Hamilton Beach 2009 Annual Report Download - page 17

14
and retail merchandising experience. This
new team redirected the focus of the
company toward enhancement of the
separate identities of its two store formats.
On January 1, 2010, Robert LeBrun,
previously Senior Vice President General
Merchandise Manager, became President
of The Kitchen Collection, Inc.
In 2009, the company invested
significantly in improving the Le Gourmet
Chef
®
store format and moving toward
profitability by focusing on an enhanced
product assortment in reformatted stores.
These steps increasingly took effect in the
second half of 2009 and are expected to
continue to improve results in 2010. Kitchen
Collection will continue to refine the
merchandise mix in the Le Gourmet Chef
®
stores in 2010. The company expects to
continue to test and implement programs
to improve Kitchen Collection’s sales and
profits as well.
Rent levels at certain stores will be
another area of concentration in 2010. The
company intends to close stores when rent
levels result in stores becoming unprofitable
in the long term. Kitchen Collection intends
to capitalize on the weak commercial real
estate market to negotiate acceptable leases
in underperforming stores. Also, as a result
of favorable short-term leasing rates,
Kitchen Collection was able to keep nine
2008 seasonal stores open in 2009 and
2010, and an additional five seasonal
stores, which opened in late 2009, open in
2010. The company also opened 11 new
traditional stores in 2009. While growth in
the number of Kitchen Collection
®
and
Le Gourmet Chef
®
stores continues to be
a long-term goal, the expected closure of
underperforming stores in 2010 will result
in a near-term reduction in the number of
Le Gourmet Chef
®
stores.
Certain employee-related benefit
programs that were suspended or reduced at
the beginning of 2009 were partially phased
back in during the fourth quarter of 2009,
and have been fully restored in 2010.
Kitchen Collection will, however, continue
to manage its operating expenses carefully.
Overall, Kitchen Collection anticipates
a moderate increase in full-year net income
for 2010 compared with 2009. Cash flow
before financing activities is expected to
be comparable with 2009.
Longer-Term Perspective
Kitchen Collection’s vision is to be the
leading specialty retailer of kitchen, home
entertaining and gourmet food products
in outlet malls and other retail channels
for consumers seeking a large selection
of unique, high-quality products at an
exceptional value. The company has two
strong store formats and plans to leverage
this strength with strong, separate brand
identities for each.
Overall, the company has moved from
recovery into a growth phase. The Kitchen
Collection
®
store format is strong and
Le Gourmet Chef
®
continues to improve.
Going forward, management plans to
focus on revenue growth through further
enhancement of its merchandise mix, store
displays and appearance. The company will
also strive to expand the number of outlet
malls in which Kitchen Collection
®
and
Le Gourmet Chef
®
have stores and to ensure
store footprint sizes are appropriate to
enhance its ability to achieve target profit
levels. Kitchen Collection also continues to
work on developing a profitable traditional
mall strategy for the Le Gourmet Chef
®
stores, where expansion potential is very
high. The Le Gourmet Chef
®
website was
updated in 2009 and the Kitchen Collection
®
website is expected to be updated in 2010.
These websites are expected to provide
ongoing revenue growth opportunities.
The Le Gourmet Chef®store in
Paramus, New Jersey, shown above,
features higher-margin, brand-name
kitchenware and gourmet foods.
The Kitchen Collection®store in
Edinburgh, Indiana, shown below,
features higher-margin, brand-name
kitchen gadgets, small electric
appliances and a variety of
other kitchen- and
housewares-related products.