food for thought

[Alan]

This will be brief. I was touring one of the larger local candle manufacturers here in Denver today (please don't ask who, because I always agree not to share specific information.)

Anyway, part of the discussion was about the present state of candle sales from the larger producers. Yankee has appearently closed a significant number of stores. And they are reportedly a $500,000,000 company (unconfirmed, so don't quote me on any figures). And Illuminations closed 43 of their 86 retail stores. So, it seems some of the larger companies are feeling some financial pressure. A number of other companies were also mentioned.

I haven't had a chance to think about what this means to the industry. Maybe it means that consumer candle sales are slowing as a whole. Or, maybe it means that some of the smaller outfits are gaining a growing and significant percentage of the market. Or maybe it means something else... not sure. But I thought I'd shared as something to ponder.

Cheers,

Alan

[Michi]

:wave: Hey Alan, long time no "see", love the new do!!

I'm hoping this just means us little guys are gaining some ground on the bigger guys!!

[smellywax]

Did you see this article in the Denver Business Journal:

http://denver.bizjournals.com/denver/othercities/boston/stories/2006/04/24/daily35.html

[Candle Man]

My customers have come to learn I have better quality candles over the Big Name Brands, but then I know people that have money and will not buy my candles (even though mine are better) because it is not a name brand. They don't want a candle sitting around that's not a name brand for their friends to see, It's a "Name Brand Thing".

[dcroome2005]

Wow, that is interesting. Thanks for sharing this Alan

Candleman- I know what ya mean. I used to be one of those " Name Brand" people. I only bought Yankee and it was because of the name.

Christina

[elle110]

Did you see this article in the Denver Business Journal:

http://denver.bizjournals.com/denver/othercities/boston/stories/2006/04/24/daily35.html

WOW! Very interesting to say the least

[Sara]

Definite food for thought there. I can think about 3 reasons off the top of my head, and they could all be wrong.

[LynnS]

I have 2 former Yank** candle customers and another who is a former PARTY LI** customer.What they cannot believe is good candles at a great price and burn better than the NAME BRAND.The one lady may still buys YANK** but only when 40-50%.Then she comes back to buy from me.

LynnS

[AngelaVA]

That's interesting. Yankme just built a huge flagship store in my town. It's almost as big as our Wal-Mart and has a fudgery, home section, cafe, santa section, kids section, etc . . . They have shopping carts lined up outside the door and people take them in there and fill them up with candles and other stuff. Crazy.

[sudsnwicks]

I must be missing something here: that Y**kee has closed down a significant number of their stores seems contradictory to what the recent article in the Denver Biz Journal is saying about their sales going up. Would someone mind clarifying this for me?

[rascal418]

This past weekend DH & I saw a Yankee Candle Display at the superflea. Although they were cheap the vendor couldn't give them away.

Gotta tell ya, I was surprised to see an outside candle display in that heat. Talked with the vendor a bit & it turns out she's selling what doesn't move at the stores at the superflea. I never thought I'd see a Yankee Candle Store owner at the flea market.

[smellywax]

I must be missing something here: that Y**kee has closed down a significant number of their stores seems contradictory to what the recent article in the Denver Biz Journal is saying about their sales going up. Would someone mind clarifying this for me?

That was what I was wondering...I had read that article and it doesn't coincide with what Alan was told. Either way, I think the larger candle companies are getting more and more competition from not only crafters like us, but less expenisve retailers such as Target.

[Alan]

Yes, that is interesting that Yankee is reporting increased sales. I wonder how that pans out as far as earnings, since increased revenues don't always equate to increased earnings, especially with publicly traded companies. It should also be noted that while they may be reporting a 12% increase in revenues, the cost of some raw materials (wax for instance) has gone up by about 20% in the same time span. The only way to get a really good picture would be to study an earnings report (but I have no inclination, even as a former series 7 RR).

Their business model may be evolving in various ways too. They have definitely closed down a number of retail outlets around here, but at the same time have become more commonly available in the some of the mall department stores. It's been speculated though that high-dollar pre-9/11 leases on retail spaces are finally expiring, and therefore it is a good opportunity for larger companies to consolidate resources into those more profitable regions. Who knows? The same may even be true with Illumintions, as far as consolidating in the wake of expired leases. Anyway, as I mentioned, it was just something to ponder.

Cheers,

Alan :smiley2:

[Suzanne]

I have to jump in here. The following is the annual report from Yankee Candle. This includes their financials, cash flow and all the other reports. I didn't dig deep enough to see what and where and why some stores may be closing but according to these reports they are consistantly growing. I'm thinking, just from briefly looking at this, the stores Alan may be referring to are stores that are not owned by Yankee but buy Yankee wholesale for resale. However, I don't know that for sure. It does state in the report the areas they chose to have their stores which include malls. I only have spent a few minutes going over this report along with what how their stock is performing. Maybe some time when I have a few hours of uninterrupted time I can thoroughly analyze this. ~maybe. Yankee Candle is doing fine and growing at a consistant pace. I see nothing that would explain that this industry is hurting or will be hurting. Everything shows consistant growth. And from the looks of it, if you own their stock, I'd hang on to it, and if you don't own their stock, I'd invest in it.

In this report there are charts you can look at to compare growth and such per year. The charts are sometimes easier for some people to look at and understand.

http://library.corporate-ir.net/library/83/831/83126/items/151790/AnnualReport2004.pdf

[Tess]

I have 2 former Yank** candle customers and another who is a former PARTY LI** customer.What they cannot believe is good candles at a great price and burn better than the NAME BRAND.The one lady may still buys YANK** but only when 40-50%.Then she comes back to buy from me.

LynnS

Yep same here. I have tons of converts!! I don't know about the candle biz as a whole slowing down, but my biz has quadrupled last years sales at this point of the year.

[Suzanne]

SOUTH DEERFIELD, Mass.--(BUSINESS WIRE)--April 26, 2006--The Yankee Candle Company, Inc. ("Yankee" or the "Company"; NYSE:YCC) today announced financial results for the first quarter ended April 1, 2006. Earnings per common share on a diluted basis increased 30% to $0.30 from $0.23 for the prior year quarter. Total sales for the first quarter were $133.9 million, a 12% increase over the year ago quarter. Total company comparable store sales increased 1%.

Included in the first quarter EPS is a favorable federal income tax adjustment of $2.3 million, or $0.05 per diluted share, primarily due to the resolution of prior years' outstanding federal income tax matters. Earnings per common share on a diluted basis before the benefit of this tax adjustment was $0.25, an increase of 9% over the year ago quarter.(1)

"First quarter 2006 EPS results were solid and at the high end of our expectations range, excluding a one-time tax adjustment", commented Craig Rydin, Chairman and Chief Executive Officer. "Revenue exceeded our plan overall, with the retail division in all three business segments delivering higher growth on positive comparable store sales and wholesale sales within expectations. Our strong revenue performance this quarter is a tribute to all of our employees who worked together to create these solid results."

First Quarter Highlights:

• Retail sales were $61.6 million, a 19% increase over the fiscal 2005 first quarter. Comparable sales in the 330 retail stores including the South Deerfield flagship store that have been open for more than one year increased 3%. Comparable sales in the 329 retail stores excluding the South Deerfield flagship store increased 4%. Consumer Direct increased 53% over the fiscal 2005 first quarter. Including Consumer Direct, total retail comparable sales increased 8%.
  
• Wholesale sales were $72.3 million in the first quarter, an increase of 7% over the year ago quarter. Wholesale comparable sales in the first quarter decreased 2%.
  
• Gross profit increased 11% to $72.0 million for the first quarter versus the prior year quarter. As a percentage of sales, gross profit decreased to 53.8% compared to 54.4% for the prior year quarter, due to promotional costs in Wholesale and higher energy and freight costs.
  
• Income from operations for the first quarter increased 2% to $19.2 million, from $18.8 million for the first quarter of 2005.

This is what was released for the first quarter of this year. If you want to research, you'll see they have forecasted continued growth and earnings. Ok I got to stop researching this, I could go on and on and I don't have time. LOL

But this should show there is nothing to worry about in the candle industry as far as it declining.

[Laura]

http://biz.yahoo.com/e/060316/ycc10-k.html

scroll down to " executive summary"

[epheme]

It said they were selling more through catalogues and internet - thus they need fewer storefronts. I guess.

I wish you all the best of luck in making Yankee close the rest of its stores!

[cybersix]

just my two cents from italy.

yesterday I went in a store (its a part of a big chain stores here in italy) where I knew they were selling yankUU candles.

They are not seeling anymore.

There were a lot of pillars, containers, votives, tarts.. All disappeared.

There was a sad shelf with some (very few) cheap chinese candles.

Here Yankoo candles are not so easy to find, and that's was the only store I know wich carried them.

[sockmonkey]

Yankee's sales are up because of placement in chain stores. They are now found in Penney's, Kohl's, Cracker Barrel, Linens & Things, Bed Bath & Beyond, and I read that some of their products will be sold in Staples soon. Their internet sales and catalog sales also do a booming business for them. I have seen them offer wholesale pricing for some candles on their site.

They are gobbling up a large market share, but appear to me trying to move away from independent gift retailers. Companies like Colonial Candle seem to be making a move to lure disgruntle Yankee wholesalers. They have dropped their opening order to a paltry sum compared to Yankees, and even compared to what they charged two years ago. They also offer to exchange or buy back candles that don't sell.

Yankee is putting a lower priced candle in the market place to grab more cash from people who wouldn't normally plunk down $22 for a candle. They are battling companies like Glade and Airwick who are known for spray air fresheners, but have moved into candle territory for a fraction of the price Yankee sells theirs for. They must also compete against Bath & Body Works/White Barn Candle Co., which are ultra hot right now and have agressive promotions to sell their products.

[keniasoapboutique]

I must be missing something here: that Y**kee has closed down a significant number of their stores seems contradictory to what the recent article in the Denver Biz Journal is saying about their sales going up. Would someone mind clarifying this for me?

Could it be because the bulk of their sales have shifted from the brick and mortar shops to on-line? Even selling to re-sellers would negate the need for a store in every mall. Just a few large distrib centers to get the product out and that's all.

[Sweet68cam]

I also noticed that yank** is even selling their car fresheners in AutoZone now...lol Maybe the reason for the steady incline in sales is due to the fact that they have closed down those stores and now are not spending as much money for the overhead to have them open...I am sure that would save a little I guess...never know. All I can say is that I hope the reason for the fallen sales if that is in fact the case, then it is because of the little people like us moving in on their market..