Employee Communications and Engagement Strategist
Employee Communications and Engagement Strategist
Talking Points on Latest Store Closings
As we continue to carefully manage the needs of our business, we have reached a decision that is both challenging, but one that will ultimately position us for sustainable growth.
You may remember that in February we announced that we were closing our Block 37 and Westfield stores.
Today, we are announcing that we have decided to close two additional stores: White Plains and Montgomery. White Plains and Montgomery will both close on January 31, 2016.
As we mentioned on the “Good Growth” Let’s Talk call in February, there are many factors that have contributed to this difficult decision:
Stores that were coming up for lease renewal in the next three years
A store’s performance
A store’s overall market potential
Our exploration of where growth is happening and where there is a decline
With White Plains, we considered multiple factors, such as: a potential significant rent increase in this store, our large wholesale presence in the market, and the recent opening our Greenwich location.
In the case of Montgomery, our lease renewal would have included a very significant rent increase, as well as a sizeable investment to rebuild our store and renovate our storefront.
We also took a holistic look at the greater DC market and determined that, given our rich wholesale presence and two additional retail stores (Chevy Chase and Tysons), closing Montgomery was the best decision to ensure a sound financial future.
In every case, we want to guarantee that our company’s financial well being is safeguarded and that our brand is strategically positioned in markets.
The closing of these stores is in no way a reflection of the store teams’ incredible dedication and hard work. We are so grateful for the contributions that these stores have made over the years.
We want you to know that we’ve already shared this news with the store teams that are directly affected. HR is working closely with them to provide ongoing support during this transition.
At this time, we do not have any additional store closings to announce. We are still in the process of reviewing all of the leases that are close to expiring to see which ones should be renewed, let go of, or repositioned.
We are committed to sharing news and information as soon as we are able.
As you can imagine, there are a number of sensitive aspects to these types of conversations – not just the sometimes-precarious business negotiations we are undertaking, but also ensuring the care and support of people in our stores.
Please keep this information confidential until we send a company announcement on May 21, 2015.
Talking Points: Background
Investing in Good Growth
There are many facets of the “Good Growth” concept we’ve been talking about, two of which have driven this decision: financial well being and investing in sustainable systems and processes.
For this reason, we are looking at where and how our brand is positioned strategically in markets. Where can our brand have the most value and sustainable growth?
A shift in customer shopping patterns
Online sales have increased significantly over the last few years. Customers have embraced shopping across channels, which has shifted traditional shopping patterns and reduced store traffic for our EILEEN FISHER retail stores, our wholesale partners, and other retailers.
In some markets, expansion of EILEEN FISHER as a brand, including our wholesale partners, has also affected the profitability our existing store locations.
Navigating an unpredictable real estate market
Retail real estate and lease negotiations have become more competitive. In some retail centers and neighborhoods, rents have risen faster than the sales generating capacity.
Many shopping center landlords are looking to tie multiple leases together sometimes pressuring retailers to open in underperforming centers. In addition, landlords might want to renew a lease, but not necessarily a lease in place. This means we would have to move locations and put significant dollars into building a brand new store.
Frequently Asked Questions
1. Why are we closing White Plains and Montgomery?
With White Plains, we considered multiple factors, such as: a potential significant rent increase in this store, our large wholesale presence in the market, and the recent opening our Greenwich location.
In the case of Montgomery, our lease renewal would have also included a very significant rent increase, as well as a sizeable investment to rebuild our store and renovate our storefront. We also took a holistic look at the greater DC market and determined that, given our rich wholesale presence and two additional retail stores (Chevy Chase and Tysons), closing Montgomery was the best decision to ensure a sound financial future.
2. What factors go into deciding to close a store?
We considered four factors in making these decisions. They included: the store’s performance, its potential, our overall brand presence in the market, and exploring where growth is happening and where there is also a decline.
3. Will there be more stores closing in the near future?
We’re in the process of looking at all of our leases that are close to expiring to see which ones should be renewed, which ones we might let go of, and which ones may need to be repositioned. Our promise is to be transparent, share this information with you as soon as possible, and work closely with store leaders and store teams during these changes.
4. For the stores that are affected, will these employees lose their jobs?
We’re working very closely with HR and the store leaders to talk with store associates about possible re-locations and/or severance. We will try in every possible way to keep those interested in remaining at EILEEN FISHER part of our company.
5. Have we closed stores in the past?
Yes we have and we carefully consider all of the factors outlined above when making these decisions.
6. How are we letting customers know about these changes? What should we tell customers if they ask?
We will be sending an e-mail to customers in the affected areas thirty days before a store closes to let them know about other shopping options.
7. What impacts profitability for our stores?
Profitability is driven by a few important factors. Rent and salaries are the two biggest expense categories. Rent and salaries that are too high for the sales level of a particular store create marginal profitability or an unprofitable picture. Store sales are impacted by many factors internal and external.
8. What are our future plans for growth in Retail?
We are going to be looking at locations for new stores, investing in our global expansion, and re-positioning some of our existing stores. We know that our company store model is very profitable and we are looking at growth opportunities there as well.
9. What are the principles of good growth for Retail?
To achieve Good Growth, we are investing in creating financial wellbeing for ourselves, our business partners, and our supply chain. For Retail, this means considering the pace and direction of the business to ensure its health and continued profitability.
10. In what ways are we enhancing our in-store experience and helping to drive customers to our stores?
We’re constantly thinking about how we can enhance the customer experience in our stores. This is why the merchant conversation is so important. We’re also considering how to leverage our hybrid concept, offer Retail exclusive product, etc. In the future, we are also looking at integrating our inventory with the web so that our customer can buy what she wants, where she wants and how she wants to buy it.
11. If I have a question or a particular concern, who should I contact?
You can contact your District Leader or Regional Director, Human Resources, or Avery directly.