Hamilton Beach 2013 Annual Report Download - page 21

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a solid core store portfolio, it will focus on comparable
store sales growth. Kitchen Collection expects to accom-
plish this by enhancing sales volume and profitability
through continued refinement of its formats and on-
going review of specific product offerings, merchandise
mix, store displays and appearance, while improving
inventory efficiency and store inventory controls. A
particular focus will be on increasing sales of higher-
margin products. The company will also continue
to evaluate and, as lease contracts permit, close or
restructure leases for underperforming and loss-
generating stores. In the near term, Kitchen Collection
expects to add stores cautiously and focus its growth
on its core Kitchen Collection® stores, with new stores
expected to be located in sound positions in strong
outlet malls. Kitchen Collection also expects to focus
on growth opportunities in e-commerce with a newly
revamped website.
Conclusion and NACCO Outlook
NACCO is a strong, multi-industry company
with leading businesses in the mining and small
appliances industries, and is well positioned to support
its individual businesses in the years ahead. The
Company continues to believe growth opportunities
are particularly significant at the NACoal and HBB
businesses, although both will be prudent in pursuing
any such opportunities. NACCO is confident that
NACoal and HBB have the right strategic initiatives in
place to move them closer to achieving their long-term
growth and financial objectives. Kitchen Collection’s
prospects at this time are uncertain, but Kitchen
Collection is concentrating on ways to improve results
by thoughtfully identifying what is working and what
is not, and making appropriate changes, including
realigning the entire organization, not just making
changes at the store level. Each subsidiary is benefitting
from programs previously put in place which, when
combined with the initiatives being implemented,
should improve results at each business over the next
few years.
In 2014, overall consolidated net income is
expected to decrease compared with 2013, primarily
as a result of the expected decrease in NACoal’s net
income. The housewares market is expected to remain
challenging for Kitchen Collection, but Kitchen
Collection is hopeful that consumer confidence and its
customers’ financial position will improve over time
in a way which will increase the number of customer
visits per store, the number of transactions per store
and sales per transaction at the malls where it retains
stores. While 2014 is expected to continue to be difficult
for Kitchen Collection, store closures and reduced
operating expenses from the business realignment are
expected to bring the operations closer to breakeven.
Comparable 2014 results are expected at HBB as higher
expenses associated with implementing its strategic
initiatives are expected to offset the gross margin effect
of anticipated top-line growth. Finally, at NACoal,
while steady performance at the unconsolidated coal
mines and improvements at Reed are expected, lower
royalty revenues and the planned outages at MLMC’s
customer’s power plant are expected to result in a
significant decrease in net income. NACCO expects
a significant increase in cash flow before financing
activities in 2014 compared with 2013.
d
In closing, we would like to thank all of our
subsidiaries’ customers, retailers and suppliers, and all
of NACCO’s stockholders, for their continued support.
Most importantly, we would also like to thank all
employees of NACCO and its subsidiary companies
for their continued hard work and commitment to
achieving the successes and meeting the challenges
of 2013. We continue to have great confidence in the
management teams leading each of our subsidiaries
and the parent company. Our many experienced and
highly motivated professionals worked successfully
to overcome challenges in the metallurgical coal and
housewares markets and deliver the Company’s solid
financial results in 2013. We are confident they can
successfully implement their respective strategic
initiatives to move the Company forward over the
next few years.
Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer
NACCO Industries, Inc.
Gregory H. Trepp
President and Chief Executive Officer
Hamilton Beach Brands, Inc.
Chief Executive Officer, The Kitchen Collection, LLC
Robert L. Benson
President and Chief Executive Officer
The North American Coal Corporation