported net earnings of $87.3 million for the quarter ended January 31, up 21.6% from $70.7 million in the year-ago period. For the year, the company reported profit of $257.1 million, and revenue of $3.24 billion. Ulta opened 100 stores last year, ending the year with 774 locations, and plans 100 net new stores in fiscal 2015.

Dollar General:
The dollar store category has been hot for some time, and this is certainly true of Dollar General Corp. Coming off a strong year in which sales increased 8% to $18.9 billion, same-store sales increased 2.8%, net income increased to $1.065 billion, or $3.49 a share, compared to $1.025 billion, or $3.17 a share the year before, DG is responding to the pending merger of rivals Family Dollar and Dollar Tree with an aggressive expansion plan to open 730 new stores and remodel 875 existing locations in 2015.

Chris Cardoni, Marketing Manager

Company News

New Business: The Leasing Team has negotiated retail leases totaling 74,300 s/f in new leases and renewals in MA and NH. VP of Leasing Don Mace will handle a new assignment at Cumberland Plaza, 2000 Mendon Rd., Cumberland, RI. The Property Management Team has taken on a portfolio of 17 family-owned retail properties in Massachusetts and Connecticut. KeyPoint Partners provided valuation guidance and financing to the family, and will also handle leasing for a number of the sites.

National Retail News

The long winter put a damper on retail sales in February: according to the National Retail Federation, excluding automobiles, gasoline stations and restaurants, retail sales declined 0.2% seasonally-adjusted month-to-month, yet were up 3% on an unadjusted year-over-year basis. Among retailers reporting monthly comp-store sales, L Brands was up 6.0%, Gap was down 4.0%, Rite Aid was up 3.3%, and Costco gained 2.0%. See our sales report below...Hudson’s Bay Co. is forming a joint venture with Simon Property Group to target opportunities in the US. The venture is structured to facilitate an IPO at a later date. HBC, whose banners include Hudson's Bay, Lord & Taylor and Saks Fifth Avenue, will contribute 42 properties to the venture which will then lease back the properties under triple-net operating leases to HBC.

Accelerating Retail News

Nordstrom Inc. will open 27 Rack stores. Nordstrom operates 292 stores, including 116 namesake stores; 167 Nordstrom Racks; two Jeffrey boutiques; and one clearance store...Tilted Kilt Pub & Eatery will add 20 new restaurants in the next 5 years. 9 of those locations are slated to open in Baltimore, DC and Virginia by the end of 2016. The chain has more than 100 locations across the country...McDonald's plans to open 125 restaurants and update 100 US locations this year...A unit of GameStop Corp. won an auction for the right to take over more than 160 stores that RadioShack is planning to close. GameStop’s Spring Communications Holding –  known as Spring Mobile – will pay $15,000 a store to take over leases at locations around the US...Barnes & Noble plans to spin off its college bookstores unit into Barnes & Noble Education, a separate publicly traded company, this summer. Last May, Barnes & Noble announced an ambitious plan to grow its number of college stores from 696 to 1,000 over the next five years. Nearly a year down the line, it has increased that number to 714...Shopko Stores plans to open its scaled-down Shopko Hometown department stores in 20 former Alco store locations later this month, part of its plan to open more Hometown stores in 2015 and 2016.  Shopko operates 321 stores in 21 states...Cabela’s plans to open a 70,000 s/f store in OH, with a spring 2016 opening. Cabela’s operates 64 stores across North America and plans to open an additional 21 locations over the next 3 years...Bloomingdale’s will open a 25,000 s/f, 3- level outlet store in fall 2015 in Manhattan’s Upper West Side. It will be the 14th Bloomingdale’s Outlet store and the first in a major urban center...Bonobos, the online men’s clothing brand, will open its largest location to date, in Manhattan’s Flatiron District. The 4,000 s/f “Guideshop” is slated to open in June. It will be the brand’s 17th location nationwide and 4th in New York City...Gander Mountain will open stores in Texas and Oklahoma this month, giving it 156 stores nationwide...The Fresh Market Inc. will close its remaining stores in CA by March 31 in order to focus on higher growth opportunities. Fresh Market also plans approximately 19 new stores in fiscal 2015, and will remodel or refresh 10 stores...Dollar General, which already has more locations than any other US retailer,  has expanded into 3 new states, Maine, Oregon and Rhode Island, and will open 730 new stores and remodel 875 existing locations in 2015. Dollar General now operates more than 11,700 stores in 43 states...Online fashion retailer Nasty Gal will open its second physical store this spring, in the Third Street Promenade in Santa Monica. Founded in 2006 as an eBay store specializing in vintage clothing, Nasty Gal currently has a global presence in 180 countries...This month Rite Aid celebrated the grand opening of a store built from the ground-up for the first time in five years. The 14,500 s/f store features the company’s wellness store format, of which there are currently more than 1,500 nationwide...L.L. Bean plans to more than triple its number of domestic stores over the next 5 years. The company will open four stores this year before accelerating growth with a goal of at least 100 by 2020, including Bean first West Coast stores, planned in the Pacific Northwest. Bean currently has 26 full-price retail stores, along with a handful of outlets, across the US...Krispy Kreme opened its 1,000th location, and will continue to build its domestic presence with franchisees in Texas, Maryland, Virginia, and Arkansas, and corporate stores in Atlanta and Florida...Habit Burger Grill will open 25 to 28 company locations and 2 to 5 franchised units in 2015 and could double in size in four years. The chain added 24 new units to close the year with 109, sees the opportunity for 2,000 locations...Express plans to open 30-plus outlet stores in 2015. The retailer ended the year with 41 outlet stores in operation...Ulta Beauty plans 100 net new stores in fiscal 2015, Ulta opened 100 stores last year, and ended the year with 774 locations....Burlington Stores, Inc. plans to open 25 net new stores. The company currently has 543 stores in 44 states and Puerto Rico... DSW expects to open 35 new stores in 2015. It currently operates 433 US stores.

Decelerating Retail News

Frederick’s of Hollywood has hired liquidators the Great American Group to wind down operations for at least 31 of its stores, which will close in the coming months. The company filed for Chapter 11 protection in 2000. It emerged from bankruptcy three years later and went public in 2006...Chico’s will shut about 120 stores by 2017 and open fewer this year than last. The company, which operates 1,547 stores in the US and Canada, opened 109 stores last year...Cache is going out of business a little more than a month after filing for bankruptcy protection. Great American Group, which won a bid for Cache’s assets at a March 3 bankruptcy auction, has begun going-out-of-business sales for all Cache's retail locations in the US, the Virgin Islands, and Puerto Rico...Target Corp. laid off 1,700 mostly headquarters employees and is eliminating 1,400 open positions. Target notified employees of the workforce reduction in an email.The cuts are part of a two-year, $2 billion corporate restructuring. Roughly 13% of the jobs in Target’s Minneapolis workforce will be eliminated. Target has disclosed it expects severance costs to total about $100 million...Children’s Place plans to close 200 stores through 2017, up from its previous plan to close 125 stores through 2016.

New England Retail News

Jersey Mike’s Subs has awarded 10 restaurants in New England to Mohegan Restaurant (JM Subs) LLC, an entity of Mohegan Holding Company LLC, of the Mohegan Tribe. The Tribe plans to open its first 2 sub shops within the next nine months in Rhode Island and Worcester County in Massachusetts...Shake Shack will open 2 new Boston locations in the next few days, at Legacy Place at Dedham and on Newbury Street. Currently there are 2 Shake Shack locations in Massachusetts, in Harvard Square and in Chestnut Hill...The long-awaited arrival of the opening of University Station happened this month. Target officially opened as one of the development’s anchor stores. University Station is located on University Avenue in Westwood, adjacent to the Rte. 128 MBTA Commuter Rail/Amtrak Station...Nordstrom will open a full-line store in the new regional shopping center being developed by General Growth Properties in Norwalk, Connecticut.  The 3-level, 150,000 s/f store is scheduled to open in fall 2018 and will be the company's second in the state. The company opened its first Connecticut store in 1997 at Westfarms Mall in Farmington...Clothing and home accessories retailer Primark will open a 70,000 s/f flagship store in Downtown Crossing in September. The store will be the first in the US for the Dublin-based retailer...Verizon Wireless will open its 4th flagship location this month, an 8,000 s/f store on Boston’s Boylston Street...Bee’s Knees Supply Company will open a two-story, 9,500 s/f location in Allston... Sonic Corp. plans to expand from 4 to 40 restaurants in the Greater Boston area during the next 5 years. Sonic operates 3,517 restaurants in 44 states, including four in Massachusetts.

February Retail Sales Report

Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales

Retail sales declined 0.6% in February as harsh winter weather kept consumers home, the Commerce Department said. Excluding autos and gasoline, sales fell 0.2%. This is the third straight monthly decline in sales.

Source: U.S. Department of Commerce -

Treasury Yields

Treasury Yield Sources:;

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had increased in January, declined in February. The Index now stands at 96.4 (1985=100), down from 103.8 in January. The Present Situation Index decreased to 110.2 from 113.9, while the Expectations Index declined to 87.2 from 97.0 in January.

Source: The Conference Board -

Purchasing Managers Index

Manufacturing expanded in February as the PMI® registered 52.9 percent, a decrease of 0.6 percentage point when compared to January’s reading of 53.5 percent, indicating growth in manufacturing for the 26th consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business -