Wal-Mart edges JCP as top textiles seller

Carole Sloan, July 13, 2001

New York — It's happened.

Wal-Mart has edged out JCPenney for the top honors in home textiles sales — a turn of events that was more a matter of "when" rather than "if" for the hard-charging Bentonville, AR discounter.

The retailers were essentially running neck and neck in 1999 and 2000, with Penney holding its first place position in 1999 by roughly the same amount that Wal-Mart edged ahead to became the home textiles sales champion in 2000.

Much of Wal-Mart's gains were the result of the addition of 41 Wal-Mart discount stores and 167 Supercenters in 2000, while its soft lines/domestics share to total store fell a percentage point for the second year in a row.

Plano, TX-based Penney's store count actually dropped by a net 32 units, the second year in a row that the store count declined, while the troubled company changed leadership, direction and operational logistics.

The "Billion Dollar Plus Club" of home textiles consists of the same five players, all holding the same positions except for the swap of first and second place. Kmart, Target Stores and Bed Bath & Beyond, the latter a newcomer to the Club in 1999, were the other members. Waiting close by in the wings for admission into the Billion Dollar Plus Club for 2001's performance is Linens 'N Things with sales at $913 million for 2000.

Among the top five in Home Textiles Today's exclusive annual Retailing Giants Top 50 survey, Penney and Kmart were the two retailers with a decline in store count, part of the radical restructuring that each retailer began in 2000.

Troy, MI-based Kmart's store count dropped by 66 units. In contrast, Target and Bed Bath & Beyond were on an aggressive store rollout with an addition of 65 units for Target and 70 for Bed Bath.

Overall, the Top 50 accounted for $19.1 billion, an increase for the group of 12.3 percent over the $17 billion in 1999. The Top 50's share of the home textiles universe accounted for a huge 86.6 percent, up from the group's share of 81.5 percent in 1999. Home textiles total sales for 2000 were $22 billion, a 5.8 percent increase over 1999's total of $20.8 billion.

Five retailers are new to the rankings for 2000: Big Lots, which zoomed onto the list in position 15; Dollar General, at 40; Sam's Club, at 41; Tuesday Morning, at 43; and Direct Marketing Services Inc. (DMSI), at 48.

Within the Top 50, the Top 5 share of the universe inched up to 43.8 percent, compared with 43.1 percent in 1999. Total sales for the Top 5 in 2000 were $9.646 billion, a 7.6 percent increase over the '99 total for the group of $8.961 billion.

Union, NJ-based Bed Bath & Beyond again scored the highest sales percentage increase in the Top 5, with a gain of 29 percent, followed by Minneapolis-based Target Stores, with a 12.4 percent gain, the only double-digit gains within this group.

For the Top 10, '00 sales were $12.672 billion, up 8.3 percent over the '99 sales of $11.704 billion. The makeup of the Top 10 changed with Clifton, NJ-based Linens 'N Things moving up to 6, swapping places with Sears, based in Hoffman Estates, IL, now at 7. Kohl's, Menomonee Falls, WI, jumped two places to 9, replacing Mervyn's, the Hayward, CA-based division of Target Corp. which fell to 10.

The Top 10's share of the Top 50 sales was 66.3 percent for 2000, compared with the group's '99 share of 68.8 percent, while the group's share of the universe edged up to 57.6 percent, compared with 56.3 percent in '99.

Major shifts occurred in the Top 15 with Columbus, OH-based Big Lots jumping into the group at 15, and Family Dollar, Matthews, NC, surged from 42 in '99 to 14. Ames edged up to 11 from 12, and Minnetonka, MN-based Fingerhut dropped to 12 from 10. At 13 was HomePlace of America, moving up from 19 as a result of the merger of Waccamaw and HomePlace in June '99. This year, HomePlace closed its doors.

The Top 15 had sales of $14.132 billion in 2000, compared with $12.864 billion, an increase of 9.9 percent. The group's share of the Top 50 was 74 percent, compared with its 1999 share of 75.7 percent, while its share of the total universe increase to 64.2 percent vs. a 61.8 percent share in '99.

For the Top 25, its '00 sales were $16.178 billion, up from $14.778 billion, a 9.5 percent increase. The Top 25 held a 73.5 percent share of the universe, compared with 71.0 percent in '99, while the percentage of the Top 50 was 84.7 percent in '00, vs. 86.9 percent in '99.

Within the group, Montgomery Ward, at 17, and Bradlees, at 22, have gone out of business. Other changes included Macy's East, which dropped from 13 to 19; Macy's West, which fell to 20 from 17; Strouds, which fell to 21 from 15; and Bloomingdale's, which slid to 24 from 23. Within the Top 25, only Eddie Bauer and Meijer moved up, to 23 from 24 for the former, to 25 from 28 for the latter.

The biggest shifts occurred at the bottom half of the Top 50 list, where newcomers displaced some familiar names and store closings and slower new store growth affected others.

Overall, 16 of the Top 50 recorded double-digit sales increases in 2000, with six companies recording increases above 20 percent.

Discussing 2000, Norman Axelrod, chairman and ceo of Linens 'N Things wryly commented, "It feels like it was five years ago. Life was pretty good in the first half, and we definitely felt a strong change since the election."

Axelrod continued, "In these times the role of brands moves more into the forefront, and our LNT Home brand will be more significant." Currently the LNT Home brand accounts for about 12 percent of the chain's total sales, and more than one-half is in textiles. Other emphasis will be on supply chain and service levels as well as product development and sourcing, Axelrod said.

At Kmart, which began its radical restructuring in the second half of the year, "We successfully debuted the new 4 Star and 5 Star Martha Stewart Everyday bed and bath collection," said Steve Ryman, senior vp, gmm. "We also reallocated square footage among the home areas to feature breadth and depth of assortment within fashion and basic bedding while continuing to offer innovative product and presentation of high-quality merchandise at affordable prices. It was a year, as we continue this year, of reducing inventory levels, improving turns and, ultimately, EBIT."

At Sears, "the emphasis definitely was on value," said Mark Grand, vp, home fashions. "Where we offered obvious significant value in either quality or fashion we succeeded. Where we overstepped, we didn't do well. As we made course corrections in the second quarter, we succeeded in the second half."

From a department store perspective, Paul Fitzpatrick, senior vp, home for Macy's West, observed, "Generally our business was driven by designers and luxury — Calvin Klein, Charisma Select and Tommy Hilfiger, which we will continue to grow."

On a moderate level, Fitzpatrick pointed to the company's private-label Charter Club as a strong force, especially in a damask sheet program and utility bedding, especially in six- and eight-piece down sets.

For Eddie Bauer, the home store greatly outperformed the total store, "and we had wonderful increases in margins," said Harvey Kanter, vp, home. "Gross margins were up, expenses were down and the repositioning of domestics definitely helped. We're driving more into the collection ensemble approach with the same color palette across two or three seasons with mixers for fashion."

Rob Valone, president of Strouds, which filed for Chapter 11 bankruptcy protection last September and now is operating under new ownership, said, "We are focusing on the linens part of our business — 90 percent." The company now operates 50 stores, 30 full linens stores, 20 outlets. In the full-line stores, "we offer better-quality, upper moderate to better items that are differentiated and unique."

Valone added, "We have shifted from price to product and fashion. In the outlets we are below mainstream price points offering strong values in closeouts and IRs."

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