An investor who bought 100 shares of Wal-Mart stock in 1975 could be facing a very comfortable retirement.
If that investor had waited until the year 2000 to buy 100 shares of Wal-Mart stock — well, maybe that investor should have played the horses instead.
Despite being one of the biggest growth stories in the history of American business, Wal-Mart Stores, the Bentonville, Ark.-based company that stormed America with its no-frills stores and rock-bottom prices, seems to have stalled.
Same-store sales have been nearly flat for several months, and its share price last week was slumbering about 10% below where it was five years ago.
The company faces an entirely different set of challenges than it did when it first started building massive discount stores in rural Arkansas in 1962. Although analysts and observers say the company still has room to expand, it is becoming increasingly expensive for it to do so, and at the same time its competition is getting craftier.
Many supermarket operators have successfully differentiated themselves on the food retailing front, and department store chains like JCPenney and Kohl's have outperformed their larger rival in general merchandise, according to Richard Hastings, vice president, Smyth Bernard Sands, New York.
“The discount store concept in America has reached its saturation point in the consumer psychology,” he told SN. “There's no longer an enthusiastic welcome mat for supercenters or discount stores. Something is going on that is seismic — there is a problem with the discount store concept in America as well as with its consumers, and it's going to be going on for a long time. We will see a slowdown in sales and earnings growth that will be ongoing.”
Hastings projects that Wal-Mart's profit margins will erode as it expands into more urban areas, where stores will be smaller and operating costs higher.
“The growth is still there, but what we are going to see is total enterprise growth, but not a matching degree of profit growth,” he said. “The scale of the business will continue to grow pretty well, but the rate of profit growth is going to come down from historical levels.”
The company's threat to traditional supermarkets also may be diminishing, according to Mark Husson, a New York-based analyst with HSBC Securities, London.
In the recently ended third quarter, he noted, Wal-Mart's food sales in supercenters were up 12% — off the typical quarterly gains of 15% to 18% the company has reported in recent years.
“While Wal-Mart's comps are off a much higher dollar base than in the past, percentage growth in supercenter food is declining, and dollar growth has reached a plateau,” he wrote. “The food retailing competitive environment is still intense, but the worst of Wal-Mart's competitive ‘crowding-out’ of the market, we believe, is over, and other capacity fallout is making food retailing a little easier for some.”
Art Turock, principal at Art Turock & Associates, Kirkland, Wash., agreed that Wal-Mart appears to have hit a plateau at which its impact on the supermarket industry may have peaked.
“Their strength of their past has become not necessarily exhausted, but they are seeing limits to growth,” he said. “They are starting to test other areas, which always runs the danger of creating a sense of betrayal, or less relevance to their target customer.”
As the company expands into more populated areas and experiments with more upscale merchandising and product offerings in an effort to expand its customer base, it only makes it more vulnerable, Turock explained.
“What it does is introduce new competition,” he said. “Wal-Mart's strategy has always been to operate a model I call a competitor-proofing strategy. But as you go upscale, you run into Target, and as you move into urban areas, you receive new challenges, not the least of which are unions and higher costs. They really are betraying their competitor-proofing model and getting more competition than before.”
In addition, he said a move by Wal-Mart's Sam's Club division to offer more consumer merchandise seems to mark an about-face from its successful focus on small-business customers, and puts it more directly in competition with club-store powerhouse Costco Wholesale, Issaquah, Wash.
Turock also agreed that “the supermarkets are getting smarter,” making it more difficult for Wal-Mart to gobble up grocery market share at the same pace it had been.
“Delhaize is a smartly run company and understands differentiation, and they've come up with some wonderful modifications to the Food Lion, Hannaford and Sweetbay brands,” Turock said. “They understand branding as well as any chain in the country.”
In addition, he said regional players like Publix Super Markets, Lakeland, Fla., and San Antonio-based H.E. Butt Grocery Co. have proved steadfast in thwarting Wal-Mart's impact, while Kroger has rolled out a strategy that seeks to compete on price and Safeway has had some success with its more up-market lifestyle stores.
“It's not as easy for Wal-Mart as it was a few years ago,” Turock said. “They are making some strategic moves that really call into question their limits for growth, and maybe these efforts need to be rethought — certainly the move to clothing and wardrobe in higher income brackets has not worked.
“I think they can grow in the U.S., but the question becomes how.”
New Channels
Turock suggested that Wal-Mart's consumer website, www.walmart.com, could be an avenue for growth, especially since it could be used to appeal to the more upscale demographic Wal-Mart was trying to reach with the recent launch of its Metro 7 women's clothing line. Such consumers, he pointed out, are more comfortable using the dot-com channel, and Wal-Mart can merchandise upscale products there without detracting from its core in-store message.
“Walmart.com has a slightly different brand equity,” he said. “You can get slightly different buys in a different range of products.”
Another potential avenue for growth, he suggested, could be in banking, a business for which the company has been seeking federal approval.
“Ultimately, if legislation permits, they could have a tremendous disintermediating effect on the banking industry,” he said.
Although Wal-Mart stated that its goals in banking are to facilitate its own transaction processing and not to offer banking services, Turock said the banking industry fits the mold in terms of businesses Wal-Mart has historically pursued.
“They look for high-volume potential, so if you look at all these unbanked consumers, many of whom are Wal-Mart shoppers, it just makes sense to me that they would go that direction,” he said. “I just think that's an area they could get into, and do quite well.”
Some analysts have suggested that Wal-Mart may try to roll out a new format next year, possibly a convenience store chain. In a report following Wal-Mart's fall analyst conference in October, Deborah Weinswig, an analyst with Citibank, New York, suggested that Wal-Mart might open a small-format concept in the U.S. in 2007, similar to its bodega format in Mexico, as a new growth vehicle.
“If they wanted to get into convenience stores, there's nothing that says they couldn't,” Turock said. “C-stores are somewhat overpriced — it is a business model that allows them to charge higher prices, but Wal-Mart can win a price war with anybody.”
He said he doubted Wal-Mart would move too aggressively into rolling out such a concept, however.
“Wal-Mart will try to do something with their conventional formats before they try something this radical,” he said.
Hastings of Smyth Bernard Sands said he expects Wal-Mart to be “very careful” in rolling out any new formats. “They will go through a few years of experimentation,” he said.
Another analyst, Virginia Genereaux of Merrill Lynch, said she didn't think Wal-Mart would open another format in the U.S., but could instead consider spinning off some of its businesses, such as its Sam's Club chain or its Asda banner in the United Kingdom, to allow the company to focus more on its supercenters and its growing international markets.
Hastings, however — although sour on the prospects for the discount store concept in general — said he counts Sam's Club as one of the key assets Wal-Mart has that its main rival, Minneapolis-based Target Stores, lacks.
“Wal-Mart basically has three buffers that Target does not,” he said. “They have Sam's Club, where they can sell a $3,000 TV set or a washer-dryer or a mattress; they have the supermarket business that is bigger than any other supermarket chain in the U.S., and that has a very smooth margin performance, with predictable results; and the third thing is that their international business is doing very well, especially since they are getting out of the markets that weren't doing very well.”
Those assets should help the chain weather a slowdown in sales and profit growth, he said.
“They face the future with uniquely Wal-Martian responses that could turn into a War of the Worlds among retailers,” he quipped.
Turock agreed that Wal-Mart has some good opportunities in international growth, but pointed out that the company also has some serious challenges.
“They are doing more in Canada now, and I think China continues to be impressive for them,” he said. “But Japan and Germany have been real struggles — Germany being a failure — and they are facing some real challenges against Tesco over in England.”
David Rogers, president, DSR Marketing Systems, Deerfield, Ill., echoed Turock's concerns about Wal-Mart's Asda banner in the U.K., pointing out that all of Wal-Mart's major competitors seem to be doing well there.
He said he believes the company will find a niche as a low-price leader in Canada, where it only recently introduced supercenters, and he noted that Mexico has long been a strong market for the company.
Slower Growth
In an October presentation to analysts and institutional investors, Wal-Mart outlined a strategy that involves a slowdown in the pace of new-store growth in the U.S. and a series of initiatives designed to increase sales and profitability.
The company said it plans to cut back on its pace of square-footage growth — 7.5% per year vs. 8% in recent years, although it still plans to open up to 300 new stores in the U.S. next year, including up to 270 supercenters. Using its new screening process for new stores, the company will also seek to limit cannibalization of existing locations, which analysts said should help boost per-store productivity but ease pressure on competitors in markets where Wal-Mart already has a strong presence.
At the same time, the company has accelerated its plans for international expansion, with up to 300 units planned outside the U.S. in 2007. Last week, reports said Wal-Mart would enter India through a joint venture.
In the analyst meeting, the company outlined a range of initiatives designed to drive sales and earnings growth in the U.S., including remodels, logistics innovations and marketing initiatives.
The moves come as the company posted its weakest performance of the year in November, with comparable-store sales down 0.1%.
Eduardo Castro-Wright, president and chief executive officer of Wal-Mart Stores U.S., explained at the analyst meeting in October that Wal-Mart is going through a three-year process to revitalize the U.S. operations.
“These are not monthly strategies,” he said. “These are long-term strategies we are implementing across the entire chain.”
Castro-Wright said an extensive remodeling plan that is being applied to 1,800 of the chain's stores in the U.S. may be partly to blame for the weak same-store sales recently, as the company experiences a sharp reduction in sales during the remodels. About a third of those stores have yet to be remodeled in 2007.
“The remodel takes a lot longer than it used to and is certainly more disruptive,” he said.
Although stores undergoing a major remodel experience negative comps for about three months during the process, they trend about 100 basis points better than the rest of the stores after the remodels are completed, he said.
“This is a very good use of capital,” he said. “The returns are way above the expectations of the company, so we are very pleased.”
Other factors that have led to the slump in same-store sales include merchandising mistakes in apparel — specifically with company's somewhat more upscale Metro 7 line, which is being scaled back dramatically in most locations. The company said there appear to be about 800-900 stores in the U.S. that will retain the line, however.
Castro-Wright also said several of the company's other initiatives, such as revamping the regional management structure to move more high-level executives out into the field and creating more customized offerings by individual market, have only just begun to have an impact.
One overwhelming message the company got out this year that could carry over into 2007 and beyond is a recommitment to low-price leadership. In a series of announcements, Wal-Mart declared that it would reduce prices first on certain generic drugs, then on toys for the holiday season, then on other general merchandise, and finally, just a few days before Thanksgiving, on groceries.
“Price leadership drives everything that we do,” Castro-Wright said in the analyst conference.
Such moves mark a departure from some of the company's other recent ventures, such as advertising in Vogue magazine and adding more gourmet products in a store in Plano, Texas.
Some observers saw Wal-Mart's efforts to expand its appeal to a more upscale consumer as a diversion of its core mission. With the strong price message this holiday season, they said, the company appears to have returned to its roots.
“I think they are getting back on track,” said Rogers of DSR Marketing. “I believe their competitive impact will strengthen now.”
Turock agreed that Wal-Mart strayed from its roots with its efforts to attract a more upscale consumer.
“They are trying to broaden their customer base, but the danger is that they will alienate their core customer,” he said. “The challenge they face is building volume and market share — they are wonderful figures to go after, but do they come at the cost of sharp differentiation for your core customer? I think this is at the heart of the issue for Wal-Mart, especially in the U.S.”
Rogers believes Wal-Mart still has “plenty of room to grow in the U.S.,” especially in California, where it only began opening supercenters three years ago.
Metro Markets
One of the biggest questions surrounding Wal-Mart's growth plans is its move into urban locations — which poses challenges in the form of construction costs, available space and labor issues.
Among the ways Wal-Mart officials have said they will tackle the space problem is through design adaptations. Executives said at the analyst meeting that the company has had some success with an initiative to increase store productivity. According to Castro-Wright, a test in the Northeast in which the SKU count was reduced by up to 13% resulted in sales gains of up to 6%.
At the analyst meeting, Wal-Mart said it would consider opening supercenters of 176,000 square feet in markets where its 195,000-square-foot prototype would seem to be called for. The company has also tested some very small supercenters — a 98,000-square-foot store in Tampa, Fla., for example.
Still, recent store openings, even in densely populated areas, have tended to be close to the traditional range of 200,000-plus square feet, which includes about 56,000 square feet of supermarket selling space, observers said.
“Most of their new stores still appear to be in the 200,000- to 220,000-square-foot range,” said Bob Gorland, vice president, Matthew P. Casey & Associates, a site-selection and consulting firm based on Clark, N.J.
He said the company also is building some supercenters as small as 158,000 square feet, but the tendency has been to build larger stores than the area might appear to be able to support.
“I've seen places where the market seems right for a 158,000 [square-foot store], but they go ahead and put a 200,000 [square-foot store] in anyway,” he said. “They seem to be saying, ‘We might not do that well at first, but we will let the market grow into it.’”
As Wal-Mart continues to press into more metropolitan areas, Gorland also said he expects to see the company building fewer ground-up locations and instead opting to renovate existing department stores that have been abandoned. The company recently opened a two-level store in Towson, Md., for example, in a former Montgomery Ward location.
“That's something conventional supermarkets have to be aware of,” Gorland said. “They might think there's nowhere around them for Wal-Mart to go, and it's difficult to get zoning approval, but if there's a JCPenney closing at a mall — Bang! There's a Wal-Mart.”
He said that although in the past Wal-Mart had shied away from entering heavily unionized areas, especially with its supercenters, it no longer appears to have any reservations about rolling out the concept in such organized-labor strongholds as New Jersey, Philadelphia and the Baltimore and Washington, D.C., markets.
“That could be a challenge for them in 2007, if the unions try to play hardball and do some picketing,” Gorland pointed out.
The newest Wal-Mart supercenters have very few changes from traditional locations, he said, with the exception of details such as colored concrete flooring instead of tile, and fewer service seafood departments. Although midsized stores traditionally have not offered service seafood departments, even the larger stores that have opened recently have not included this offering, he pointed out.
Following a store tour of a supercenter in Fishkill, N.Y., Weinswig of Citibank said the company is increasing its selection of take-and-bake offerings and offering more local preferences in the deli.
Take-and-bake products also are increasing their penetration at the Sam's Club Weinswig visited in Secaucus, N.J., as part of the tour. Other improvements on the food side at Sam's include more attractive labeling on store-brand products, she said.
Going Upscale
The organics offering that Gorland has seen in new supercenters has been fairly meager, he said.
“I have been in some stores in middle-income areas, and they have very little,” he said, noting that the offerings are limited to a few categories, such as cereal and baby food. “It's not like the organics section you would find in an 80,000-square-foot Kroger.”
Although some have cited the move to offer more organic and natural selections as a bid to capture more upscale customers, some see it as just the opposite — a reflection on the more mainstream acceptance of such products.
“Even poor people are more concerned about what they eat, in terms of added chemicals and things like that,” said Rogers of DSR.
Although the company said it has experienced success with its upscale test store in Plano, Texas, the changes there had much more to do with the ambiance and merchandising than they did with the actual product selection, Jon Fleming, chief marketing officer, said at the Morgan Stanley Global Consumer Conference in New York last month.
“We actually did more there in terms of the experience than we did with product offering, and the traffic counts and the business has been significantly above any comparative group that we have for similar stores and similar demographics,” he said.
Fleming explained during the analyst meeting in October that the company was in the early stages of the customer segmentation process.
It has taken its shoppers — which it says encompass 84% of the U.S. population — and divided them into the loyalists, who spend about 42% of their discretionary income at the store; selective shoppers, who shop frequently but in narrow product ranges; and skeptics, who shop infrequently and spend less than 5% of their discretionary income at the chain.
“We've taken these transactional segments and applied geography and demographics and ethnicity to really arrive at segments by store so we can better connect with customers,” he said.
The company recently named Santiago Roces, formerly the CEO of Wal-Mart in South Korea, to head up a new division within the marketing department focused on the customer experience within the stores.
“Our single biggest opportunity is to connect with our customers who are already in our stores,” Fleming said.
Castro-Wright said he sees this segmentation effort as a major part of the company's strategy for the next year.
“It's going to take another 12 months to bring these initiatives to the market,” he said.
Other Initiatives
Labor productivity also has been a key focus of the company, and a new scheduling system designed to improve traffic flow at the front end promises to boost customer satisfaction, Wal-Mart executives said.
Overwhelmingly, the company said, its customers' No. 1 complaint about shopping at Wal-Mart is the time it takes to check out — a problem the company is addressing.
Speaking at the October conference, Pat Curran, executive vice president, operations, for Wal-Mart Stores, said the company recently completed a test at 39 locations in Dallas-Fort Worth and Columbus, Ohio, in which it sought to better match traffic flow with the number of cashiers on duty.
She said the company surveyed about 300 customers to determine if they had noticed any difference in their checkout experience, and 70% said the checkout process was “much better” than the previous time they had shopped, and 60% said they faced shorter checkout lines and less waiting.
Half of respondents also said they appreciated the reduced clutter at the front end that was a part of the initiative.
A Decade of Wal-Mart Expansion in the U.S.
Discount Stores | Supercenters | Neighborhood Markets | Sam's Club | ||||||||
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YEAR | OPENED | CLOSED | CONVERTED | TOTAL | OPENED | TOTAL | OPENED | TOTAL | OPENED | CLOSED | TOTAL |
1997 | 59 | 2 | 92 | 1,960 | 105 | 344 | 0 | 0 | 9 | 6 | 436 |
1998 | 37 | 1 | 75 | 1,921 | 97 | 441 | 0 | 0 | 8 | 1 | 443 |
1999 | 37 | 1 | 88 | 1,869 | 123 | 564 | 4 | 4 | 8 | 0 | 451 |
2000 | 29 | 1 | 96 | 1,801 | 157 | 721 | 3 | 7 | 12 | 1 | 462 |
2001 | 41 | 2 | 104 | 1,736 | 167 | 888 | 12 | 19 | 13 | 0 | 475 |
2002 | 33 | 1 | 121 | 1,647 | 178 | 1,066 | 12 | 31 | 25 | 0 | 500 |
2003 | 43 | 0 | 122 | 1,568 | 192 | 1,258 | 18 | 49 | 25 | 0 | 525 |
2004 | 41 | 1 | 130 | 1,478 | 213 | 1,471 | 15 | 64 | 13 | 0 | 538 |
2005 | 36 | 2 | 159 | 1,353 | 242 | 1,713 | 21 | 85 | 13 | 0 | 551 |
2006 | 24 | 2 | 166 | 1,209 | 267 | 1,980 | 15 | 100 | 17 | 1 | 567 |
Notes: Converted discount stores included in new supercenter openings. Totals reflect store counts for the fiscal years ending Jan. 31 of the years indicated. Source: Wal-Mart financial filings |
‘Greening’ Wal-Mart's Image
BENTONVILLE, Ark. — Wal-Mart Stores here has an opportunity to leverage its efforts on behalf of environmental sustainability to both improve its image and gain favor with young consumers, analysts said.
“The sustainability message is a very brilliant move, and it's consistent with their message of trying to keep costs down,” said Art Turock, principal, Turock & Associates, Kirkland, Wash. “It's totally consistent with improving profitability.”
Wal-Mart has unveiled a series of initiatives aimed at reducing the massive company's impact on the environment, including:
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Asking suppliers to design new, eco-friendly packaging.
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Seeking more organically produced products at low prices.
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Adding local growers to its roster of suppliers.
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Pioneering new, energy-efficient technologies in its stores and transportation networks.
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Promoting energy-saving products to its customers.
At two stores in McKinney, Texas, and Aurora, Colo., Wal-Mart is testing a host of innovations designed to save energy, from the parking lots to the lighting systems. The company recently said some of the systems tested at those stores have now been approved for use throughout the company.
For example, LED lighting will be used in freezer cases in all new Wal-Mart and Sam's Club stores beginning in January 2007.
In a presentation at Wal-Mart's fall conference to analysts and institutional investors, Lee Scott, chief executive officer, described “being a valuable member of the communities” it serves as one of five “pillars” of the organization. The company's environmental initiatives comprise a large portion of that effort, he said.
Scott said his message to the “outside world” is this: “If your interest is to build a better environment, there isn't a better partner that you can hook up with than Wal-Mart, because we can make more of a difference in the environment than any other company in this world, whether it be through packaging, whether it be through the truck fleet, whether it be through the number of containers that we move, how we deal with refuse, the use of electricity, or the adoption of LED lighting for freezer cases.”
By virtue of the company's sheer size, Wal-Mart has the potential to create entire new markets for technologies or products that can help cut energy use, he explained.
He also emphasized that the initiatives Wal-Mart is undertaking to conserve resources and protect the environment also help reduce expenses.
“Because it is not an altruistic endeavor, what we are doing is driving waste out of the company,” he said. “We are saving electricity costs, we are saving on maintenance costs, we are saving on fuel costs in the truck fleet, and we are saving on the cost of transportation because we are downsizing packaging. These are things that have nothing to do with giving money to charitable causes. These have to do with embedded differences in the way you run your business in a way that eliminates waste and creates a better company that you can perpetuate even if times got tough.”
Although Scott conceded the moves were “not altruistic,” Turock said the initiatives should help blunt some of the criticism the company has received as a poster child for corporate greed.
“This will shut up some of the people who would attack Wal-Mart,” he said, adding that being eco-friendly is particularly important to younger consumers. “Gen Y is a very large population, and they are very high on the sustainability scale.”
Turock said he expects Wal-Mart to continue to pressure suppliers to make a bigger and bigger commitment to environmental sustainability.
“Asking them to make smaller packaging is the first ripple,” he said. “The question becomes, where else will they have to be compliant with Wal-Mart's efforts on sustainability?”
— M.H.
Wal-Mart New-Store Projections
YEAR | DISCOUNT STORES | SUPERCENTERS | NEIGHBORHOOD MARKETS | SAM'S CLUBS |
---|---|---|---|---|
2007 | 20-30 | 270-280 | 15-20 | 30-40 |
2008 | 5-10 | 265-270 | 15-20 | 20-30 |
Note: Year indicates fiscal year ending Jan. 31. Source: Wal-Mart Stores |
Ho-Ho-Hum for the Holidays
BENTONVILLE, Ark. — The term “Black Friday” usually has positive connotations for retailers, but after problems with Wal-Mart Stores' website and a weak sales report, it was more like “Bleak Friday” for the supercenter operator.
According to reports, heavy traffic caused the site to display blank pages or stall for several hours on what is traditionally the kickoff to the holiday shopping season.
The next day, the company said its comparable-store sales for the four-week period from Oct. 28 through Nov. 24 would come in 0.1% below the levels of a year ago, the company's worst monthly sales performance in 10 years. Wal-Mart said its holiday season kicks off on Nov. 1.
The news of the negative comps was cited as one of the factors in the poor performance of the stock market last Monday, and Wal-Mart saw its own shares slide about 2.7% that day.
Analysts estimated that overall retail sales throughout the U.S. were up about 5% on Black Friday 2006, compared with year-ago results.
Wal-Mart refocused on its core low-price message in the weeks leading up to the holiday shopping season, with price “rollbacks” on electronics, toys and groceries.
John Fleming, chief marketing officer, Wal-Mart Stores U.S., said during an analyst conference in October that the company's holiday-season advertising this year was designed to remind people of the shopping opportunities at Wal-Mart.
“Wal-Mart is seen as a store for everyday products, not necessarily for holidays and special occasions,” he said. “We are running ads to point out things that people might not think of.”
He said the company has a schedule of ads targeting each of the major holidays, with three basic “planks”:
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Growing the basket.
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Creating solutions for time-starved shoppers.
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Being the value leader on gifts.
One of the ways to grow basket size, he said, is to offer exclusives. Last year Wal-Mart found that shoppers who took advantage of the company's exclusive offer on a Garth Brooks compact disk checked out with baskets that were “significantly bigger” than other baskets on that day.
In the grocery department, Fleming said the company has “made it easier for customers to get in and get what they need and get out” of the bakery aisle, an especially busy area during the holidays.
Wal-Mart said the malfunction of its website, walmart.com, came as the result of extremely heavy use by shoppers.
“It really came down to ‘too much of a good thing’ as we experienced a higher than expected traffic surge that caused the site outage early on Black Friday,” said Amy Colella, a spokeswoman for Walmart.com, in a written statement. “We experienced a [sevenfold] increase in our orders, compared with the same time last year, when the Black Friday specials became available on our site.”
She said that although Wal-Mart's Friday-only special offers were supposed to expire at 11 a.m., the company extended the deadline through midnight. The company also “worked all weekend” to make sure the site was ready for so-called “Cyber Monday” specials.
The site's breakdown occurred just a month after the company held a teleconference touting new innovations designed to make the site more shopper-friendly.
In the teleconference, Raul Vasquez, CMO, walmart.com, called the site's redesign “the most significant work that we've done on the site since we launched in October 2000.”
The changes the retailer made affected 900 product categories and more than 2 million site pages. Among the changes were more educational features in electronics, aimed at consumers who browse online before they go into the stores, and “more compelling visual images” in home furnishings to promote impulse buys of additional merchandise.
— M.H.