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Top dog nibbles at $3 billion

Carole Sloan -- Home Textiles Today, July 21, 2003

New York — Wal-Mart is about to become the industry's first $3 billion home textiles retailer, further widening the gap between itself and JCPenney, by $555 million.

The nation's third largest home textiles merchant, Target, is threatening to overtake Penney, even as both are being threatened by Bed Bath & Beyond, in fourth position — for the moment.

The same Top 5 led the exclusive HTT Top 50 retail leaders for 2002, but there was no shortage of high-drama subplots to the story.

The Top 5 increased its sales clout, moving up 7.5 percent to $11.0 billion in 2002 from $10.3 billion in '01. The home textiles universe for '02 was $23.9 billion, up 3 percent from 2001's $23.2 billion.

Wal-Mart remained the home textiles sales leader with a 13 percent increase bringing it to $2.9 billion, increasing its lead over the former number one, JCPenney, which had home textiles sales of $2.4 billion for 2002.

Penney saw the gap between it and Wal-Mart more than double in 2002, up from a differential of $245 million in 2001, and a scant $46 million in 2000, the year it lost its crown.

Penney's results were impacted by a store count drop of 26 units and the 14 percent decline in home textiles sales in its catalog, which plummeted 22 percent overall. The department store division had a strong year, with home textiles sales increasing 13.9 percent.

In third place was Target with sales of $2.185 billion, up 13.2 over 2001. Minneapolis-based Target's increases were fueled in part by an increased store count of 94 units over '01.

Bed Bath & Beyond and Kmart switched positions. Union, NJ-based Bed Bath & beyond moved up to fourth place with home textiles sales of $2.008 billion, abetted by the addition of 94 new units in 2002.

Kmart, the only one of the Top 5 to record a home textiles decline, dropped to fifth place with home textile sales of $1.555 billion. Sales declines in part were the result of the Troy, MI discounter's Chapter 11 bankruptcy filing in January '02, and the closing of 283 stores in the fiscal year.

The Top 5 contributed 46.1 percent of the total, compared with 44.2 percent in 2001. Within the confines of the Top 50, the Top 5 represented $11.023 billion, up 7.5 percent from 2001.

In the back half of the Top 10, the same players occupied the same ranking slots. Sixth place Clifton, NJ-based Linens 'n Things recorded a 17 percent increase in home textiles, Kohl's of Menomonee Falls,WI, surged 22.1 percent, with a significant portion coming from 75 new stores, and Framingham, MA-based T.J. Maxx/Marshalls increased 7.1 percent.

On the downside was Sears, in seventh place with an eight percent home textiles decline, in part because of its exit from custom decorating as well as an overall decline for the Hoffman Estates, IL-based retailer. Mervyn's, of Hayward, CA, also had a decline in home textiles, down 5.2 percent.

The Top 10 represented $14.505 billion of the Top 50, up 7.5 percent over 2001.

There were six newcomers to the Top 50, three as a result of parent company divisional consolidations. The newcomers were San Francisco-based Pottery Barn, in 14th place with home textiles sales of $250 million; cataloger Linen Source of Tampa, FL, at number 49 with $76 million in home textile sales; and at number 50, Corte Madera, CA-based Restoration Hardware, with $66 million in home textiles revenues.

Reflecting corporate consolidations were The Company Store Group, which combined Domestications and The Company Store, moving the consolidated unit to 16th place with sales of $246 million; Filene's/ Kaufmann's in Boston with combined sales of $120 million; and Robinson's/May-Meier & Frank in North Hollywood, CA, with sales of $117 million.

Moving beyond the Top 10, 11 retailers jumped two or more slots in the rankings with Framingham, MA-based HomeGoods leading the rest with a gain of nine places, moving from number 42 to number 33 and home textiles sales of $128 million, up 30.6 percent compared with 2001. Close behind was Lowe's, the Wilkesboro, NC-based home improvement/decorating chain, up to $130 million in home textiles sales, a gain of 18.2 percent over 2001, and Jacksonville, FL-based Stein Mart, up 8.5 percent to $141 million, both gaining seven slots.

Carson Pirie Scott, Milwaukee, WI, jumped six positions to 43rd with sales of $106.5 million; Anna's Linens, Costa Mesa, CA, gained four slots to number 40; while Issaquah, WA-based Costco and Tuesday Morning, Addison, TX, moved up three places each to number 23 and 37, respectively.

The other significant gainers were Pier 1, Fort Worth, TX; Brylane Home, New York; and Fred Meyer, Portland, OR.

And 2002 was the last year on the rankings for City of Industry, CA-based Strouds since the specialty retailer is liquidating its business.

In total, the Top 50 retailers contributed 86.2 percent of the total home textiles business, compared with 83.3 percent in 2001. The Top 50 had sales increases of 6.7 percent to $20.6 billion versus $19.3 billion.

The gains were even larger for the Top 25, which had sales of $17.8 billion, up 7.0 percent.

Assessing the year, Paul Fitzpatrick, senior vp, Macy's West, San Francisco observed, "Overall it was pretty good. But it was a tough down [products] year, as well as Charisma, which is a big business for us, and Polo Ralph Lauren, although that is coming back with new product and solids.

"Charter Club and Hotel, our Federated brands were even stronger and still building," Fitzpatrick added.

For David Milgrom, president of Chicago-based Direct Marketing Services, "2002 was a very good year and a lot of our gains came from on-line business. There's a lot of channel shifting from catalog to the Internet."

Key pieces of the home textiles business, Milgrom related were "kids, which is a strong business for us, especially in home coordinates, more embellishments in bedding, rather than ordinary print coordinates, and unique and better goods."

For Joe Laneve, senior vp, Bloomingdale's New York, "Last year was tough and the biggest challenge was from our 'big brand' guys, which is a very important part of our business, assortment and advertising. On the positive side was our own brand, only@ Bloomingdale's, which was very strong, especially in kids and quilts. Charisma, Waterford and Royal Sateen also were strong."

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