Big Lots to roll out furniture in West
By Clint Engel -- Furniture Today, May 23, 2004
COLUMBUS, Ohio — Big Lots will roll out furniture departments for the first time to eight Western states this year as part of a continuing expansion of one of its most productive categories.
The departments, focused on ready-to-assemble furniture, will be added to about 180 stores in California, Nevada, Utah, Arizona, Colorado, Oregon, Washington and Idaho beginning this summer. Along the West Coast, the new departments will stretch from San Diego to Seattle.
These are the first furniture departments in the West for the retailer outside of a test in Los Angeles that was recently expanded to about 28 stores, said Kent Larsson, senior vice president of marketing.
The departments will start small at about 700 square feet, taking the place of a weak hanging apparel category that Big Lots is dropping from its stores.
The RTA furniture mix will include occasional tables, microwave carts, bookcases, desks and other case goods.
Beginning next year, some of the departments could morph into full-fledged furniture departments of 2,000 to 5,000 square feet, with promotional upholstery and other categories. But plans for that move, which requires expensive reconfiguration of store floors, are tentative, said Al Bell, vice chairman and chief administrative officer of the closeout specialist.
A total of about 400 Big Lots stores will make room for the small furniture areas this year. Those additions will give the retailer furniture departments in more than 90% of its expected 1,500 stores by around Thanksgiving time, Bell said. That's up from the 70%, or roughly 1,000 stores, that carry furniture today.
In 2003, furniture and bedding accounted for about 12%, or $500 million of Big Lots' total sales, up nearly 14% from the $440 million the year before. That $440 million led Big Lots to make Furniture/Today's listing of Top 25 U.S. furniture retailers for the first time last year at No. 24.
"The furniture division has grown very rapidly and this will be another big growth year," Bell said, declining to project how much the division is expected to do for this fiscal year ending in January 2005.
Bell did hint of the category's potential, noting that while furniture accounts for about 12% of Big Lots' total sales, that figure is closer to 20% for stores with full furniture departments.
Bell said results for the furniture departments are better than the company average in key performance categories, including sales per square foot, gross margin and stock turns.
"We're excited about expanding our furniture business because we believe we can be very important to the consumer," Bell said. "It is clearly a superior category for us compared to fashion hanging apparel."
Big Lots will open a leased 460,000-square-foot distribution center in Redlands, Calif., in the Los Angeles area to facilitate its Western furniture rollout. Its other stores with furniture are served by an 810,000-square-foot facility in Columbus, Ohio.
During its fiscal first quarter ended May 1, the retailer added 67 furniture departments — 19 in new stores and 48 in existing locations, either through expansion or through elimination of hanging apparel. It also added space to 70 existing furniture departments, Bell said.
Big Lots has 45 freestanding furniture stores, but the number hasn't been growing, as the retailer prefers to expand through in-store departments that benefit from Big Lots' main-store traffic.
Bell outlined the retailer's continuing plans for furniture during a first-quarter conference call with the investment community this month. Big Lots reported a decrease in net income for the period to $6.7 million from $10.2 million for the same period a year ago. Sales rose 7.5% to $1.02 billion, and same stores were up 2.7%.
Bell said that the company also is excited about its improving home décor business, which includes decorative accessories. About three months ago, Big Lots hired Chrystal Weary to lead that segment as vice president and merchandise manager, "and we've seen nice improvements in sales in that area," he said.
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