Garden Ridge to reduce the box

Discount Store News, June 21, 1999 by Debbie Howell

HOUSTON -- Garden Ridge plans to trim its assortments by one-ninth this year, as it begins testing a smaller-format store that will open this fall in an Atlanta suburb.

Chairman Armand Shapiro made that announcement to shareholders at the company's annual meeting this month and also introduced the new ceo who will lead that charge, Paul Davies, former president and ceo of Champs Sports. Shapiro is stepping down as ceo and will remain active as board chairman.

Shapiro called Davies a thoroughly experienced retail executive who will help the chain increase sales and expand beyond its current 12-state market in the Southeast.

"We're a young company. We have a lot of growth ahead of us," Shapiro said, predicting $450 million to $475 million in sales by fiscal yearend.

The 30-store chain, known as "The Home Decor Marketplace," noted an 18% increase in sales last year to $364.7 million and a 2% increase in comp store gains. Net income, however, decreased 8% to $10.5 million.

Reducing prototype store size and assortments should boost those numbers and help the chain become more efficient, Shapiro indicated. According to the company's annual report, Garden Ridge has identified 10,000 nonproductive low-demand skus that will be cut beginning in the spring, leaving the typical store with 80,000 skus.

The test store will open this fall in Douglasville, Ga., in an existing 110,000-sq.-ft. building that has about 96,000 sq. ft. of selling space. That's a reduction from the current new store average of 106,000 sq. ft. of selling space, which was cut back from 125,000 sq. ft. two years ago.

Shapiro said merchandise cutbacks will be in furniture, party supplies, decorative accents, housewares and floral. Also, at future stores the cafe will be reduced roughly to half its size with a smaller lounge area and vending machines rather than full food service.

Highlighting last year's accomplishments, cfo Jane Arbuthnot said Garden Ridge opened six new stores last year; three were in the new markets of Lexington, Ky., Columbus, Ohio and Nashville, Tenn.

Another six are on tap for this calendar year, three of which have already opened in Greensboro, N.C., Cincinnati and San Antonio. The Kansas City market and Austin, Texas, will each get a new store this summer, while the sixth and final opening for the year will be the smaller-format prototype in Georgia.

Shapiro also talked about the typical Garden Ridge customer, which he said is quite unique in retail. "They really have an emotional attachment with us," he said. Among their typical characteristics:

* 94% are female; the typical shopper ranges in age from 18 to 75; and average household income is $50,000 to $75,000.

* A customer spends a minimum of 45 minutes in the store and a median of two hours per visit.

* 97% of customers browse, and 92% make a purchase.

* Customers consider shopping at Garden Ridge as entertainment; they like the stores' variety and selection, and they typically make purchases from six out of 10 department categories in a visit. The 10 categories are floral, housewares, seasonal, pictures and frames, party supplies, pottery, crafts, candles, home accents and baskets.

Mark Pruitt, director of sales development, said the artificial floral department is the largest in both store space and sales--it accounts for 20% of chain-wide sales. He estimated the second strongest sales department is seasonal, followed by artwork and frames.

The store experience is boosted with crafting demonstrations, finished craft product samples and classes.

"You just don't know what you re going to find when you turn a corner," Pruitt said. "We constantly have to have new things."