Kinder-Care plans retail expansion with Bargain Town, apparel chain

Discount Store News, July 18, 1988 by Mary Ellen Kelly

Kinder-Care Plans Retail Expansion With Bargain Town, Apparel Chain

BIRMINGHAM, Ala.--Bargain Town USA, operator of 58 dollar stores and six Bargain Town R.P. (Right Place/Right Price) family apparel units, this month launched a one-price women's apparel chain called, "$imply 6."

Besides the new spin-off, Bargain Town's parent, Kinder-Care Inc., based in Montgomery, Ala., announced plans to expand Bargain Town USA into a $300 million retailer within five years. Kinder-Care acquired the then $48 million Bargain Town USA nine months ago.

Kinder-Care Inc. is believed to have the resources to carry out its aggressive retail expansion plans for the dollar store chain. Kinder-Care operates the nation's largest chain of children's day care centers (about 1,200 locations), extensive insurance and financial services, in addition to photographic studios.

The corporation reported revenues of over $506 million for the year ended Dec. 31, 1987, and net earnings of more than $26 million, despite an $18 million loss charged against fourth quarter pre-tax earnings due to a decline in value of a portion of its investment portfolio after the October stock market crash.

Both the new $imply 6 and the Bargain Town stores will be financed out of Kinder-Care's Specialty Retail Group headed by Jay Kline, president and chief executive.

Kinder-Care views diversification into specialty retailing as a means of increasing profitability. In February, its Specialty Retail Group bought the 200-unit Shoe City retail chain for $30.4 million.

Kline told DSN that additional acquisitions and spin-off retail formats are among the proposed growth strategies for the company. "Kinder-Care did not go into this field [specialty retailing] to be a small player," he said. "Bargain Town is a great vehicle for spin-offs and well-positioned for the specialty field."

While he declined to describe what other retail formats the Specialty Retail Group would develop, Kline said sales projections illustrate the magnitude of the firm's hopes for the division. Bargain Town sales were $45 million in 1987. Kline projected sales of $60 million in 1988 and $300 million by 1992.

The new $imply 6 chain, which was scheduled to open the doors to its first unit in Birmingham at presstime, will price all merchandise--women's apparel, but no accessories--at $6.

Twenty-five stores are slated to open by September in Alabama, Georgia, Florida, Mississippi and Tennessee, according to Rodney Barstein, Bargain Town president and member of the chain's founding family. Florida represents a new market for Bargain Town USA.

"We plan to open between 50 and 70 $imply 6 stores each year; 25 before Easter, 25 in time for back-to-school, and 20 others as locations become available throughout the year," Barstein said. Kline said that 30 store openings are scheduled for this year, 40 slated for next year and the goal is to open 70 stores per year after 1989.

In addition to $imply 6, Bargain Town USA will quicken its growth pace to four or five Bargain Town store openings per year, a significant increase over the chain's previous 31-year growth history.

The three retail formats will remain within the borders of the five-state trading area until market limitations force further growth. "We are going to stay as geographically compact as we can without transferring business from one store to another, then branch out until we are completely national," Kline said.

The three store formats that comprise the Bargain Town USA group--Bargain Town, Bargain Town R.P. and $imply 6--each emphasize apparel but they target a slightly different market.

All 58 Bargain Town stores are 12,000 square feet to 14,000 square feet and apparel comprises about 70 percent of sales. All clothing--men's, women's and children's--is sold at roughly 40 percent margin. Kline estimated that 20 percent of the apparel is brand name irregular merchandise. The stores are located in relatively low-rent markets and generate about $90 per square foot.

The company's six Bargain Town R.P. stores, sell basically the same apparel as Bargain Town R.P. stores, sell basically the same apparel as Bargain Town units, but no hard lines merchandise. Store size is about 6,000 square feet. The format allows the chain to avoid hard lines price competition in selected markets where full-line discounters like K mart and Wal-Mart are dominant, Kline said.

Both of the Bargain Town formats are designed to attract the lower-or middle-income consumer. $imply 6, on the other hand, will be positioned for more universal appeal in terms of consumer income, but will sell only women's apparel.

Barstein described the $imply 6 store environment as considerably more upscale than Bargain Town USA.

"The stores will have a tan and magenta decor, be fully carpeted and provide shoppers with six dressing rooms. There will be a center aisle set-up with visual wall displays as well as round racks, 4 ways and waterfalls." He estimated the store could generate nearly $200 per square foot, more than twice the $90 per square foot sales floor productivity of Bargain Town stores.