Bombay looks for answers in merchandising, marketing
By Larry Thomas -- Furniture Today, September 1, 2002
Fort Worth, Texas — Merchandising and marketing decisions made last fall after the Sept. 11 terrorist attacks have come back to haunt The Bombay Company, a perennial Top 100 retailer that has been swimming in red ink for months.
Those decisions, coupled with the sluggish economy, have humbled the one-time high-flyer, which fueled its growth in the go-go '90s with splashy catalogs that drew female consumers to stores packed with imported merchandise.
But in recent months, ineffective newspaper ads and direct-mail cards were substituted for many of the catalogs, and stores were often out of stock on featured items. That led to deeper discounting as the retailer struggled to keep its same-store sales on the positive side.
The effort didn't succeed, as same-store sales for the quarter ended Aug. 3 declined 6% and the company reported a net loss of $6.7 million for the first half of its fiscal year. That was about $1 million greater than the loss it posted in the first half of fiscal 2001, which was hardly a stellar year itself.
Directors of the publicly held company recently decided the bleeding had to stop. The board forced out Carmie Mehrlander, Bombay's chairman, president and chief executive officer, and said it probably will replace her with two executives. A president and CEO will be responsible for day-to-day operations, and a chairman will focus on strategic planning.
"The board unanimously agreed that a management change was in order," board member Nigel Travis said.
in a wide-ranging and unusually candid conference call. "We unanimously agreed that the disappointing sales and earnings results were not acceptable."
Until the new executives are hired, a team of senior managers led by Brian Priddy, executive vice president of operations, is running Bombay. And Travis made it clear that Mehrlander's replacements will likely come from outside the company.
"We want strong leadership from the outside," he said. "Our primary aim is to find a retailer with the breadth of experience that Bombay needs."
He said he hopes to fill the CEO post by the mid- to late October, but didn't set any timetable to hire a chairman. That post, he said, will be filled by someone with experience with the financial community.
Until then, the existing management team is working hard to undo the mistakes of last fall, when merchandise orders for the first half of 2002 were cut significantly and some of its signature catalogs were replaced by run-of-press newspaper ads and direct-mail postcards.
Elaine Crowley, senior vice president and chief financial officer, said the company is still feeling the adverse impact of those decisions because of the long lead times for its all-import merchandise lineup.
She said about one-third more containers are "on the water" than at this same time a year ago, but acknowledged some stores still may not be fully in stock on all top-selling items until late September or October.
"We feel we're in a better in-stock position today," said Steve Farley, senior vice president of marketing. "But are we where we need to be? Not at all."
Crowley said the run-of-press newspaper ads have been scrapped, and catalog circulation has been increased by 38% for the second half of the fiscal year. In addition, Bombay is testing the effectiveness of eight-page color inserts in Sunday newspapers in Boston, Chicago and Washington, and is running full-page ads in "Oprah" magazine each month through December.
"We are very pleased with the inserts," Farley added. "The sales results are very encouraging."
He also said the retailer plans to broaden its product assortment to include more fashion-forward merchandise. Recently completed consumer research showed that Bombay's typical female consumer wants a more eclectic mix.
"Even though we have not done a good job of blocking and tackling, the loyalty to the brand is fantastic," he said. "We're still getting traffic in stores."
Crowley said furniture accounts for about 48% of the company's sales. Accessories make up another 36% and wall décor another 13%.
During the second quarter, she said, sales of occasional furniture were up 10%, but bedroom and home office furniture sales each declined 15%.
Source: The Bombay Company
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