Store closings, tough times dominate news in '06
By Clint Engel -- Furniture Today, May 27, 2007
High Point — While the Top 100 actually added a few more stores than last year's Top 100, it's the store closings and tough times in 2006 and on into this year that have dominated the news.
Last year's bankruptcy filing of Atlanta-based Storehouse, part of the Rowe Cos., resulted in the closing of 69 stores by the end of November. Also falling off the Top 100 list and out of business were Atlanta-based Rhodes and New Orleans-based Kirschman's, both partly gobbled up by No. 2 Rooms To Go, though some stores fell away for good. Minneapolis-based Gabberts also fell off the Top 100 following the closing of its last two Texas stores.
Pier 1, Bombay struggle
No. 7 Pier 1 Imports and No. 23 The Bombay Company continued to struggle, posting losses and closing a net 86 stores between them. Both have also indicated they are getting out of the youth furniture store business with plans to close Pier 1 Kids and BombayKIDS units.
There's more bad news coming. No. 54 Rockaway Bedding filed for Chapter 11 protection in April and is looking to scale back to 50 to 70 stores from the 185 units it operated at year's end. Atlanta-based Leath Furniture is closing down its Modernage stores in Florida and they have confirmed they are closing down the entire chain.
Julius M. Feinblum Real Estate is marketing the leases and owned properties for the 18 remaining Leath stores as well as one that has already closed.
FBI scales back
And some of the dedicated store networks have begun to show signs of weakness, too, perhaps most noticeably the Furniture Brands stores. In addition to tabling the big plans it once had for Broyhill stores, the furniture conglomerate recently has seen a number of its dealers close or hand back dedicated stores, including No. 34 Hendricks Furniture Group, which sold back three North Carolina Drexel Heritage stores to Furniture Brands and converted its two other Drexel stores to its Boyles full-line format.
In a conference call with the investment community, Furniture Brands noted that in the first quarter of this year, it acquired 18 stores from three dealers, but Chairman and CEO Mickey Holliman called the timing an anomaly and said he doesn't expect that pace to continue.
In the same call, Holliman called Furniture Brands "a company that needs to redefine our strategy." A strategic planning project is under way and the outcome is expected to be announced in a few months.
It's not been getting any easier for the smaller players either, said Jerry Epperson, industry analyst and managing director of Mann, Armistead & Epperson.
"One of our continuing problems is that the real estate hasn't changed," he said. "So many of the independent furniture stores are in the same place (they operated in for years), because they own the stores. They're paying themselves rent and don't want to close and move even though the market has moved."
Epperson said that situation relates mostly to the smaller retail players but also has been an issue with Top 100 and former Top 100 companies such as Rhodes, Levitz and Breuners Home Furnishing Corp.
A look back at the Top 100 from 1995 shows that the industry has lost some 25 companies from that list, something Epperson called a normal progression over a period of 10 years or so.
"I think that will always, be true," he said, but added, "If business doesn't get better right now, we're going to lose more than that."
Despite these strains, the industry has not been devoid of good news. Indeed, this year's Top 100 opened a net 297 stores, up from the net 222 units opened by last year's Top 100.
Here are just some of the expansion highlights of last year and the years to come:
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No. 3 Ikea — The Sweden-based lifestyle giant continued its aggressive U.S. expansion with new stores opened in Bolingbrook, Ill., Stoughton, Mass., West Sacramento, Calif., and Canton Mich., in its past fiscal year. This fiscal year (which started in September) Ikea already has opened a store in Round Rock, Texas, and Draper, Utah, and has another planned for Portland, Ore. Charlotte, N.C., Sunrise, Orlando and Tampa, Fla., Somerville, Mass., West Chester, Ohio and Brooklyn, N.Y., also are set for the later dates.
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Ashley Furniture HomeStores — The new No. 1 opened a net 77 stores last year for a total of 296 units at year's end. Early this year, Ashley celebrated the opening of its 300th HomeStore in Daytona Beach, Fla., through licensee Howard Fineman, and shows no signs of slowing down.
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No. 27 American Furniture Warehouse — Owner and President Jake Jabs opened a new concept — a 533,000-square-foot warehouse showroom in Firestone, Colo. — that combined a regular 88,000-square-foot showroom with a large warehouse shopping, take-with environment. A similar 380,000-square-foot complex is expected to open in Colorado Springs, Colo., later this year.
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No. 33 Finger Furniture — The Houston-based retailer, quiet in recent years, made a splash in October, announcing plans to open several 100,000-square-foot full-line stores in the market by 2009 and up to a dozen Ashley Furniture HomeStores over the next few years. It will become the latest in a growing line of major players to join the HomeStores fray.
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No. 28 The Sleep Train — The Citrus Heights, Calif.-based retailer added more stores (a net 79 units) than any other Top 100 company last year, thanks in part to the acquisition of former Top 100 company Sleep Country USA and the opening of 27 other stores. Thirty-five more stores are on tap this year.
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Rooms To Go — The retailer may have dropped a notch to No. 2, but its expansion plans are as aggressive as ever. Last year, RTG opened a net 14 stores and entered Mississippi, Louisiana and Alabama through the acquisition of Rhodes and Kirschman's stores. It is expanding its already massive distribution network and next year plans to enter Houston or another unnamed major metro area.
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No. 8 American Signature — The Columbus, Ohio-based retailer had a big year with sales up more than 15% to nearly $1.07 billion and store count growing by 15 units to 126 stores. The retailer, which operates American Signature Furniture and Value City Furniture stores, introduced a third format, Roomstoday, that's designed to be a fashion-forward step beyond the price-oriented Value City and with the flexibility to move up and down a broader price spectrum.
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No. 59 American Home — The Albuquerque, N.M.-based retailer expanded its Arizona presence with two American Home stores in Mesa and Sahuarita.
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No. 11 Raymour & Flanigan — The chain continued to plug away at Northeastern markets with the opening of a net 11 stores. This year, it plans to open at least four more in addition to its May acquisition of Seekonk, Mass.-based Alperts, which gave the company entry into Rhode Island.
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No. 21 Mattress Firm — Acquired by private equity firm J.W. Childs and senior management earlier this year, the Houston-based sleep chain has been on an expansion and acquisition tear. It added 44 net new stores last year, including 23 through its purchase of Chandler, Ariz.-based Metropolitan Mattress. Already this year, it has acquired the 15-store Las Vegas-based Bedtime Mattress. The company had signed a letter of intent to buy No. 63 Mattress Discounters, but recently withdrew it saying the two couldn't come to terms.
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No. 32 Robb & Stucky — In addition to expanding its main Scottsdale, Ariz., store, the upscale, Fort Myers, Fla.-based retailer opened full-line and Patio stores in Orlando and Palm Beach Gardens, Fla., a Patio store in Chandler, Ariz., and outlets in Naples and Port Charlotte, Fla. This year, it has opened a second smaller full-line Dallas-area store and has plans for a third in the market as well as a Patio store in Boca Raton, Fla., and its first 100,000-square-foot store in Las Vegas.
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No. 75 FAMSA — The Monterrey Mexico-based retailer, with U.S. stores in California, Texas and Nevada, shot into the Top 100 this year through a steady diet of expansion and acquisitions. Already this year, it has acquired the 12-store La Canasta of Corona Calif., with stores in Southern California and Houston. It plans to open eight more this year and then another 10 or so a year, targeting existing and new markets with large Hispanic populations — including Phoenix, where it plans to open soon.
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Jun 11, 2008 -
Independents overcoming obstacles
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