City Furniture to invest $17.5 million in expansion
Clint Engel -- Furniture Today, November 3, 2011
A rendering shows City Furniture’s planned 56,000-square-foot store Cutler Bay, Fla., store is part of a $17.5 million, multi-store expansion the Top 100 company is planning in South Florida.
FORT LAUDERDALE, Fla. - City Furniture is embarking on a $17.5 million, multi-store expansion and renovation that will net the Top 100 company two more Ashley Furniture HomeStores and nearly 100,000 square feet of additional space.
The company says it will boost the presence of both its City and Ashley brands in its South Florida markets.
City is spending $3.5 million on an expansion and renovation of its Dadeland City showroom in the Miami area, adding a second floor and doubling the size to about 30,000 square feet. It closed the location earlier this month, moving into a temporary showroom until an expected spring completion of the permanent showroom.
City President Keith Koenig said the company also is looking to open an Ashley HomeStore in the Dadeland/ Pinecrest area, which he characterized as very expensive and one of the most difficult areas in South Florida to find good store prospects.
In Cutler Bay, Fla., City will build a new 56,000-squarefoot showroom on property adjacent to its existing store. Work on this $7 million project begins in December and is expected to be completed by August. Through contractor Stiles Construction, the retailer will then renovate its existing store into a HomeStore, connecting the two showrooms to create a 90,000-square-foot superstore.
Along a furniture row in the Fort Lauderdale area, City will demolish a former Modernage furniture store in Oakland Park, making room for a $3 million, 25,000- square-foot HomeStore. Work is expected to begin in the spring and be completed by the end of 2012.
And in West Palm Beach, the company will build a $4 million HomeStore next to its City location on Palm Beach Lakes Boulevard, connecting them for another superstore. Work there is expected to begin in the second quarter of 2012 and finish up in early 2013, at which time City will close an existing leased HomeStore nearby.
All stores will be environmentally friendly, "next generation" formats following the design the company rolled out this year at the 94,000- square-foot City/HomeStore complex in Boca Raton, Fla.
While business conditions continue to be challenging, they are improving, Koenig said.
"We've been acquiring properties for this expansion for the last few years, and while it may seem we're going against the economic tide, the timing is right," he said.
City's sales will be up 5% to 7% this year, Koenig said, adding that the retailer has extra cash and confidence in the future.
"If would be foolish for us to wait any longer," he said. "Even if the market double dips or slows down, these projects will still add incremental sales and profits to our business.
"Also it's very important for our brands to have consistency across the entire enterprise, and when you see these new stores, they will be gorgeous."
Asked if the company had any difficulty in financing the projects, Koenig said no, because bankers realized they would be high-return investments. In Dadeland, for instance, Koenig said City knows it will be able to more than double its business out of the store with the expansion. He's also sure business in Cutler Bay will double with the City/Ashley superstores.
"And the couple of extra Ashley stores (we're adding) are in great neighborhoods that will do wonderful business, so those are high-return projects also."
Also, Koenig said, City has equity in all the properties so the debt load is light and the increased sale volume will more than cover the incremental increase in overhead.
All the new stores will be designed to achieve Leadership in Energy and Environmental Design certification from the U.S. Green Building Council, with features such as natural wood and stone finishes, LED lighting and the use of drip irrigation and dual-flush toilets and low-flow urinals, among other things.
City is No. 32 on Furniture/Today's Top 100 with estimated 2010 sales of $216.7 million at 24 stores. It now has 23 stores - including nine HomeStores - and will have 25 showrooms when these latest projects are completed.
Koenig said he's looking for a 5% to 10% sales increase in 2012 and conservatively estimates another 5% to 10% increase in 2013 after all the projects are completed.
By then, "I'm hoping we'll start to see more normalcy in the housing market," he said. "Our whole industry has gotten slammed with the housing crisis. Once the foreclosure issues are close to an end, I believe we'll see a more normal business environment and a more normal housing economy."
Key suppliers to the chain in addition to Ashley include City's own Kevin Charles upholstery, Cheers/ManWah, HTL, Legacy Classic, Universal, SLF, Pulaski, Casana, Idea Italia, Markor on a direct sourcing basis, and in bedding Serta, Sealy, Simmons, King Koil, Tempur-Pedic and private label Kevin Charles memory foam bedding through Chinese producer Zinus.
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City Furniture to invest $17.5 million in expansion
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