Badcock sees retail upturn in 2008
Readies network of stores
Gary Evans -- Furniture Today, September 17, 2007
ORLANDO, Fla. — Florida-based retailer W.S. Badcock Corp. expects the housing market to begin turning around in 2008, and wants its network of stores to be ready when it happens, President Don Marks told Badcock retailers at their annual meeting here.
Marks and Michael Ray, the company’s chief financial officer, said research by Badcock’s analytical department indicates that there’s an 80% correlation between home sales and home furnishings purchases, based on figures over the past 30 years. There’s a time lag of about three months between the closing on the home and when the new owner starts to buy furnishings, Marks said.
“This market is going to come back and we have to be ready,” Marks told his audience of over 1,000 people, who filled a ballroom at the luxurious Gaylord Palms Resort and Convention Center here. Nothing could be worse, he added, than having consumers ready to buy and not having the inventory to sell them.
Based on its own research and a forecast from banking giant Wachovia on the housing market, “We think we’re going to come out of this in June or July of next year,” said Marks. “We think — but we just don’t know.”
Ray said the company expects another flat year until housing sales start to revitalize. In the meantime, he urged dealers to maximize opportunities by increasing non-product sales like warranties, minimizing out-of-stocks, controlling inventories, executing fundamentals and initiating the company’s Select program to show best sellers in a gallery-like setting.
Retailers at the meeting heard that the Badcock network’s sales in the fiscal year that ended in July were down less than 1% from the previous year’s $530 million. Sales started to trail off in September and October of last year, about three months after the real estate market cracked, Marks said.
“We started to run negative comps,” he said. “We haven’t run negative comps in years.”
But he said that despite the skittish economy, sales won’t stay down forever. Consumers have “got to come back into the marketplace. And when they do come back into the marketplace, I think our sales will rebound. And probably in two years we’ll have a good year.”
For now, he said, it’s best to refine strategies, programs and procedures after a period of “running full bore.” Dealers were also urged to take advantage of company services that include everything from insurance to name tags so they can spend their time doing things more beneficial to the business.
In a separate interview, Marks cautioned that a big spike in business due to pent-up demand could be temporary because it could take later sales out of the market — much like it does months after hurricanes, when people replenish mattresses and other essentials.
Ray said Badcock stores’ sales in Florida and Georgia, combined as a region, were down 1.8% in the latest fiscal year. The two states account for 69% of Badcock’s sales, he said. Sales in North Carolina, on the other hand, were up 5% and Alabama was even better, although he didn’t give a figure.
Badcock executives spoke in a talk show-type format with Marks manning a desk as a host like Johnny Carson, at one point donning a turban and pressing sealed envelopes to his forehead for some “Amazing Marnac” answers to hidden questions. Example: “Chinese checkers.” “Who we hired in Shanghai to do quality control.”
Both Marks and Chuck Sajeski, senior vice president of the Badcock supply chain, said that dealers had run woefully short of bedroom and dining room product at times, which cost them sales. The company is now ordering deeper in those categories.
Sajeski, in a presentation he called “Ships Gone Wild,” said the supply chain problems should be remedied by a new software program called Logility. He said the system can accomplish such tasks as detecting shortages, reordering when necessary or vetoing orders on non-performing items.
“We’re just beginning to see the fruits of it,” he said.
Sajeski, who joined Badcock a year ago, has been involved in a yearlong overhaul of Badcock’s supply chain systems, which now have to handle the complex business of importing from China.
The company has developed scorecards that measure the performance of suppliers, and has a team of “replacement buyers” who make sure inventory is available, and that it moves from the distribution center to where it’s needed. Marks said the report card isn’t meant to penalize suppliers, but to “cause them to become more efficient so we both can make money.”
Sajeski said there have been times when the company staged promotions that were doomed to fail because they were scheduled 60 days out, when product for the promotion would take 120 days to arrive from China. Now, the company schedules promotions and advertising to coordinate with incoming shipments.
 Zane Carpenter, left, Greg Arndt, both of Badcock’s corporate office. |
 Katrina and Mike Sellers, Badcock, Martinez, Ga. |
 Tara, Ken and daughter Kirstie Jackson, Badcock, Kissimmee, Fla. |
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| Zane Carpenter, left, Greg Arndt, both of Badcock’s corporate office. | Katrina and Mike Sellers, Badcock, Martinez, Ga. | Tara, Ken and daughter Kirstie Jackson, Badcock, Kissimmee, Fla. |
 Tina and Don Marks, Badcock corporate; and Bruce Wolfson, Bankers Warranty Group Chicago. |
Tina and Don Marks, Badcock corporate; and Bruce Wolfson, Bankers Warranty Group Chicago. |
Remembering Don Marks...
10/05/2009Don Marks dies at 62
10/12/2009Badcock sees retail upturn in 2008
09/16/2007Badcock's Don Marks dies of cancer
10/04/2009Badcock aims to grow
09/24/2006
