Hamilton Beach 2010 Annual Report Download - page 17

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The opening of new stores, the renegotiation of
leases and the company’s continuing program of
closing underperforming stores are also expected to
provide improved results in 2011. As a result of
favorable short-term leasing rates, Kitchen Collection
was able to increase the number of seasonal stores
opened in 2010 and keep some of these seasonal
stores open in early 2011. While growth in the number
of Le Gourmet Chef®stores continues to be a long-
term goal, the expected closure of underperforming
stores in 2011 will result in a near-term reduction in
the number of Le Gourmet Chef®stores. The effect of
opening new stores and closing unprofitable ones is
expected to result in a net increase of 17 total stores
for the year.
In addition, to increase the efficiency of its distri-
bution operations, Kitchen Collection is combining
its two distribution centers into one larger facility. The
company expects to incur some additional expenses
in the first quarter of 2011, when the relocation is
expected to occur. The company also anticipates
increased transportation costs in 2011 but expects
to offset these increased costs through pricing and
other actions as needed.
Overall, Kitchen Collection anticipates an increase
in full-year net income and cash flow before financing
activities in 2011 compared with 2010.
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 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 is in 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 and
profitability growth through further strengthening of
its merchandise mix, store displays and appearance,
while maintaining disciplined cost control. The
company also plans to expand the number of outlet
malls in which Kitchen Collection®and Le Gourmet
Chef®operate and to optimize store footprint sizes to
enhance its ability to achieve target profit levels. The
company also plans to continue to work on refining
a traditional mall approach for both store formats
which focuses on a smaller store footprint and which
takes advantage of open locations and lower rents.
In the near term, expansion at both outlet malls and
traditional malls will be focused on the Kitchen
Collection®format. When adequate profit prospects
are demonstrated for the Le Gourmet Chef®format,
Left: The Kitchen Collection® store at Aurora Farms
Premium Outlets near Cleveland, Ohio features higher-
margin, brand-name kitchen gadgets, small electric
appliances and a variety of other kitchen- and
housewares-related products.
Above: The Le Gourmet Chef® store in Indianapolis, Indiana.