Rooms To Go rises to top
Still growing after sales double in 5 years
By Clint Engel -- Furniture Today, March 31, 2002
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Seffner, Fla. — Rooms To Go's sales rose to about $1.26 billion last year, a 20% gain and enough to unseat Ethan Allen as the No. 1 store on Furniture/Today's Top 100.
The room package and youth specialty chain edged out Ethan Allen, which Furniture/Today estimates racked up $1.17 billion in furniture, bedding and accessory sales in 2001.
For Rooms To Go, the climb to the top has been relatively quick. Established in 1991 by Jeff Seaman and his father, Morty Seaman, the Florida-based chain first appeared on the Top 100 nine years ago at No. 34, with 1992 sales jumping more than 180% to $85 million. Rooms To Go then had just 21 stores, primarily in central and western Florida.
Today, it's a 90-store powerhouse with units throughout Florida and in Georgia, the Carolinas, Tennessee, Texas and Puerto Rico. It opened its first Rooms To Go Kids store in Marietta, Ga., in 1997, quickly rolling out that format for a total of 18 Kids units today, complementing its 63 regular-format stores and nine clearance centers. In 2000, sales topped $1 billion for the first time.
Now, despite his habit of saying the next year was likely to be the toughest yet, President Jeff Seaman sounds uncharacteristically optimistic about the future.
"Which is scaring me," he said. "Every time I've been negative we've done well, and every time I'm positive, we don't do well."
But Rooms To Go's record is hard to discount. Its growth last year came during a time when many were recording flat or down sales. And that growth came despite an expansion plan slowed by unexpected construction delays. A year ago, Seaman said the company would open about 24 stores over a two-year period; instead, it will open more like 13 or 14.
In recent ads, RTG has billed itself as "the No. 1 retailer of furniture in America," with more than 20 million pieces of furniture delivered.
"We had a good year in 2001 and I don't know why," Seaman said. Business was reasonably strong going into the fall. Then, after a few weeks of bad business following Sept. 11, things changed for the better.
"That nesting instinct you read about? I think it really happened," he said. "We went from OK business pre-9/11 to no business post- 9/11 to explosive business post post-9/11."
In the 12 to 14 weeks after the attacks, the retailer's same-store sales were up more than 15% — among its best gains ever, Seaman said. For the year, the company added a little more volume than Seaman was looking for, and average sales per square foot climbed from about $750 in 2000 to $800 in 2001.
While Seaman has noted the importance of driving business in a tough climate even if it means a short-term dip in profit, last year turned out to be a good year for both sales and profits, he said, adding, "In a recession year, your costs come down, so that was a boost too."
Sales so far this year are good, Seaman said, not as strong as last year's close but better than last year on average.
Rooms To Go opened six stores last year — a Rooms To Go and two Kids stores in Texas, a regular-format store and a clearance center in greater Atlanta, and a clearance center in Clearwater, Fla.
This year, Seaman expects to open seven or eight stores, primarily filling in existing markets or regions. That includes its first store in Greensboro, N.C., currently under construction, stores in Atlanta and Charlotte, N.C., and four more stores in Texas for a total of 10 in that state. It's first Austin, Texas, store just opened in February.
Not all of the Texas growth this year will be in Dallas or Austin, and although he ruled out Houston, Seaman wouldn't disclose other potential markets.
In addition, the retailer is planning two new Miami stores that will open either late this year or early next year, and a store in a new market that Seaman wouldn't identify, although it will be within the company's current distribution range.
RTG also is expanding its distribution capacity (see boxed story at left). And years ago, the Seamans began investing in certain manufacturers, in part to support the chain's growing volume.
Last year, securing goods wasn't a problem, Seaman said, as many retailers either went out of business or scaled back. But this year is shaping up differently.
"We're expanding our network of suppliers because our existing suppliers are having a hard time keeping up with us," he said. Most of the new vendors are offshore case goods suppliers.
And the Seamans, who own a piece of promotional upholstery supplier Corinthian, stepup upholstery maker HM Richards and others, aren't ruling out other vendor buys. Today, slightly less than 50% of the retailer's upholstery and between 10% and 15% of its case goods come from producers in which the Seaman's own a stake.
"If something comes up that makes sense, we'd definitely invest in it," Jeff Seaman said.
In a recent profile of Rooms To Go in The New York Times, the chain was described as "the kind of rapidly expanding juggernaut that makes Wall Street bankers salivate." For that story, Seaman hinted he might take the company public as a way to reward loyal employees. But he told Furniture/Today this is not on the current agenda.
"Right now, we're not considering it," he said.
| Rooms To Go's Greensboro, N.C., store, now under construction, is one of seven to eight units the largest U.S. furniture store chain plans to open this year. |
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