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Company Profile of Fred Meyer, Inc.

Discuss Company Profile of Fred Meyer, Inc. within the Company Profiles & News !! forums, part of the Mirror View - Ebooks Links & Miscellenous Reading Material category; Fred Meyer, Inc., is a chain of hypermarkets founded in 1922 in Portland, Oregon, by Fred G. Meyer. The company ...



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Company Profile of Fred Meyer, Inc.
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Pratik Kukreja
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Company Profile of Fred Meyer, Inc. - May 6th, 2011

Fred Meyer, Inc., is a chain of hypermarkets founded in 1922 in Portland, Oregon, by Fred G. Meyer. The company was one of the pioneers of one-stop shopping, eventually combining a complete grocery supermarket with a drugstore, clothing store, shoe store, fine jewelers, home decor store, home improvement center, garden center, electronics store, toy store, sporting goods store, and more under one roof.
Fred Meyer stores are throughout Oregon, Washington, Idaho, and Alaska. Before the company's merger with Kroger in October 1998, it traded on the New York Stock Exchange under the ticker symbol FMY. Although the company is now a division of Kroger, the stores are still branded Fred Meyer, and the western region of the Kroger Corporation is headquartered in Portland.
Fred Meyer is sometimes known as "Freddy’s", a nickname the company was given by its customers and which is used in its advertising. For a number of years, the company has used the marketing slogan What's on your list today? You'll find it at Fred Meyer! or more simply What's on your list today? in its advertising.

Perfumania Holdings, Inc. is an independent, national, vertically integrated wholesale distributor and specialty retailer of perfumes and fragrances. The Company does business through four primary operating subsidiaries, Perfumania, Inc. (Perfumania), Quality King Fragrance, Inc. (QFG), Scents of Worth, Inc. (SOW) and Five Star Fragrance Company, Inc. (Five Star). It operates in two industry segments: wholesale distribution, and specialty retail sales of designer fragrance and related products. The Company’s wholesale business, which is conducted through QFG, distributes designer fragrances to mass market retailers, drug and other chain stores, retail wholesale clubs, traditional wholesalers, and other distributors throughout the United States. Its retail business is conducted through three subsidiaries: Perfumania, a specialty retailer of fragrances and related products; SOW, which sells fragrances in retail stores on a consignment basis, and perfumania.com, Inc., an Internet retailer of fragrances and other specialty items.
Wholesale Business
QFG buys designer fragrances principally from the brand owner/manufacturer. QFG’s sales are principally to retailers, such as Wal-Mart, Walgreens, Kohl’s, Nordstrom Rack, Marshalls, Target, Ross Stores and TJ Maxx. QFG also operates a direct sales department that services over 10,000 pharmacies and specialty stores, such as AmerisourceBergen and Cardinal Health, throughout the United States. The wholesale business also includes the Company’s manufacturing division, operated by Five Star, which owns and licenses designer and other fragrance brands, paying royalties to the licensors based on a percentage of sales. Five Star’s owned and licensed brands are sold principally through the Company’s wholesale business, SOW’s consignment business, and Perfumania’s retail stores. Five Star handles the manufacturing, on behalf of Perfumania, of the Jerome Privee product line, which includes bath and body products and scented candles, and which is sold exclusively in Perfumania’s retail stores.
Retail Business
Perfumania is a specialty retailer and distributor of a range of brand name and designer fragrances. As of January 30, 2010, Perfumania operated a chain of 370 full-service retail stores specializing in the sale of fragrances and related products at discounted prices up to 75% below the manufacturers’ suggested retail prices. Each of Perfumania’s retail stores generally offers approximately 2,000 different fragrance stock keeping units (SKUs) for women, men and children. These stores stock brand name and designer brands, such as Estee Lauder, Cartier, Issey Miyake, Bvlgari, Yves Saint Laurent, Calvin Klein, Giorgio Armani, Hugo Boss, Ralph Lauren/Polo, Perry Ellis, Liz Claiborne, Giorgio, Halston, Escada, Chanel, Sean Jean, Lacoste, Burberry, Azzaro, Guess, Donna Karan and Paris Hilton. Perfumania also carries private-label lines of bath and body treatment products under the name Jerome Privee, and cosmetics products under the name Mattese. The retail business is principally operated through Magnifique Parfumes and Cosmetics, Inc., a subsidiary of Perfumania, although the stores are generally operated under the name Perfumania. Perfumania’s retail stores are generally located in regional malls, manufacturers’ outlet malls, lifestyle centers, airports and suburban strip shopping centers.
Perfumania.com offers a selection of the Company’s products for sale over the Internet and serves as an alternative shopping experience to the Perfumania retail stores. SOW operates a national designer fragrance consignment program, with contractual relationships to sell products on a consignment basis in approximately 2,500 stores, including more than 1,300 Kmart locations nationwide, as well as through customers such as Burlington Coat Factory, Filene’s Basement, SYMS, Loehmann’s, Fred Meyer, Daffy’s and Duane Reade. SOW determines the pricing and the products displayed in each of its retail consignment locations and pays a percentage of the sales proceeds to the retailer for its profit and overhead applicable to these sales. Consignment fees vary depending in part on whether SOW or the retailer absorbs inventory shrinkage.
The Company competes with Elizabeth Arden.

As the 1990s progressed, Fred Meyer continued to fine-tune its store formats and locations in order to fend off increasing competition that cut into sales and earnings. The rise of category-killers was particularly troubling, especially in the areas of hardware and home electronics. In response, Fred Meyer reduced the amount of space devoted to lumber and building materials and began to phase out computer hardware. In 1993, Fred Meyer altered its growth strategy, deciding to concentrate on adding stores in areas where the chain was already strong; in some cases smaller-than-typical Fred Meyer stores were subsequently opened in smaller markets within these areas. A byproduct of this strategy was the chain's 1994 exit from the northern California market, into which it had only just begun to expand. The company incurred a $15.98 million charge as a result, leading to a profit of only $7.2 million for the fiscal year. Results for 1994 were also affected by an 88-day strike which centered on the number of part-time employees at the company. Sales increased at a more healthy rate in fiscal 1995 and 1996, buoyed by a surge in sales in Fred Meyer's nonfood departments.
The mid-1990s saw the company make its most dramatic moves outside the realm of one-stop shopping supercenters. Fred Meyer had entered the fine jewelry business in 1973. Over the next two decades, it had built up a chain of about three dozen Fred Meyer Jewelers standalone stores, which were located within malls, and it had also included Fred Meyer Jewelers departments in nearly 100 of its supercenters. In 1995, the company acquired 22 mall jewelry stores located on the West Coast, then the following year purchased 49 Merksamer Jewelers mall stores spread throughout 11 states. In the summer of 1997, Fred Meyer further bolstered its jewelry operations with the acquisition of Fox Jewelry Company and its 44 Fox Jewelry stores located in malls in six Midwest states--Michigan, Wisconsin, Indiana, Illinois, Iowa, and Ohio. With the addition of Fox Jewelry, which had been founded in 1917 with a store in Grand Rapids, Michigan, Fred Meyer became the fourth-largest fine jewelry chain in the country.
An even larger acquisition the summer of 1997 brought Fred Meyer an enhanced presence in food retailing. In a $2 billion deal, Fred Meyer purchased Smith's Food & Drug Centers, Inc., a leading regional supermarket and drug store chain with more than 150 stores in the southwestern and mountain states of Arizona, Idaho, New Mexico, Nevada, Texas, Utah, and Wyoming, making for an ideal geographic fit. Founded in 1948 and headquartered in Salt Lake City, Smith's large stores combined full-line supermarkets with drug and pharmacy departments and operated under the names Smith's, Smitty's Supermarket, and PriceRite Grocery Warehouse. Smith's reported sales of $2.89 billion for 1996.
Fred Meyer's growth continued in 1998. In March, Quality Food Centers Inc. (QFC) was added to the company's arsenal. QFC operated 89 supermarkets in the Seattle area and had been expanding by making strategic acquisitions over the past several years, much like Fred Meyer. The company purchased a second retailer that month, Food 4 Less Holdings Inc., an operator of 264 Ralphs stores in California and 80 Food 4 Less warehouses. Overall, Fred Meyer's merger activity catapulted it into the upper echelon of retailers with $15 billion in annual sales.
During the remainder of the 1990s, it was expected that the company would need to concentrate on issues of integration, including administrative, purchasing, information systems, distribution, and manufacturing functions. The management team charged with this responsibility was Ronald W. Burkle, CEO of Smith's, who was named chairman of Fred Meyer, and Miller, who remained president and CEO. Consolidation in the industry continued, however, and by this time Fred Meyer had become a very attractive acquisition target.
Sure enough, in October 1998, The Kroger Co. made a 13.5 billion play for Fred Meyer. Kroger stood to gain handsomely from the deal. The transaction would secure its spot as the leading supermarket chain in the United States, a position for which competitors Albertson's and Wal-Mart Stores were vying. Kroger gained several new retailing formats--including jewelry stores, warehouses, and department stores--and strengthened its foothold in the western United States. The company also expected the combined operations would secure cost savings of $75 million in the first year of operation, $150 million in the second year, and $225 million in the third year. The Federal Trade Commission gave its nod for the union after Kroger agreed to divest eight of its stores. Fred Meyer and its subsidiaries were integrated into Kroger in May 1999.
Kroger president David B. Dillon assured consumers that little would change at its stores in a May 1999 Portland Oregonian article. "Customers will continue to see the neighborhood chain they are familiar with today," he commented. "The combined company will have 18 food-store divisions, each with the authority to establish operating, merchandising, and pricing strategies in response to the demographic, economic and competitive conditions in each market."
As part of Kroger's growing list of holdings, the company operated as Fred Meyer Stores, Inc., the third-largest supercenter operator in the United States. In the early years of the new century, it continued to focus on pleasing its customers by offering a variety of national brand and private label products. It also kept pace with consumer demand, making necessary adjustments to its product mix. One example was the addition of Naturally Preferred, a line of natural and organic items that was found in the Natural Choice departments of its stores. In March 2003, Fred Meyer began offering its customers Naturally Preferred magazine, which included information and coupons. While Fred Meyer had certainly come a long way from its roots in the 1920s, its focus on customer satisfaction and low prices was sure to remain in effect for years to come.
Principal Competitors: Albertson's Inc.; Safeway Inc.; Wal-Mart Stores Inc.

Beta: 3.69
Market Cap (Mil.): $94.15
Shares Outstanding (Mil.): 8.97
Annual Dividend: --
Yield (%): --
PERF.O Industry Sector
P/E (TTM): -- 4.83 14.01
EPS (TTM): 76.47 -- --
ROI: -1.77 5.17 1.32
ROE: -5.98 6.26 2.20

Wholly Owned Subsidiary of The Kroger Co.
Incorporated: 1923
Employees: 92,000
Sales: $14.9 billion (1998)
NAIC: 452110 Department Stores; 452910 Warehouse Clubs and Superstores

Key Dates:
1923: Fred Meyer Inc. is incorporated in Oregon.
1928: Meyer opens what many regard as the world's first self-service drug store.
1959: The company acquires four Marketime drug stores.
1960: Fred Meyer goes public.
1964: Roundup Wholesale Grocery Co. is purchased.
1981: Fred Meyer is acquired by KKR in a leveraged buyout.
1986: The company goes public for a second time.
1997: Fred Meyer adds Smith's Food & Drug Centers Inc. to its holdings.
1998: The company buys Quality Food Centers Inc. and Food 4 Less Holdings Inc.
1999: The Kroger Co. acquires Fred Meyer in a $13.5 billion deal.

Name Age Since Current Position
Nussdorf, Stephen 59 2004 Chairman of the Board
Katz, Michael 62 2004 President, Chief Executive Officer, Director
Dellomo, Donna 45 2008 Chief Financial Officer, Secretary
Taylor, Carole 65 1993 Director
Bouhadana, Joseph 40 2002 Director
Garfinkle, Paul 69 2004 Director

3800 Southeast 22nd Avenue
Portland, Oregon 97202

Last edited by pratikkk; May 6th, 2011 at 11:59 AM..
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