Luxury Linens sheds its coat - Burlington Coat Factory Warehouse Corp. Luxury Linens - Special Supplement: Home Market Trends - Cover Story

Discount Store News, April 6, 1992 by Jill Lettich

What Started as a Leased Department at Burlington Coat Factory Has Become a Profitable Domestics Specialty Concept

Would you buy towels at a place called a coat factory?

Don't let the name fool you. What began as a leased department in an off-price apparel chain has become a fertile specialty retail concept for Burlington Coat Factory.

Under the Luxury Linens moniker, Burlington, N.J.-based Burlington Coat is expanding beyond just an in-store domestics department to a freestanding store venture that provides brand, selection and price in the home products category.

The success of the concept is not surprising considering the off-price expertise of Burlington Coat Factory executives. And it doesn't hurt that experienced Linens 'n Things alumni are at the helm of the domestics venture.

"Burlington was leasing the department until about six years ago," explained Dan Richman, president, Luxury Linens, formerly with Linens 'n Things. "They decided it would be best to run it on their own. Five years ago they got a group together to run the linens division."

Besides Richman, the group includes Richard Rymda, another Linens 'n Things exec, who serves as gmm.

In its first year, Burlington included only seven Luxury Linens departments; that figure has grown to 145, against a total store base of 170.

A benchmark was reached in May 1991, when the first standalone Luxury Linens store debuted in San Marcos, Calif., just north of San Diego. According to Richman, the only thing preventing expansion to other areas is suitable real estate.

"We're halfway through our fiscal year, which ends in July, and are running substantially ahead in comparable store sales," Richman noted. The company does not break out sales for the Luxury Linens division, but sales for Burlington are expected to reach $1 billion for fiscal 1992.

"We are actively looking for real estate to expand Luxury Linens. We hope to have additional freestanding stores by fall," he said.

The real estate philosophy at Luxury Linens mirrors that of the parent company. "Long leases with easy outs and low rents," are the criteria, according to Monroe Milstein, chairman, Burlington Coat Factory.

That has created some interesting partnerships and real estate configurations for the stores.

In its San Marcos unit, for instance, Burlington tested both linens and a children's clothing specialty concept in one building. And in Sterling, N.Y., Luxury Linens and Burlington Coat Factory stores are featured side by side. The real estate consideration also means the in-store departments are varied in size.

|I would say the average Luxury Linens department is about 6,000 sq. ft. But it varies widely, anywhere from 4,500 sq. ft. to 25,000 sq. ft.," said Richman. "The reason that 25 Burlington stores don't have a Luxury Linens department is simply a matter of space. In the stores that do feature it, we have been looking to expand where we can."

While the company is spinning off Luxury Linens, Richman admits that the seasonality of Burlington Coat Factory benefits from a Luxury Linens department that attracts customers all year round.

"In the summer, when people are not shopping for coats, we hope to be able to bring them in," he said.

If the size and design of its stores are not as consistent as major competitors such as Bed, Bath & Beyond and, in the West, Stroud's Linen Warehouse, Richman noted that there are important consistencies in its merchandise mix.

"We offer a wider selection, than most of our competition in the category," he said. Evidence of this in San Marcos was a wall of toss pillows in every color, pattern and size imaginable; in store No. 1 next to headquarters in Burlington, N.J., two double towel walls display almost every shade available.

With the emphasis on value, most of the stores, including the San Marcos unit, maintain a warehouse look. The company, however, has been updating and modifying fixturing.

"We just got rid of the last steel fixtures," said Richman. "The newer stores have plain wood fixturing painted white with wooden valances. Clearer signing is being used. Where we have the space, we also do some display vignettes so that customers can see the merchandise."

The merchandise at Luxury Linens, like that of its parent, is all current season merchandise with most of it bought directly. "We do buy some closeouts, but his is a large reorder business," Richman pointed out. "We also buy direct in giftware, though there are more closeout values in that marketplace.

|Our merchandising philosophy is like Burlington's. We have quality department store merchandise at value prices."

According to Richman, because it features department store brands, price points run in the middle to upper price point ranges.

At its San Marcos store, towels were featured from $4.99 to about $12.99. In the Burlington store, decorative shower curtains were $32.

Luxury Linens features basic bedding - its largest volume category - along with tabletop, a bath shop with some hard goods accessories, and bath rugs. In larger stores, Richman said it carries area rugs, as well.