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Wal-Mart reports ‘healthy’ comps

BY Mike Troy

BENTONVILLE, Ark. Strong results in health and wellness categories propelled Wal-Mart to a 2.1% same-store sales increase in January, the company announced Thursday morning.

The other major category singled out for solid performance was food, while such categories as home, entertainment and hardlines were said to have met or exceeded planned results.

“We are pleased that we exceeded our expectations for comp-store sales in January,” said Wal-Mart vice chairman Eduardo Castro-Wright. “Our sales results were driven by a continuation of gains in customer traffic. Clearly, our stores are performing very well as we continue to emphasize customer service and innovative merchandising.”

The 2.1% same-store sales increase narrowly topped the company’s guidance, which had been reduced the prior month to a range of flat to 2%. “Our 52-week comps growth is three times higher this year than it was last year. Our January results contributed to a strong performance for the fourth quarter and the year,” Castro-Wright said.

Total sales for the U.S. stores division increased 6.1% to $17.9 billion, while Sam’s Club sales declined 0.8% to $3.1 billion and international sales slid 7.3% to $6.6 billion due to the impact of a stronger dollar. Without the negative effect of currency fluctuations, international sales advanced 11% in January. Sam’s Club’s same-store sales, excluding fuel increased 2.4%.

Aside from the numbers themselves, the other revelation contained in the January sales release was that Wal-Mart will shift to providing quarterly, rather than monthly, same-store sales forecasts, effective immediately. “We believe this guidance is a more appropriate measure for our investors, particularly in volatile times when consumer swings are more difficult to predict,” said CFO Tom Schoewe. “This is more consistent with the long-term view we take on our business.”

The rationale for the move is similar to that offered several years ago, when Wal-Mart suspended the practice of providing the financial community with a weekly sales call. Wal-Mart will continue to report monthly results, it just won’t provide an estimate of same-store sales for the coming month.

“Rather than providing monthly guidance 12 times a year, we will provide 13-week guidance four times a year, based on the [National Retail Federation] retail calendar,” Schoewe said. Accordingly, he noted that the company expects first-quarter same-store sales to be in a range of 1% to 3%. “Because our value proposition is so relevant to our customers and members, we believe our underlying business around the world will remain very healthy,” Schoewe said.

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Elephant out of business because of economy; lack of financing

BY Michael Johnsen

BERKELEY, Calif. The challenging economy claimed its latest retail victim Tuesday, as Elephant Pharm shuttered its three locations for good after filing for liquidation under chapter 7 of the United States Bankruptcy Code.

The chain’s three locations had been open on Monday.

“The company has been burdened with obligations that were quite difficult for a company of our size to carry,” Elephant Pharm CEO Kathi Lentzsch stated. “The current management team and board of directors worked diligently to grow the company to a size that could bear these obligations, but due to the current economic conditions and the tightening of the credit market, it has not been possible to raise the capital required to continue the business.” 

That suggests the Elephant business may have failed more because of its lack of heft — Elephant fielded the buying leverage of only three locations to fill store shelves in a full-size 12,000-square-foot-plus footprint — than because of its pharmacy business vision as a pharmacy that dispensed both traditional allopathic medicines and Ayurvedic herbs.

Pharmaca, based in Boulder, Colo., fields a similar business model, albeit in a much smaller retail box. Averaging 5,000-square-feet per location, the 23-store chain has secured some $20 million in financing this past spring and has more than doubled in size in the past year.

Executives at Elephant Pharm had been trying to secure additional financing in an exceedingly financing-poor market for the past year. The chain closed its Los Altos, Calif., location, which had been its fourth store, this past September. “In spite of these efforts, the company was ultimately unable to meet its mounting obligations and regretfully had no choice but to close its stores,” the company stated.

 “We are extremely proud of our team and what we were able to accomplish in the 6 years since we opened. We would like to thank our vendors and our very loyal customers for their support over the years.” Lentzsch said. “Elephant has been both a leader in its industry as well as a reflection of a greater societal movement for healthy change.”

Elephant Pharm employed 190 people across its three stores and at the home office.

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Febreze launches Destinations Collection

BY Drug Store News Team

CINCINNATI Febreze has launched its new Destinations Collection, offering fragrances in three scents: Hawaiian Aloha, Brazilian Carnaval and Moroccan Bazaar.

The new collection was inspired in part by the growing “staycation” trend.

“During these uncertain economic times, consumers are becoming more creative in providing escapes for themselves and their families without breaking the bank,” stated Scott Beal, Febreze brand manager. “The Febreze Destinations Collection offers boutique scents from around the world that create a temporary getaway through an authentic scent experience.”

The launch will be supported by an online “From Staycation to Vacation” sweepstakes on www.febreze.com/destinations that will run from Feb. 2 to July 5, 2009.  One grand-prize winner will receive a trip for four to Hawaii, Morocco or Brazil. Ten first-prize winners will receive $1,000 toward a home decor makeover and more than 1,500 consumers will win a coupon redeemable for any Febreze product.   

The Febreze Destination Collection is available nationally at food, drug and mass retailers with prices ranging from $2.99 to $7.99.

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