C-SUITE

CEO Corner: Q&A with At Home’s Lee Bird

BY Marianne Wilson

Someone forgot to tell At Home that big-box stores are passé.

Since Lee Bird took the reins as chief executive at the beginning of 2013, the Plano, Texas-based home decor superstore retailer has been on a steep upward trajectory — and it shows no signs of losing momentum anytime soon.

At Home has delivered revenue growth at a 20% compounded annual rate over the past four years. In its most recent quarter, the chain reported a 22% increase in sales and a 5.8% increase in same-store sales — its 13th consecutive quarter of positive same-store sales growth.

Also, at a time when many retailers are downsizing their formats and/or closing stores, At Home is doing neither. The company has opened 80 new stores in just over four years. It plans to open 25 net new stores this year.

Chain Store Age recently spoke with Bird, who added title of chairman in April. He was in New York City to commemorate the company's one-year anniversary of its initial public offering by ringing the closing bell at the New York Stock Exchange.

CSA: What are you most proud of in At Home's first year as a public company?

Bird: That we continue to grow at the rate we were hoping we would as a public company, and that our business continues to grow across new and existing markets. Recently, for our fourth quarter in the public arena, we reported our 12th consecutive quarter of over 20% net sales growth.

CSA: How do you explain At Home's success?

Bird: The home furnishings market is a $180 billion market in annual revenue, with a growth rate of about 3% a year. And it's highly fragmented, which all bodes well for us.

We are winning as a result of the breadth and depth of our offering — we carry all the styles that people want at the lowest prices and that’s resonating with consumers.

CSA: How do you do all this?

Bird: We have a very low-cost structure and an efficient business model that allows us to offer low prices. And our secret sauce is our people.

CSA: What do you mean?

Bird: We firmly believe if your employees are happy, customers will feel it, so taking care of our team members is an important focus for us. And to that end, all of our store associates have bonuses and paths for career growth.

I believe in the golden rule: Treat people the way you want to be treated. My job is no more important than the folks who unload our trucks.

We try to make sure that all our employees feel rewarded and recognized. For example, everyone who works in a store can make a bonus if the store makes its plan. So they are incentivized.

I really believe retail is a place for great career growth. And with At Home's growth, our employees have great career opportunities with us.

CSA: At Home does not have an e-commerce site. Is that something you are thinking about?

Bird: It all comes back to the customers. We keep asking her — I say her because 85% of our customers are female — what's important (in terms of shopping). Our research shows that the most important thing she looks for when shopping for home decor is the lowest price, largest assortment, and to be able to see, touch and feel the merchandise — and to buy immediately. And we can do all that in our stores.

Customers vote with their wallets. We've had 13 consecutive quarters of same-store sales growth, and our new stores make money the first year out. That tells us the market is fine with our being a store retailer.

CSA: How much revenue are your new stores generating?

Bird: Our new stores in the first year used to do about $4 million in sales. But now they do about $6 million as we have gotten better at opening new stores.

CSA: What is At Home's real estate strategy?

Bird: We really do well anywhere. We look for nice retail locations where customers are use to shopping. We can do standalone stores, and we also love being in power centers. We have also taken anchor positions, which we are now testing in six malls.

We have stores in small and big markets and they do equally well.

CSA: Are you entering new markets?

Bird: Yes. Rhode Island, Massachusetts and Las Vegas are among the new markets we've entered. And we are also opening stores in existing markets, such as Pittsburgh.

CSA: At Home currently has 136 stores. What's the potential for expansion?

Bird: We estimate the market can support at least 600 stores — and we know where they should be. We have mapped out every retail trade area we want to be in. We use an analytical model from Buxton — we are of the third version. When a location becomes available we are able to make a decision quickly on whether that location would work for us or not.

We really feel that real estate is one of our core competences. Our real estate team has opened over 80 stores in the past four years. They've done a great job.

CSA: What about international expansion?

Bird: We are focused on the U.S. for now.

CSA: Tell us about At Home Stores.

Bird: Our stores average from 80,000 to 150,000 sq. ft. All offer the same assortment of 50,000 items, although the depth of inventory might vary depending on the store size. We bring in at least 20,000 new items every year, or about 400 new items every single week.

CSA: Have you entered any new merchandise categories?

Bird: This past year, we expanded our patio furniture assortment and that's been a great growth category for us. Decorative garden is another growth category.

And our seasonal business is strong and continues to grow. We carry over 100 artificial Christmas trees in multiple colors and styles, and have 12 different themes of Christmas ornaments. We really do win on assortment.

CSA: What about New York — is At Home thinking of coming our way?

Bird: Yes, we are looking at how to make it work. The rents are higher out here. But we expect that in the next two years, we would be in the New York metro area.

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ECOMMERCE

Beleaguered brand making comeback

BY Deena M. Amato-McCoy

American Apparel’s website has been hinting about a summer relaunch for some time — now its parent company is making good on its promise.

Gildan Activewear, which purchased the specialty retailer at a bankruptcy auction earlier this year, is preparing to relaunch the brand’s e-commerce website, according to Bloomberg. However, this is only the first project on its list of retail plans.

The new website will open within the next two weeks. The site will feature a wide range of products — including pieces that American Apparel’s historically sold, such as jeans, the report said.

Gildan purchased the brand and assets for $88 million in January, but not American Apparel’s stores or factories. At the time, it also separately purchased inventory from American Apparel to ensure a seamless supply of goods to its printwear channel while Gildan integrated the brand within its printwear business.

Since then, Gildan has rebuilt the American Apparel brand’s inventory and ramped up shipments to wholesalers. The company also hired top talent from American Apparel’s old advertising and marketing team to handle its branding, according to Racked.

Gildan is already boosting overall revenue by selling blank American Apparel basics to wholesalers, who then customize the items. That segment of the screen-printing business is the most lucrative, and Gildan predicts American Apparel will contribute to higher margins, Bloomberg reported.

"This will hopefully be one of the best acquisitions the company has ever made, in terms of return on investment, so we’re very excited about it," Gildan CEO Glenn Chamandy told Bloomberg.

Looking ahead, Chamandy will continue focusing on distribution and direct-to-consumer operations — especially on a global level. “We’re going to expand internationally. We think that this could be quite big as we go forward,” he said in the report.

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News

Q&A: Office Depot merchandising VP discusses back-to-school

BY Deena M. Amato-McCoy

The back-to-school shopping season is in full swing, and Office Depot is ready.

With back-to-school spending expected to reach $83.6 billion, an increase of more than 10% over last year’s $75.8 billion, according to the National Retail Federation, Office Depot is eager to grab its portion of this back-to-school wallet share. To achieve this goal, the office supplies retailer is diversifying assortments and stepping up fulfillment efforts.

Office Depot’s senior VP of merchandising Petter Knutrud shared insight into how the company is preparing for last-minute shoppers with Chain Store Age.

CSA: How are shoppers’ school supply needs changing?

PK: Students are increasingly looking for high performance laptops that can function for schoolwork by day, and handle highly-designed video games by night. That said, gaming and Windows “Ink” technology are all trends this back-to-school season.

Petter Knutrud

Office Depot is stocking more computers with graphics processing units (GPUs) — or a dedicated graphics card — which address this need and the broader trend of gaming. Windows “Ink” technology lets students ‘write’ notes on touchscreen laptops with an active pen stylus that works with a broader range of touch-enabled laptops.

Even with the latest technology updates, students still heavily rely on traditional writing, so we’ve also stocked up on our assortment of fun, colorful notebooks and pens and pencils. To help students express their individuality, we also have an assortment of playful accessories and merchandise that lets students personalize notebooks, pencil pouches and backpacks. These range from furry, clip-on pompoms and fun, decorative stickers to keychains using text lingo such as “squad” and “#bff.”

Office Depot also has two exclusive fashion collections, Gone Global and Modern Minimal. Catering to Gen Z, these collections highlight the shade of Millennial Pink, which is mixed in with palm fronds and soft, geometric patterns on notebooks, binders and folders.

CSA: What role will online shopping play this back-to-school season?

PK: Shopping from our e-commerce platforms is expected to grow. To meet this demand, Office Depot and our OfficeMax retail locations now offer shoppers the option to buy online, and pick-up in-store (BOPIS) within one hour of purchase. We expect this service to help the families who prefer to shop online from the comfort of their home, and then make an easy stop at our retail stores to pick-up their supplies.

CSA: How important is BOPIS to this year’s back-to-school season?

PK: BOPIS is a key component of the back-to-school season, and it makes shopping at Office Depot and OfficeMax easier than ever. Now, customers can choose the method of shopping that is easiest for their hectic back-to-school schedules – whether that is online, in-store, or a combination of both.

CSA: What other services you plan to offer this back-to-school season to get merchandise into shoppers’ hands faster?

PK: Our micro-site makes it simple for customers to shop online. Shoppers can link to officedepot.com/school from any device or location. Once their order is complete, they can choose to have supplies delivered straight to their door, or they can utilize in-store pick-up.

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