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Sunday, August 11, 2002

Kmart banking on Joe Boxer's appeal


Retailer hopes brand will attract younger shoppers

The Associated Press

        DETROIT - Kmart Corp. is turning to the popular, smiley faced, Joe Boxer underwear brand to attract customers and help it through the back-to-school selling season, one that analysts said is critical for the bankrupt retailer.

        Back-to-school sales are a major predictor to how the holiday sales season will go and can boost a company's bottom line going into the fourth quarter, retailing experts said. How well Kmart performs this month will be a key test and an indicator for its survival.

        “They have to be solid and they have to be strong if they're going to survive this year,” said Jordan Kaplan, business professor at Long Island University.

        “A good school season will strengthen investor confidence in Kmart.”

        Joe Boxer could be just what Kmart is looking for to help it boost sales, Mr. Kaplan and others said.

        Kmart's partnership with Joe Boxer was announced months before Kmart's Jan. 22 Chapter 11 filing. Thursday, Kmart held a fashion show in New York to show off some of the Joe Boxer clothing, underwear and home products it began selling late last month.

        Kmart chairman and chief executive James B. Adamson said Joe Boxer fills a necessary demographic for the Troy-based chain - high school and college-age buyers with spending power who want to revamp their fall wardrobe.

        “I think we hit a home run,” Mr. Adamson said.

        “It is really, really selling well.”

        Retail analyst Burt Flickinger III, managing director of Reach Marketing, said Joe Boxer could be a key catalyst for Kmart.

        The Joe Boxer line includes T-shirts, pajamas, denim, shoes, baby clothes, bedding, bath accessories and its trademark underwear. Prices range from less than $3 to around $27, with some of the bedding for sale at higher prices, according to a Kmart price list.

        Kmart also has launched television ads for the Joe Boxer line. Two segments feature a man dancing comically in his underwear, and others show college-age men and women talking about why Joe Boxer doesn't mean just underwear.

        But Mr. Flickinger and others said grabbing a brand that appeals to younger buyers comes at a good time for Kmart.

        “If you can get younger people ... that come into a Kmart, which traditionally does not attract them, you're creating a good target market base for the future,” Mr. Kaplan said. “This is important to them. It's part of their revitalization effort.”

        The popularity of clothing sellers such as the Gap Inc. and Abercrombie & Fitch are waning, Flickinger said, making shopping at discounters for “cool” clothing more acceptable.

        “There's been a pronounced shift that the cheap chic is cool,” Mr. Flickinger said. “It's cool to save and look good.”

        Younger buyers also tend not to have deeply held views of the major discounters because they don't have years of experience with them, said Ken Bernhardt, marketing professor at Georgia State University.

        “So if you're going to change attitudes, which Kmart needs to do, you might as well start with those with the least deeply held attitudes,” Mr. Bernhardt said.

        But how much of the “cheap chic” market Kmart can grab is uncertain, experts said. Target Corp. has done very well and Wal-Mart Stores Inc. and Kohl's Corp. also attract the thrifty teenage clothing buyer. All three showed an increase in June sales over the prior year while Kmart posted an 8.7 percent decline in same-store sales.

        Analysts said Kmart can't pin its hopes on one brand.

        “It's becoming increasingly difficult for a chain like Kmart to survive,” Mr. Kaplan said.

        “A single line is not going to turn around a chain. But it can be part of the process of turning it around.”

       



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