BlueLightUpdateKMBoardMarch202001v1 - Update...

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Unformatted text preview: Update Randy Allen Update Demand and net sales are off $2.3 million (48%) and $2.4 million (64%) year-to-date, respectively, from the FY2001E budget. Demand shortfall driven by falloff in conversion rate 0.19% actual vs. 0.37% budget Current site traffic is greater than Wal-Mart's and equal to JC Penney and Sears Planned major website relaunch is on schedule for week of March 19 Return of Blue Light to Kmart stores should drive more qualified traffic to website. Site Relaunch To-to-bottom site redesign designed to substantially raise conversion rate. Changes based on customer feedback and holiday learnings. Redesigned products homepage, highlighting more New top navigation with improved checkout and tiered shipping Expanded product information and buying guides On-line gift registry Better merchandise assortment Site Relaunch Relaunch of home, electronics and sports stores and new stores for flowers and beauty & fitness of Black & Decker and Panasonic branded stores April branded stores will include George Foreman grills, Dickies, Wrangler, Rte. 66, Phillips, Olympus and Huffy Introduction Relaunch Future site revisions in 2001 are planned for April, May, back-to-school (July), September and holiday season Revisions to site will be driven by customer feedback via research. Site functionality Merchandise assortment Promotions strategy Focus is on turning browsers to buyers. ISP Update Successful March relaunch of ISP offerings 12 hours free (average family is online 11.25 hours) (Basic) $9.95 for 100 hours (Premium) Limited time offer of buy anything on BlueLight and receive one-month of unlimited, free access Initial results are promising but very early Average purchase of $35 (initial offer has no minimum) for unlimited service 50% of ISP orders are for Premium service New CD now arriving in Kmart stores 6.4 million subscribers with 1.4 million active Cost per active subscriber of $1.47, down from $2.97 in November 2000 (at end of February) Audit Update BlueLight audit not yet completed but preliminary findings are disappointing. Approximately $30 million of unrecorded adjustments (Kmart's share $18 million). Cash impact of $[XX ] million to prior budget Lack of control framework and processes to ensure timely, accurate and complete recording of transactions in financial records "Material weakness" letter to be issued Audit Update New controller hired started March 19th 14 years finance and accounting experience with Levi Strauss; 5 years with PwC; CPA Solid line to Kmart and dotted to BlueLight PwC engaged to conduct enterprisewide controls review with support from Kmart's internal audit group. Implementation of recommendations to begin at end of review (early April) Business Repositioning Based on audit findings and current business softness, BlueLight has identified $[XX] million in cost savings, e.g., marketing, information technology spending, reduced headcount BlueLight and Kmart management continue to explore additional efficiencies, e.g., information technology, fulfillment, marketing, customer care, that will be implemented during FY2001. BlueLight's results remain under budget, further cost reduction initiatives will be taken. Revenue plan remains subject to relaunch results. If ...
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This note was uploaded on 03/04/2008 for the course NBA 5780 taught by Professor Peck,nathan during the Spring '08 term at Cornell.

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