Ariel Capital Management can’t get enough of Neiman Marcus Group Inc. The Chicago investment firm has increased its holdings in the upscale retailer’s Class A shares to a 26.5 percent stake, up from 11.3 percent last July.
Obviously, Ariel isn’t discouraged by the current softness in the luxury goods market, which has taken on a toll on everyone from Gucci Group to Prada. Just like the nation’s best-known investor, Warren Buffett (the last name as published has been corrected in this text), Ariel takes a “very long-term approach to our holdings,” says Tim Fidler, Ariel assistant portfolio manager. “We see an extremely well-managed company doing very well in a tough environment.”
Other attractions: Neiman’s shares are selling at a very reasonable 14 times next year’s earnings, and its balance sheet is top-notch, Fidler said.
So is Ariel looking to invest even more in the Dallas-based retailer? It can’t, even if it wanted to–that would trigger Neiman’s “poison pill” takeover defense plan.
Black and white: Lots of retailers pay lip service to valuing their black and Hispanic shoppers. But when it comes to a chain’s marketing dollars, most of them are spent targeting TV shows that white consumers watch or radio stations they listen to.
Oh, the nation’s savviest retailers might shoot some spots with black actors, but those messages usually show up only during a handful of shows that feature predominantly black casts. Often, these “ethnic” spots don’t even tie in with the rest of the retailer’s campaign.
Wal-Mart Stores Inc. is one exception to the rule; Sears, Roebuck and Co. is another. Both regularly show black customers in their image advertising. Now Kmart Corp. is joining them–with good reason.
One-third of Kmart’s sales are to black and Hispanic customers, and 40 percent of its most loyal shoppers are black or Hispanic. Because Kmart is trying to reorganize under bankruptcy protection, those customers are more important than ever.
As part of Kmart’s new image advertising campaign, some spots will feature gospel singer BeBe Winans or rhythm and blues legend Chaka Khan. Spots aimed at Hispanics will showcase Latin crooner Jose Feliciano.
The message, according to Steven Feuling, Kmart’s senior vice president of marketing, is “Kmart is about real people. There’s no saccharin greeter at the door. This sends a strong message about who Kmart really is.”
Departing from past practice, Kmart will incorporate the spots in its general market rotation. That means they will be broadcast on shows like “Friends,” which is viewed by large numbers of black and Hispanic viewers as one of the country’s most popular mainstream shows.
While Feuling isn’t expecting any of Kmart’s new ads to drive shoppers to its stores, he is hoping that shoppers get the message behind the tag line, “The Stuff of Life.”
“We have everything you need,” he says.
This fix might hold: Friday was a watershed day for TruServ Corp. The debt-laden hardware buying cooperative for True Value Hardware store owners finally nailed down a new lending agreement that extends its $200 million credit facility until June 2004.
That means the Chicago-based cooperative can file its annual 10-K statement with the Securities and Exchange Commission with an unqualified opinion from its auditors, PricewaterhouseCoopers.
It also means Pricewaterhouse can go back to TruServ’s 2000 10-K and amend its opinion to unqualified. Last year, the auditors had no choice but to express doubt about TruServ’s ability to continue as a going concern because it was in violation of its lending agreements.
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Nobody is happier about that than Pamela Forbes Lieberman, TruServ’s president and chief executive.
“The completion of these financing amendments is a crucial step toward restoring the financial strength and profitability of TruServ,” she said.
Still, the cooperative reported a net loss of $50.7 million in 2001, but it reduced its inventory by nearly $110 million last year, trimming its total debt by almost $97 million, to $457 million.
While that’s still a hefty debt load, it’s clearly a move in the right direction.
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