How do you create a small ruckus in the furniture department on the 9th floor of Macy’s flagship Herald Square store in New York?
    Present Donald Trump, live and in person, to mark the launch of his new furniture collection, Trump Home, at Macy’s.
    On a make-shift stage Thursday night, The Donald gladly talked about the furniture on display, which was described with words like “luxurious” and “high quality,” and he stayed true to his typical Donald roots, touting other Trump businesses like his shirts and ties.
    Onlookers — some of whom were tourists who had accidentally stumbled upon the event — giggled, snapped pictures on their cell phones, and cheered when he said NBC was bringing back his reality TV show, “The Apprentice.”
    The crowd eagerly swarmed the billionaire as his toured the collection and remarked “This is nice” as he walked by a dining room table.
    But what does the hoopla mean for Macy’s and its home business, which has struggled as the cooling housing market has dampened demand for big-ticket items like furniture?
    Hard to tell. Many in the giddy crowd were foreign tourists and others were Macy’s employees.
    Ivonne Davila, a 32-year-old business manager, said she liked the furniture and was happy the Trump logo was not obsessively displayed on the line.
    She described herself as a regular Macy’s shopper who stopped by the event out of a mix of curiousity–seeing The Donald in person — and because she is looking for furniture. She said she needed furniture for a house she has in Puerto Rico, but she was not sure she would buy anything.
    “If I didn’t have student loans to pay, I would buy it,” she said.
    Many in the crowd seemed to have their eyes on something else–the free champagne and hors d’oeuvres that were being served. Some, resting on the furniture, mumbled that the prices were too high for Macy’s although many said they liked the way the furniture looked.
    The collection includes a china cabinet that was marked at $3,499 and a black leather sofa at $2,699.
    Maybe Macy’s should have had Trump go head-to-head with Martha Stewart — whose Macy’s furniture collection was on display directly across the show room from the Trump collection. Now that would  have been sure to draw a crowd.

Almost half of American parents — 48.7 percent — say they will keep back-to-school spending to a minimum this year and only plan to buy replacements for clothing that their children have outgrown, according to a survey conducted by research firm America’s Research Group.

“Parents are trying to cut back spending wherever they can as the money pinch tightens this year,” says C. Britt Beemer, chairman of ARG. “Thus, retailers should expect a lackluster back-to-school season with growth around 2.5 percent over 2006.”

This year, 90.3 percent of those parents who said they are spending less cited having “less money” as the cause — a big jump from the 43.2 percent who cited less money as the reason last year. Higher gas prices are to blame, the survey found.

What will families be buying? As expected, clothing will be the biggest purchase category, with 85.3 percent of parents saying they plan to spend more on apparel and 14.7 percent said they will spend more on shoes.

While many parents have not yet decided where they will shop for back-to-school clothing, some indicated clear preferences:
- Wal-Mart at 14.5% in first position, 
- JCPenney at 9.7%, 
- Old Navy, 8.7%, 
- Sears, 7.6%,  
- Target, 4.8% 
- American Eagle, 3.9%.
 
The study consisted of 1,000 telephone interviews conducted from July 5-8.  The error factor is plus or minus 4.3%.

Hershey Co. has been falling behind the competition in the growing dark and premium chocolate market. The solution? Team up with the company that convinced millions of people to pay $3 or more for a cup of coffee and steaming milk.

The chocolate company and coffee house giant Starbucks have announced a deal to create and market premium chocolate under the Starbucks name.

What kind of chocolate?

“The premium platform will combine the highest quality chocolate with Starbucks beverages and cafe flavors, as well as delectable fruits, nuts, herbs and spices,” the companies said in a news release. The chocolate will be sold in U.S. food, drug and mass merchandise stores.

Hershey Chairman and Chief Executive Richard Lenny touted the deal as one way for the company to pick up its growth in the dark and premium chocolate business when he discussed falling second-quarter earnings with analysts.

“Over the next five years we expect the segment to measure $2.5 billion at retail, representing a mid-teens compounded growth rate. Hershey’s growth in this segment has not kept pace with the competition and this will change,” Lenny said.

Aside from the deal with Starbucks, Hershey has also been trying to sell premium chocolates under the Hershey’s Cacao Reserve, Scharffen Berger,  Joseph Schmidt and Dagoba brands.

Some observers are skeptical about how well Hershey, known for its everyday brands like Kisses and Reese’s Peanut Butter Cups, can compete in the premium sector.

“Hershey is the Anheuser-Busch of chocolate and when consumers trade up to premium items it is to Heineken-like items such as Godiva, Lindt, Ghirardelli or even Dove,” John McMillin, then-analyst at Prudential Equity Group, said in May.

Target is better known for its bright red bull’s-eye and its trendy TV ads, than it is for its PR strategy and executive showcases. 
 
Indeed, Target has let its stores and its sales  — which rose 13 percent to $59.49 billion last fiscal year — speak for themselves. But now there appears to be someone else who wants to speak for the company. An ”activist” investor (a group formerly known as ‘corporate raiders’) is at their doorstep, and for many companies lately, that’s meant bad news. What to do? The Abernathy MacGregor Group has some answers, and according to the PR firm, a company under pressure from a hedge fund has just as good a chance of winning an activist battle as they do losing one. 

James MacGregor, vice chairman of Abernathy MacGregor, in a letter to clients, says most activists are looking for cash and a quick pay out on their investment.

“An activist investor is like a guy standing at an ATM. What he wants is fast cash, and he’ll push as many buttons — in this case your buttons — as necessary to get that cash,” said MacGregor, who was writing in general and not in response to the Target situation.

Hedge fund manager William Ackman disclosed on Monday that his fund owns a 9.6 percent stake in Target, and he plans to speak to its management about trying to boost the retailer’s stock price.
    
Ackman’s firm, Pershing Square Capital Management, has gained prominence for forcing change at high-profile companies, including waging a battle against Wendy’s, where he pressured management to sell its Tim Hortons coffee chain to boost shareholder value.
 
So what chance does a company have of defending itself against an activist shareholder?
 
In a letter to clients titled “Dealing with Investor Activism”, MacGregor says activists won about 60 percent of the attacks that went public last year.
 
“If you wind up in an activist’s sights, you’ve got a 50-50 chance of emerging without damage,” he writes, referring to all activist situations, whether public or not.

The PR man’s optimism is counter to that of Morgan Stanley’s Robert Kindler, who says activists will win every time. 
    
MacGregor suggests management meet with the activist because chances are he will go public if a meeting is declined. But if a company rejects the activist’s demands, MacGregor said the activism begins and typical actions include:    
    - Demanding a meeting with the full board
    - Going public, via the news media, with accusations of lousy governance and lousy performance
    - Reaching out to other shareholders for expressions of support
    - Demanding seats on the board
    - Threatening legal action
    - Threatening a proxy fight
 
MacGregor does not recommend having the activist meet with the board –”The activist’s motivation all too often is to intimidate or divide the board or to gather grist for subsequent legal actions,” he writes.  He also recommends keeping any media response limited and calm. 
  
MacGregor says an activist wins if he convinces the board he has enough support to win a proxy fight if he wages one or if the activist convinces the board the fight is not worth the pain.

A company wins when an activist backs down, possibly concluding the company cannot create the cash-generating events he wants or other shareholders fail to rally to the activist’s side. Then there’s the “self-mutilation” ploy used by some companies, he writes:  “They effect an otherwise unattractive transaction that eliminates the possibility of the activist’s desired event.”

So what other advice does MacGregor have? “Scout your vulnerabilities well in advance. Articulate a credible value creation strategy. Make sure your investors know and understand that strategy. Play straight with activists. Avoid mud-slinging contests. Execute. Perform. Don’t panic.”   

(Photo credit. Reuters file)

Readers eagerly awaiting the arrival of what may be the most anticipated book release in history are expected to show remarkable self-restraint.
The latest and last instalment of the Harry Potter series arrives in stores at 12:01 am July 21, but research by Wal-Mart shows that despite suspense over the ending, most readers are planning on keeping their curiosity in check.
Nearly 9 out of 10 intended purchasers say they’ll read straight through to the end rather than skip to the final pages to find out what happens, according to a telephone survey of Americans age 16 and older conducted on July 17 by Wal-Mart.
Nearly 17,000 people have already vowed to keep the ending a secret at www.makethepledge.net
About 28 million people say they plan to buy the book this weekend, according to the survey. That’s equivalent to the number of people in the states of New York and Michigan combined.
And, the research suggests that America is truly a nation of optimists. 58 percent of those planning to buy the book believe Harry lives at the end.
Wal-Mart is doing its part to keep the secret safe - over 50,000 ear plugs will be distributed Friday at Wal-Mart stores where the retailer predicts the largest sales will happen. The secret of who dies will not be discussed at the registers, the company said.

–Written by Regan E. Doherty

Macy’s Inc. shares hit a high on Wednesday morning after a news report in Women’s Wear Daily that private equity firm Kohlberg Kravis Roberts & Co. is considering a bid for the department store chain.
  Any potential transaction could signal a setback for beauty company Estee Lauder, whose North American department store sales — led by Macy’s stores — account for about 37 percent of revenue, according to Bear Stearns analyst Justin Hott. For the full note, click here.
   Only recently did Estee’s Group President John Demsey say that the company was finally seeing U.S. sales normalizing a year after they started slumping following the Macy’s/May Department Stores consolidation and store closures.
   Though the flip side might be that a turnaround in Macy’s — which itself has reported flagging same-store sales lately — could be good for Estee Lauder under any circumstances, any reexamination of Macy’s business holds many risks of moving in other directions that are detrimental to Estee Lauder, Hott added.
   “Another potential disruption at Estee’s largest partner creates much more uncertainty and volatility,” Hott wrote in a research note. “We do not know if management would change, but there could be entirely new protocols, systems, and methods put in place under new ownership. Changes that take time to implement could slow the timetable for any turnaround by Estee.”
   Estee is trying to convince retailers to join it in spending more on training sales people at beauty counters, in an effort to revive sales. But buyers with a good deal of private equity experience are more likely to choose cutting costs over raising them, Hott wrote.

(Photo. Reuters file)

   ”They’re so dreamy.”
    Chances are, that’s how a typical Wet Seal shopper feels about pop band Maroon 5, fronted by oh-so-cute heartthrob Adam Levine.
    Just in time for back-to-shool, the teen clothing retailer, purportedly in the know about the working of a teenybopper’s heart — and wallet — has teamed with the band and A&M/Octone Records in a new promotion.
    The sweepstakes on wetseal.com gives the winner a trip to Los Angeles, digs in a Hollywood hotel, a $500 shopping spree — at Wet Seal — and tickets to a Maroon 5 concert, where they’ll “hang out with the band,” according to the press release.
    Chief Merchandising Officer Dyan Jozwick says the promotion brings together everything the Wet Seal shopper loves: “fashion, music and boys.”
    After a hum-drum summer, the teen retailers are hoping to drum up enthusiasm and capture market share for the fall. Rival American Eagle Outfitters, for example, has already announced a contest in which winners who select the most popular fit will get a pair of free jeans — so take that, Adam Levine!  

The confirmation came on Monday — Paul Blank and Chris Kofinis, the major voices behind Wal-Mart opposition group WakeUpWalMart.com, have joined the campaign staff of Democratic presidential candidate John Edwards.

The two well-known Democratic operatives were reported earlier this month to be headed back to their roots. Blank had worked for Democrat Howard Dean’s 2004 presidential campaign, while Kofinis was a former adviser to 2004 Democratic presidential hopeful Wesley Clark.

Blank now takes on the role of Edwards’ deputy campaign manager, while Kofinis joins as communications director. The two are joining a campaign that is lagging in opinion polls and has been haunted by charges of lavish spending (like at $400 haircut). But Edwards is focusing on some of the issues that Blank and Kofinis tried to tackle at WakeUpWalMart — poverty and low pay. 

So … where does the staffing change leave WakeUpWalMart.com, which has been one of the most vocal groups in criticizing Wal-Mart for its pay and health care practices?

The labor-backed group was adamant that it would continue its mission undaunted.

“The last two and a half years have been incredible, but the WakeUpWalMart.com movement will move forward even more aggressively and will reach even greater heights,” said Laura Tatum WakeUpWalMart.com spokeswoman in a statement.
       

Pancake house IHOP Corp. ordered up a large feast on Monday when it announced its $1.9 billion acquisition of bar-and-grill chain Applebee’s International Inc.  –  a company nearly twice its size. 

IHOP, which has a market capitalization of about $980.6 million, will use securitized debt backed mostly by Applebee’s restaurant and real estate assets to fund the purchase of the much larger company, whose market value is $1.82 billion.

IHOP, which franchises 99 percent of its 1,319 restaurants, plans to revamp Applebee’s business model away from owning and operating its own restaurants to becoming predominantly a franchisor. Applebee’s has nearly 2,000 restaurants, of which 508 were company-owned. 

“The value is in the restaurants and the real estate. You’ve seen this play in Sears-Kmart, Toys R Us and elsewhere. The companies may have problems, but the land they are sitting on still has value and the brand names still have value that can be leveraged,” said one consumer investment banker who declined to be named.

Applebee’s, which has been under shareholder pressure to improve its stock price, said earlier this year it was reviewing its options. The company has struggled amid weak consumer spending, higher gas prices that siphon away consumers’ disposable income, as well as stiff competition from rivals and grocery stores that are selling more prepared meals.

“While the sale price (of Applebee’s) is somewhat less than we expected, it does illustrate value of franchised businesses with tools such as securitized lending, refranchising and G&A (general and administrative) reductions that are available,” said UBS Equity Research analyst David Palmer. 

“Importantly, the 9-tmes forward EBITDA (earnings before interest, taxes, depreciation and amortization) price highlights the value of a franchised business with owned real estateeven one with long-term issues like (Applebee’s),” Palmer said.

Other companies such as pizza-delivery chain Dominos Pizza Inc. have recapitalized on their own. Palmer suggested that Brinker International, which owns Chili’s Grill & Bar, could help its stock price by following IHOP’s plans for Applebee’s.
 
(Photo credit: IHOP website)  

    Banking that tens of millions of plus-size women in America will vent their frustration over finding a well-fitting pair of jeans, retailer Lane Bryant has launched a new formula for denim buying that mirrors Homeland Security’s terrorism threat advisory scale.
    Proclaiming that “jeans shopping has terrorized curvy women for years,” the president of Lane Bryant, LuAnn Via, promises that the company’s new Right Fit jeans will fit all customers.
    Lane Bryant, which is owned by Charming Shoppes Inc., scanned 14,000 women’s bodies with the help from body scanner company Intellifit, then turned results over to its design team, who created three new fits. Lane Bryant joins others such as MyShape.com and Zafu.com using technology to identify shape-appropriate apparel.
    The secret for Lane Bryant is in the color coding. Yellow means your body type is straight through the waist and hips, red is slightly curved, while blue is full at the hips.
    Voila! Choose your appropriate color and show those terrorists who’s boss!

(Photo: Lane Bryant)