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KING OF PRUSSIA - Zany Brainy Inc. learned this year that change can hurt.
The retailer with a slant towards educational, nonviolent toys acquired a major competitor in July, got a new CEO in September and bought out its partner in the online portion of the business last month.
The Montgomery County-based company opened 25 new Zany Brainy stores this year, plus the 60 stores it absorbed when it acquired Noodle Kidoodle of Syosset, N.Y., a toystore chain with a similar focus, in a stock deal worth $40 million.
Now, with Zany Brainy stock trading at less than $1 after a slow holiday season, and the integration of the acquired stores going less smoothly than expected, Zany Brainy needs to post some good news if it wants to restore investor confidence.
Comparable store sales, the bellwether in the retail industry, were down 6 percent this holiday season.
According to Zany Brainy, if sales at the former Noodle Kidoodle stores were excluded, comparable store sales for December would have been positive.
"We were overzealous," said Thomas G. Vellios, acting CEO of Zany Brainy. He replaced Keith C. Spurgeon, the former chairman and CEO who resigned in September.
"The (Noodle Kidoodle) deal closed the end of July, early August," Vellios said. "We underestimated the work to get awareness up to par to get ready for the fourth quarter."
Despite the "acting" in his title, he said the company is not searching for a replacement right now.
The holiday decline followed a drop in sales of about 10 percent in the third and second...