Chefs on a shoestring look to The Kitchen Collection (KC) to get the name-brand products they want, without the name-brand price. The specialty retailer sells discounted cookware, bakeware, small appliances, cooking gadgets, kitchen accessories seen on TV, gourmet foods, and decorative items to consumers. It operates under the Kitchen Collection and Le Gourmet Chef banner through about 300 stores, located in factory outlet as well as some retail malls, dotting 40-plus states, as well as through the internet. The company stocks both private-label and brand-name merchandise (including the Hamilton Beach and Proctor Silex lines owned by KC's parent, NACCO Industries). KC generates more than 10% of NACCO's sales.
Despite a modest increase in year-over-year revenues, KC has struggled to improve its earnings. The retailer took a more than $12 million operating loss in 2008, driven by a non-cash impairment charge attributable to a slump in NACCO's stock price and the onset of the economic recession. Although KC managed a respectable rebound in 2009 (thanks, in part, to lower product and freight costs, as well as fewer markdowns at Le Gourmet Chef ), its earnings slid more than 10% in 2010 from the prior year, eroded by higher selling, and general and administrative expenses, and a soft consumer marketplace.
Going forward, new store openings coupled with an improved product offering promise to fuel KC's momentum. Stung by fewer customer visits and a lower number of sales transactions at both the outlet and traditional shopping mall locations, the company is exploring new routes to retail growth and diversification. Recently, it has tested alternative store formats for its Kitchen Collection chain, including an expansion in its seasonal stores and a modernized retail displays and floor space. KC is also moving toward alternative retail strategies for its Le Gourmet Chef stores, which sell higher-ticket items for cooking and home entertainment; a handful of underperforming stores have been shut down. – less
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