Regionals retrench to sustain profitability - retail stores

Discount Store News, Feb 5, 1996

NATIONWIDE DSN REPORT - Regional retailers are framing their strategies for what promises to be a decisive year for many, tightening their operations and in some cases shearing away underperforming stores.

By spring, Ames, Pamida and Venture will have 67 fewer stores among them, and Bradlees may also shutter a few. Most will be supplemented by new store openings in more vigorous or less competitive markets, although store counts will remain below their current levels. The tally: * Ames will close 17 of its 307 stores by early March in Maine (Caribou, Houlton, Madawaska, Presque Isle, Skowhegan), New York (Batavia, Greece, Lockport, Niagara Falls, Ogdensburg, Rome, Warsaw, Waterloo, Webster and two stores in Rochester) and Pennsylvania (Mansfield). About 1,000 jobs will be eliminated, including 71 headquarters positions. Ames will take a one-time charge of about $20 million in the fourth quarter of fiscal '95.

Ames opened two new stores in 1995 and has officially announced two openings for '96, including a former Stuarts location in Lowell, Mass., to open Feb. 28. In late January, it bid $2.75 million on 10 former Jamesway locations - three in New York, four in New Jersey, two in Pennsylvania and one in Virginia. The outcome, subject to bankruptcy court approval, was unknown at press time. * Pamida will close 40 of its 185 stores by the end of May. lt would not disclose locations, but according to news reports, Minnesota will be hardest hit, losing 12 stores. Reports also indicated that stores in Kentucky, Montana, Nebraska and Ohio will remain open. About 1,000 jobs will be eliminated. Pamida will take a pre-tax store closing charge of $19 million to $21 million in the fourth quarter of fiscal '96.

Pamida will open six to eight stores this year, two of them relocations. Again, the company would not specify markets, but did note that after the closings, 92% of its stores will serve markets with populations of less than 20,000. More significantly, 82% of its units will be in markets without national or regional chain store competition. * Venture will close 10 of its 115 stores by late March in Champaign, Streamwood and Elgin, Ill.; Williowbrook and Texas City, Texas; and Indianapolis (all five stores in the market). About 1,200 jobs will be eliminated. Venture expects to save $22 million through the closings.

The company has no plans to open new stores in '96 and will instead complete its repositioning from a traditional discount store to lifestyle-oriented department store (see story on page 3. When store openings resume in '97, "Texas will be our primary market for expansion," said exec vp of marketing Cliff Campeau.

The regionals announced their closings and subsequent store openings in the opening weeks of the new year, presumably to give retailers plenty of time to fine-tune their operations before the next wave of consolidation hits the industry.

Collectively, the closings will idle 3,200 employees. Executives at all three chains made it plain they had no other choice.

Some of the associates [whose jobs will be eliminated] have been with us for 20 or more years," said David Nilsson, manager, planning and analysis, Pamida. "But we need to consider the remaining 6,600 employees, and profitability is at the top of our minds. One of the things we are here for is to maximize shareholder value."

Some retailers are restructuring internal operations as well. Pamida, which recently converted- its Milwaukee-based DC into a company-run house by eliminating a third-party operator, hinted that the search for an additional DC (to be the discounter's fourth) officially has not ceased.

Ames has reduced its hard lines divisions from three to two, and its home lines from five to four.

Bradlees will close its regional offices in Edison, N.J.: North Haven, Conn.; and Braintree, Mass., in the next few weeks, moving top operations managers to the main corporate headquarters in Braintree. District managers will now be based in stores within their zones, which are being reduced from 14 to 10.

The 134-store chain also named Michael Trafford and George Van Eron regional vps, stores, reporting to James Zamberlan, executive vp of stores.

Spokesman Coleman Nee said the chain's focus on better execution will be facilitated by housing the human resources, asset security, food services and other support staff in the stores rather than in regional offices.

Bradlees also will open three new stores in March. Stores in Providence, R.I., and Danvers/Peabody, Mass. will have 89,000 sq. ft. of gross selling space. The new unit in Worcester, Mass., replacing the Shrewsbury store six miles away, has a 94,000-sq.-ft. selling floor.

Other regionals are playing their '96 plans close to the vest. * ShopKo would not say whether it will close stores, but did say it will open a new unit in Pullman, Wash.,,and relocate its unit in Beaver Dam, Wis. * Hills has signed a lease on. one store so far for '96, but is' looking at other locations. It had originally planned to open three to five new units. Also, the company is retrofitting 11 stores to its latest prototype and will conduct sales floor expansions in five stores (the remodel number may increase). * Caldor has said it will open some new stores this year, but hasn't released their locations. In November, postponed store openings in five markets: New Bedford, Mass.; District Heights, and Silver Springs, Md.; Glen Oaks, N.Y.; and Hunting Park, Pa.