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Author: TMFTypeoh Big red star, 1000 posts Home Fool CAPS All Star Global Fool SC1 Red Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1206  
Subject: Re: SVU - Q2 2012 Date: 11/1/2011 11:02 AM
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One item that could really help the company is something it's calling hyper-local retailing. This is giving more power to the local store manager, letting him tailor the store and promotions and marketing to let the store capture local events. The example pulled out in the call was the Albertsons store in Cheyenne, Wyom. during Frontier Days last July, one of the biggest rodeos in the country. The local store director put up a walk-in display like a horse stable, turned part of the parking lot into a petting zoo, and tied in promotional displays for a national vendor that was sponsoring the rodeo. Employees dressed in cowboy hats and shirts. Sales were driven pretty well, with healthy comps (same-store sales) during that time. If it loosens the corporate control strings a bit across the country, the individual stores could become more local, giving customers the best of both worlds -- a consistent national retail feel with local flavor for loyalty.

Sounds a lot like the strategy walmart has been using, giving the local managers a lot more flexibility.

I think this is an excellent strategy, and it can also increase employee happiness/decrease turnover. After all, don't we all want more flexibility in our jobs to perform without corporate getting in the way?

This just tells me that this new CEO really knows what he is doing, and is clearly bringing his walmart experience with him.

The only thing I will disagree with you on is paying the dividend. While I am sure that if they cut the dividend that the stock will drop (probably hard), anything they can do to accelerate debt repayment should be seen as a good thing. After all, wouldn't doing so bring them a few steps closer to a higher credit rating, which would REALLY be a huge catalyst to propel the stock higher?

Yes, dividends are great, and yes they do wonders over time. But this turnaround story is all about debt repayment (look at Ford's stock for a good example). The dividend will be great to reinstate 5 years from now .

Overall, I think SVU is doing its job, and the dividend is more nit picking than a general gripe. Nice pick Jim!

Brian
SA/RB Welcome Fool
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