Hamilton Beach 2012 Annual Report Download - page 24

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total of 82 Kitchen Collection®stores
over the course of 2012. Feedback to
date on these changes is favorable, but
reduced traffic in 2012 made it difficult
to determine their longer-term impact.
In addition, these changes resulted in
higher up-front costs during 2012 and
the liquidation of a substantial amount
of inventory, both of which are not
expected to recur in 2013. As these new
formats gain traction, they are expected
to improve margins and income in 2013.
Longer-Term Perspective.
Kitchen Collection’s vision is to be the
leading specialty retailer of kitchen,
home entertaining and gourmet food
products mainly in outlet malls and
certain traditional mall types for
consumers seeking a large selection
of unique, high quality products at
an exceptional value. The company’s
core strength is its Kitchen Collection®
store format in outlet malls, but it has
two solid store formats and plans to
leverage this strength with strong,
separate brand identities for each.
However, with an operating margin
significantly lower than its target, the
company is focused on ways to move the
business back to a significantly more
profitable position and has identified
initiatives that are expected to move
the company closer to, and ultimately
achieve, its long-term financial target
of 5 percent operating profit margin.
Kitchen Collection plans to focus
on comparable store sales growth by
enhancing sales volume and profitability
through refinement of its formats and
value and trend messaging, and pres-
entation and ongoing review of the
specific product offerings, merchandise
mix, store displays and appearance,
while improving inventory efficiency
and store inventory controls. The
company will also continue to evaluate
and, as lease contracts permit, close
underperforming and loss-generating
stores, principally Le Gourmet Chef®
stores. In the near term, Kitchen
Collection expects to concentrate its
growth on increasing the number of
Kitchen Collection®stores, with the
store expansion program tied to identi-
fying the best positions in the best
outlet malls for Kitchen Collection®
stores. At such time as adequate profit
prospects are demonstrated by the
Le Gourmet Chef®format, the com-
pany’s expansion focus will shift to
increasing the number of these stores
as well.
Kitchen Collection® provides a wide variety of specialty kitchen-related products, as shown in this new
bakeware display at the Kitchen Collection® store in Jeffersonville, Ohio.