Dress Barn, on expansion kick, digests 'Rax'

Discount Store News, March 18, 1985

STAMFORD, Conn. -- Dress Barn is on an expansion streak.

Having already tripled its store count in the last three years, the off-price apparel chain's recently digested acquisition of 50 Off the Rax stores from The Stop & Shop Companies brings it to a 155-unit total. Within the next 12 months there will be, conservatively, 200 stores on the map, promised chairman and president Eliott Jaffe. Within the next three to five years there will be 300.

In the last year Dress Barn has expanded its distribution space by one-third, but it will soon need more. It has added a new management tier to its corporate ladder--three regional directors--but is still looking for more managers. Plus, it has increased the size of its buying team by one-third.

Interested In Expansion

While the company has the capacity to open 15 to 25 new stores annually--five are slated to open this spring--it is eager to expand through acquisition, according to Michael Palmer, vice president, finance. In fact, Dress Barn is currently conducting exploratory talks to acquire additional locations. However, at presstime, details were not available.

With stores presently stretching from coast to coast in some 20 states, the heaviest concentration is in the Northeast. While the South, with its "successful discount malls" is targeted as a key growth area (five Atlanta stores were opened in 1984), Palmer underscored the company's market options are "wide open."

Marking entries into three new trading areas, the Off the Rax purchase was made in two parts--first East, then West, described Palmer. The first group--30 stores in two new markets, Baltimore/Washington, D.C., and Philadelphia--was purchased in August. The second group was acquired in October: 16 stores in the new market of Chicago and two in St. Louis, where the chain had one existing unit. The total purchase price was approximately $3.5 million.

However, the company's first acquisition was made some five months earlier in March, when it bought eight Tagg stores from The Gap for an undisclosed amount. This purchase marked the chain's debut in Detroit and San Francisco.

In fact, it was the "unexpected smoothness and ease" of the Tagg conversion into Dress Barn stores that encouraged management--wary of too much growth too fast--to swallow both parts of the Stop & Shop deal.

Indeed, the experience of absorbing the much smaller Tagg purchase seems to have served the company well for the much larger task of adapting the Off the Rax chain to its format.

By January all Off the Rax stores carried new Dress Barn outdoor signage. The first group was fully remodeled before spring. In many cases, the stores were painted, recarpeted, trimmed in wood and refixtured. The West group will be ready, Palmer said, by Mother's Day.

One of the chief logistical challenges of the merger has been disposing of the Off the Rax merchandise. He described it as "lower-priced and of a different taste level" than Dress Barn's. However, by late February it had virtually been liquidated.

Dress Barn is now in gear for its first full-swing season after the big merger.

Not only are analysts projecting sales in excess of $95 million, compared to last year's $61.6 million, for fiscal 1985, ending July 31, but they also expect earnings to jump. Analysts project $3.9 million profits this year compared to 1984's $2.8 million.

While other off-price apparel chains flounder to survive or simply become casualties of the industry's shakeout, Dress Barn has found its own formula. And it works.

Unlike Off the Rax, which industry watchers agree failed to identify a specific customer, Dress Barn has a very narrow audience: working women, age 18 to 40, in middle- to upper-middle-class income brackets. The stores cater to her needs for work and relaxation, offering in-season fashion-branded goods in a specialty store setting. They are carpeted, uncluttered, neatly fixtured and have nice dresing rooms.

Dress Barn labels include Harve Benard, Liz Claibourne, Casper, Villager, Cherokee, Gloria Vanderbilt, Calvin Klein, John Meyer and Larry Levine. It also has developed five of its own labels--Princeton Club, Westport Ltd., E. J. Eliott, Christopher and Lise J--which comprise 15% of the mix.

While this figure may reach 20%, Palmer insisted the company will not opt for a heavy private label presentation, even as it becomes too large to rely on special buys or as it grows big enough to have more clout in the manufacturing world. The bulk of the goods will continue to bear the brand names that have always attracted Dress Barn's shoppers. Buyers will work with vendors cultivated over 23 years to create viable off-price programs, he said.

The stores, meantime, are classified into five merchandise groups, with 80% falling under the "average" umbrella. These units feature a more basic assortment in all categories with a smattering of fashion-forward looks. The other 20% have either "junior," more progressive looks; "missy," with more size 10's, 12's 14's and 16's; "working woman," offering more suits and blouses, or "premiere," higher-priced clothing for affluent locations.