Odd Job management relishes fresh start - Odd Job Stores - Brief Article

DSN Retailing Today, Sept 23, 2002 by Debbie Howell

SOUTH PLAINFIELD, N.J.--More changes took place this past year for regional closeout retailer Odd Job Stores than most chains might experience in a decade. Not only did the World Trade Center attacks impact the company's core business in Manhattan, but the retailer changed its corporate name, exited peripheral businesses, hired a new ceo, moved its headquarters and brought in new buyers as part of a strategy to focus solely on the retail business.

As a result of these changes, revenue has yet to rebound from the upheaval. Sales for the first half of the year are down 2.7%, while losses from continuing operations grew to $3.3 million. But the company has begun adjusting and recently implemented programs to energize sales.

Expanded advertising efforts are reaching new customers, while new merchandise categories, such as refurbished computers, are generating excitement. And the chain's two largest-volume stores, located in Manhattan, are being remodeled to improve the shopping experience.

"This is a year of transition. We're basically starting a new company with a lot of new people," explained executive vp and cfo Ed Cornell.

The company, formerly known as Mazel Stores, got its start in 1975 as a wholesaler of closeout merchandise. In 1996, the company purchased its first 12 retail stores, which have since grown to 77 units in the Northeast and Midwest. In 1997, Mazel formed a joint venture with Value City, operating closeout sections in its partner's stores.

Although the wholesale business and joint venture were profitable, last year, Odd Jobs decided to exit those segments and focus entirely on closeout retailing, its largest business in revenue. The joint venture was terminated, while the wholesale segment sold in February.

"We took the two profit-generating businesses and got rid of them and kept the higher-volume business, but the one without profits," Cornell said.

While some might question the wisdom of that move, Odd Job Stores' retail business was close to making a profit last year--at least, that is, before the terrorist attacks occurred. One Odd Jobs store located a block from the World Trade Center shut down permanently. while eight others in Manhattan are still off in traffic count by 8% to 12%. With those stores generating 20% of the retailer's annual sales volume, the impact was significant.

Even though customer traffic should rebound, those stores were sorely in need of a boost. Thus, the retailer is remodeling its two stores located on 48th and 32nd streets and implemented new advertising and merchandising tests.

"We are constantly testing and trying to find new initiatives that will help drive more traffic in the stores," ceo Peter Hayes told investors during an Aug. 28 conference call.

Odd Jobs has tested new advertising this year, such as an insert in a New Jersey newspaper and an ad in the Wall Street Journal that expanded the typical circular distribution. In addition, the company has featured high-impact values and items, such as $39.99 VCRs and video games starting at $9.99, and added new signage to stores to direct customers to its hottest deals.

One new category the retailer tested in the second quarter was such a hit that it will be expanded--refurbished computers. Odd Jobs completely sold out of bundled packages featuring a computer, monitor, speakers and keyboard for $169 and accepted rain checks, 98% of which were redeemed. A similar test of refurbished laptops marketed for $299 followed, which also sold out.

In addition, the troubles of other retailers benefit closeout chains like Odd Lots in that overstocks are more readily available. Hayes told investors that during a recent buying trip to Asia, he was able to make several good buys of merchandise that had been earmarked for Ames, which is now in the process of liquidating.

"We do have an advantage of being able to buy goods at a cheaper price when times are bad," Cornell explained.

The ability to get good closeout buys is related to experience and timing. With the majority of the buying team newly hired this year, the learning curve has been a factor in its ability to grab good deals, which drive sales. Those changes went hand in hand with the company's name change to Odd Job Stores in June and the movement of all corporate divisions from Columbus and Cleveland, Ohio, to South Plainfield, N.J., earlier this year.

The remaining 12 stores that operate under the name Mazel will be changed to Odd Job or Odd Job Trading over the next several years, Cornell said.

As for the outlook at Odd Jobs, Hayes told investors he anticipated sales growth in the low single digits in the second half of the year, up from the second quarter's disappointing 3.1% decline in comparable store sales. No new stores are on tap this year, at least not until the company gets stabilized.

In the closeout niche, Odd Jobs is one of a handful of regional chains with sales ranging from $150 million to $258 million. Competitors of similar size are National Wholesale Liquidators, Ocean State Jobbers and Building #19. Dominating the segment is near-national chain Big Lots, which earned $3.4 billion last year compared with $258 million for Odd Jobs.