Bob's Discount opening first New Jersey store
By Clint Engel -- Furniture Today, October 3, 2005
Manchester, Conn. — Bob's Discount Furniture will open its first store outside New England next month and has signed a sale-leaseback deal on its distribution center that's fueling a major expansion of the facility.
The Top 100 company will open a showroom of about 42,000 square feet in Totawa, N.J. — its first in the state — on Oct. 6.
The store is a former Huffman Koos unit, said Julius Feinblum, owner of Julius M. Feinblum Real Estate, which brokered the deal and is helping Bob's with its expansion strategy in the New Jersey market.
Bob's will follow early next year with a second New Jersey store in Paramus that will be about 35,000 square feet, closer to the retailer's prototype size, said Bob Kaufman, president.
Separately, Bob's founders signed a sale-leaseback deal on its 297,000-square-foot distribution center in Norwich, Conn., with W.P Carey & Co. W.P Carey is paying $10.3 million, which pays off the original mortgage, and also is providing $12.3 million for a 272,000-square-foot, high-cubed expansion that is expected to be completed by March, Kaufman said.
The deal also sets the stage for additional financing of a final 245,000-square-foot expansion. The timing will depend on Bob's growth, but Kaufman said it could be within the next two years.
The full expansion would push the facility past 800,000 square feet.
He said the sale-leaseback and related financing was the best way to raise the more than $20 million in capital the project requires.
"We looked at a number of alternatives, and clearly this one was the most attractive," he said. "It allows us to concentrate on our core business and lets (W.P. Carey) do what they do best."
Early this year, equity firm Saunders, Karp & Megrue acquired a 70% stake in Bob's, saying it would bring the capital and expertise needed to grow the Top 100 chain beyond New England.
Since then, Saunders has been acquired itself, by funds controlled by Apax Partners, a larger private equity firm operating in the United States, Europe and Israel.
Kaufman said he was impressed with Apax and added, "I think we have the right partner to take us to the next level."
Bob's is ranked No. 32 on Furniture/Today's survey of Top 100 U.S. Furniture stores with 2004 furniture, bedding and accessories sales of $258.1 million at 19 stores, up nearly 26% from the year before.
The expansion of the Norwich distribution center is designed to support the company's growth, Kaufman said.
In addition, the first expansion will enable the retailer to move out of three off-site warehouses it has had to take on.
When the first phase is completed, the facility should be able to support some $350 million to $400 million in sales, Kaufman estimated.
That capacity would be pushed past $500 million with the final phase.
