KEL304

MARK JEFFERY AND JOSEPH F. NORTON

Clothes ‘R’ Us Point-of-Sale Initiative:
Managing IT Programs Overview
Marcus Nord, a program manager for Clothes ‘R’ Us, had an urgent update for the program management team and Nancy Orlin, the company’s chief information officer (CIO). Nord had just learned that four of the six product managers had unexpectedly quit. For Orlin, this was yet another obstacle that was making this program one of the hardest she had managed in her career. In Orlin’s twenty-year tenure at the company, she had managed many technology projects that were vital to the company’s strategy. Despite the extensive use of information technology (IT) at Clothes ‘R’ Us, Orlin could not recall anything that compared to the …show more content…
Between 1990 and 1997 Clothes ‘R’ Us experienced tremendous growth and financial success. In that period, it expanded its store operations from two hundred to three hundred stores and the total number of employees almost doubled. In fiscal year 1997, revenue was up 23 percent to almost $6.51 billion, while net earnings rose 18 percent to nearly $534 million. Although other apparel retailers also experienced strong growth backed by strong consumer spending, Clothes ‘R’ Us had annualized earnings per share higher than any of its competitors during this period. Revenue growth began to slow in 1998 and fell to single digits in 2000. Clothes ‘R’ Us expanded to more than four hundred stores and in the process doubled its balance-sheet debt. By the end of fiscal year 2000, Wall Street analysts saw a company that had over-expanded and had some of the worst gross margins in the industry. Moreover, discount retailers such as Walmart had improved their product lines and served as strong competitors in the low-priced segment. In 2001 Clothes ‘R’ Us sought to reduce costs to regain its competitive advantage. It continued to open new stores, but closed more than forty of its least profitable stores. Total headcount was reduced by 20 percent and the number of employees per store was reduced by almost one-third. The massive changes coupled with dismal sales led the company into its