Garden Ridge tests new services while finalizing private ownership

Discount Store News, Jan 24, 2000 by Debbie Howell

HOUSTON -- Garden Ridge, now in the process of becoming a privately held company, is finalizing contracts with several companies to experiment with new services in its stores this year, ranging from an outdoor garden center to package shipping.

Most of the services will be in test phase at a handful of stores for about six months before the retailer decides to roll them out nationally.

"We're looking at these activities to enhance our customers' experience and it will also add to our profitability," said Gary Ramsey, executive vp of stores for the 33-store home-decor chain.

Ramsey declined to name the companies involved because none of the contracts had been finalized at press time. He did tell DSN the tests will include a garden center, florist area, cellular phone service sales, mailing center, CD purchase kiosk, vending machine services, ATMs and a deal with a national gourmet food vendor.

For about two months, Garden Ridge has been testing an outdoor garden shop operated by a nursery at its store in Memphis, Tenn. Ramsey said a 10,000-sq.-ft. outdoor space is dedicated to the garden shop, which sells plants, flowers and related gardening products. Garden Ridge gets a percentage of the shop's profits in return for the space.

Ramsey said having a garden center operated by a third party (a regional nursery operator adept at plant care) may be best. Depending on the success of the Memphis test, more garden centers may be opened in warm-weather states this year.

Also in test phase now at two Garden Ridge stores in Austin, Texas, is a cellular phone service booth. The rest of the new services are scheduled to kick off this month or later.

"We plan to do other things as well, but it's still in the planning stage, such as a service ... like upholstery cleaning and drapery cleaning and custom decorating services for the home," Ramsey added.

So far, Ramsey said, he's been pleased with the short tests of the garden center and cell phone outlets.

Beyond these more permanent licensed businesses, Ramsey said each holiday season Garden Ridge will add other contracted services.

Garden Ridge also has taken other steps to increase sales and profitability, including its recent hiring of Cal Eller as executive vp of merchandising.

Garden Ridge, which is in the process of completing a tender offer by a group of investors to go private, reported an 18% increase in sales last year to $364.7 million and a 2% rise in comparable store sales. Through this year's third quarter ended Oct. 31, 1999, sales were up 25% to $281.3 million although comps are down 1%.

In the meantime, an investor group's tender offer to acquire the outstanding shares of Garden Ridge garnered enough shares last month to enable the group to take the chain private.

GR Acquisition Corp. received 10.2 million shares at a price of $11.50 per share, increasing its ownership of Garden Ridge from 31% to 93.6%. Enough shares were tendered that the deal will enable GR Acquisition to buy out any remaining shares for the same price.