Goody's: Facing the future - discount clothing store chain re-engineering effort - Apparel Merchandising

Discount Store News, Feb 21, 1994 by Jeffrey Arlen

Goody's was a one-man show until chairman Bob Goodfriend hired a team of professionals to manage the half billion dollar operation.

Business school case histories often chronicle the exploits of entrepreneurs who successfully build a business only to have it crumble after it reaches a certain magnitude.

In many instances, these innovators are powerless to stop the disolution of years of effort. What's more, the blame for this particularly painful kind of business failure often lies squarely on the shoulders of the very men who created the operations in the first place. They simply can't let go.

Frequently this kind of fiscal disaster can be averted by the installation of a management team capable of running a large complex organization. Yet, it is not uncommon for seat-of-the pants business builders to be late in their cry for help.

Bob Goodfriend, who took his father's 12-store, $2.5 million Athens Outlet Store business and built it into Goody's Family Clothing, a value-price apparel operation with 147 units and sales of half a billion dollars, let out a yell.

Last Spring he initiated a "re-engineering" effort that, while still in progress, has already brought in a new managerial team and a complete update of the company's Knoxville, Tenn., distribution center and computer systems.

"We were coming off a great year in '92 [sales were up 25 percent while net income rose 49 percent over the prior year], but I realized that if we were to continue to grow than I was going to need an infrastructure that the company didn't have. The company had been run entrepreneurially forever and every and it was time to change. I was making 90 percent to 95 percent of the major decisions," explains Goodfriend, who still sits in an opulent executive suite as chairman of Goody's, but has passed on day-to-day operations, and the title of president to Roger L. Jenkins, a former dean and professor at the University of Tennessee.

After Jenkins came on board last March, he immediately began building a new management roster, which is charged with shaping the future of the company.

"To form a new team I had to find a new leader. I thought Roger [who also served on the company's board of directors] complemented me very well. He's strong where I'm weak. My background was always merchandising. My strengths had not been people. He knows how to jell a team together," Goodfriend says.

Aside from Jenkins, the other new key players include executive vice president of merchandising, advertising and stores, George I. Rubin, a take-charge merchant who once worked for Les Wexner of The Limited, and John Thompson, who ran MIS and distribution for Lee before joining Goody's as executive vice president for business systems and logistics.

Jenkins, who has studied retail for many years and worked with Management Horizons while an academic at Ohio State University, knew that a major cultural change was due at the company even before he was offered the job. "The company was a one-man dog and pony show where Bob's decisions were executed by a staff of people who background and training were not really commensurate with their responsibilities, job or title."

In addition to rearranging the personnel who run Goody's, Jenkins is overseeing a challeging growth strategy.

The goal is to reach $1 billion in sales by 1997. "We hope to grow sales at 20 percent a year and earnings per share at 25 percent a year. We calculate that 20 percent top line based on 5 percent comp sales growth," says Jenkins.

This strategy, obviously, also relies heavily on new store openings. Twenty-three new doors are scheduled to open next year, while 30 new Goody's will go on-line in 1996 if all goes according to plan.

To do this, Goody's will make a break from small town locations and tackle retailing small town locations and tackle retailing in somewhat larger urban areas.

Goody's won't be opening in New York anytime soon, but it is moving into medium-sized cities. This spring, for example, the company, which currently operates in 12 states, will open the first of five units in Birmingham, Ala.

"That market is very, very important to us because that's the first major metro market that we're going into," says Jenkins.

And Goody's intends to make its presence known.

"We're approaching Birmingham and all the new markets we plan to open very

differently than we have in the past. We've met with civic leaders, had a press conference and are working on some projects with schools in the area. As we get closer to opening to store we'll do TV, radio and print ads," reports Jenkins, who says the Goody's already spends a substantial 4 percent of sales on advertising.

Substantial merchandising changes are also in the works.

"The store was very young, and on the other end very dumb. They forgot the middle," says Rubin, the new merchandising head who, in addition to serving as executive vice president and general merchandise manager for Lerners, was president of D&L Department Stores before joining Goody's last year.