Darden testing combined Olive Garden and Red Lobster concept

The parent company of restaurant-chain powerhouses Olive Garden and Red Lobster is testing a new restaurant format that would combine its two best-known brands into one building, allowing for expansion into markets once considered too small for a standalone location.

Darden Restaurants Inc. will open its first "synergy restaurant" in March in Palm Coast, Fla., and expects to open two more locations in the next year.

The company is trying to avoid some of the pitfalls that have held back dual-brand fast-food restaurants. A big one: Blending the brands too much by using common menus and sharing dining rooms, diluting what diners enjoy about a particular brand.

"We've developed a prototype that maintains the integrity of all key brand touch points including separate front doors, separate lobbies, separate bars, separate dining rooms and brand-specific menus," chief operating officer Andrew Madsen said during an investor-day presentation in Orlando Feb. 1. "The primary areas of capital synergy including a shared kitchen, shared refrigeration and shared storage are invisible to the guest."

Under Armour fired up about new "charged cotton" T-shirts

Kevin Plank is a highly competitive chief executive and is not shy about his desire for his upstart Under Armour to slay athletic apparel giants like Nike.

So it's no surprise when Plank makes big promises on an earnings conference call.

But his description of a new line of Under Armour cotton T-shirts dubbed "Charged Cotton" on the Nov. 27 call was notable even for Plank.


"It's a phenomenal product," he raved. "It is the most comfortable, beautiful T-shirt in the world that for $25, it's going to make all those $80 and $90 cotton T-shirts from the designer labels seem ridiculous."

The new shirts are scheduled to debut in March.

Get in the (online) zone! AutoZone sees bright future for web sales of auto parts

Online sales of auto parts historically have lagged just about every other retail category.

Customers tend to use the internet to research parts and pricing but more often than not visit a brick-and-mortar store to make the purchase.

AutoZone has revamped its web offerings to cater to those consumers, and perhaps convince more of them to buy online, CEO William C. Rhodes said in a conference call Dec. 7.

"As consumer behaviors change and as we enhance our sites, we believe this is likely to continue to grow at a fairly rapid pace," Rhodes said. "Today, many of our in-store sales are influenced by our customers' interaction with us over the web."

The auto-parts chain with more than 4,200 U.S. stores has streamlined the number of steps it takes to find parts online to match a customer's car, and in November launched a separate site for commercial customers at autozonepro.com.

For customers, the advantages of shopping for parts online include "a wealth of information over and above" what is available at the store counters, along and a much larger assortment, said CFO William T. Giles.

The approach appears to be working. Online sales for AutoZone rose 11 percent in the first quarter compared to last year.

Kroger house brands losing share to national brands in hopeful sign for economy

More Kroger customers are opting for brand-name products instead of house-label items in a trend that has company executives feeling cautiously optimistic about consumer spending.

The company said sales of national brand products rose in the third quarter while sales of Kroger's more than 20,000 house-branded items fell from about 35 percent of sales to 34 percent.

CEO David Dillon said strong sales last year for private-label products, brought on in part to an unwillingness by the big food players to drop prices to match deflation, have made comparisons tough this year. Another factor: National brands have invested in more advertising and promotional activities in 2010.

"I also think it's a partial indication of some of the customer base seeing that the world around them has improved," Dillon said in a Dec. 2 conference call, before cautioning listeners to read too much into the trend.

One trend that's more clear: The widening distance between the haves and have-nots.

Kroger officials noted that the chain has seen sales rise for Boar's Head meats, high-end wines and Starbucks coffee at its in-store kiosks. At the other end of the spectrum, more than double the number of customers are using food stamps for groceries than just three years ago.

Women falling out of love with J. Crew?

The news that trendy retailer J. Crew is being acquired in a $3 billion deal helped obscure the company's disappointing quarter and weak outlook.

In a potentially ominous sign for the retailer, women's apparel is a growing weak spot, said CEO Millard Drexler in a conference call Nov. 23.

The company lowered its fiscal 2010 earnings per share outlook to a range of $2.08 to $2.13 per share, and comparable-store sales in the negative low single digits.

"Needless to say, we are disappointed with our third quarter results and our fourth quarter outlook," Drexler said. "While we are seeing strength from our men's, crewcuts, accessories, factory and Madewell business, the softness has been primarily osolated to our women's retail and direct business."

No more 'no interest no payments' offers means fewer charges on store cards

Fewer customers these days are using store credit cards, at least at Home Depot, after credit card reform enacted in February put an end to "no payment, no interest" offers.

The chain, which operates more than 2,240 stores, has seen its private-label credit card penetration drop from 26 percent last year to 23 percent this year.

About half of the drop is because the company can no longer offer six months of no payments and no interest on purchases above $299, Chief Financial Officer Carol Tome said on a conference call Nov. 16. The change was part of the Credit Card Accountability, Responsibility and Disclosure Act.

"It's now no-interest, minimum-payment, and customers are looking at that minimum payment and albeit it's a small payment, but they're looking at that payment and saying I'm not sure that value proposition works for me anymore," Tome said. "And so they're switching out to bank cards, and we've seen an increase in our bank card penetration accordingly."

Abercrombie & Fitch closing more than 100 stores in strategy shift to internet, overseas

Abercrombie & Fitch plans to close even more of its flagship brand's U.S. stores in the next few months than it predicted earlier this year, as the youth-oriented retailer focuses instead on international growth and internet sales.

Online sales for Abercrombie and its stable of spinoff brands have jumped 40 percent this year and now make up 10 percent of the business, CEO Michael Jeffries said on a Nov. 16 conference call with Wall Street analysts. International sales, also rising rapidly, now make up about 18.5 percent of sales for the New York-based company.

The chain now plans to close about 67 U.S. Abercrombie & Fitch stores by the end of 2010, up from 60, and another 40 to 50 locations next year. The company operates about 1,100 stores in the U.S., of which 347 are the flagship Abercrombie & Fitch, 537 are Hollister Co. and 205 are abercrombie kids locations.

Abercrombie CFO Jonathan Ramsden said the costs of the closures will be minimal since in most cases the closures coincide with lease expirations. Stores with low volumes and those in lower-end malls were the first targeted for closure.

The company, which has not yet provided a list of stores slated for closure, plans "modest incremental markdowns" at the affected locations.