Cost Plus Seeks Smarter Home Mix
Cecile Corral -- Home Textiles Today, November 27, 2006
Cost Plus Inc. has seen its home business sales tumble and is reacting by streamlining sku count in the coming months, the variety retailer said during its third quarter conference call.
Barry Feld, president and ceo of the 286-unit chain, noted that since the earlier quarter, "We have seen an acceleration of the deterioration of the home side. And when you look at home décor and home furnishings, particular high-priced furniture, it is definitely putting pressure on our overall store volume."
The solution? To "migrate away" from high-ticket furniture pieces and reduce furniture sku count.
The company reported a third-quarter net loss of $11.7 million, compared to the loss of $2.7 million for the same period last year. Revenues grew 7.3% to $215.4 million from $200.7 million last year, while same-store sales for the quarter decreased 1.3% compared to a 4.7% decrease last year.
While consumables departments have improved, said Feld, "Our focus for the near term will be to continue to strengthen the home décor and furnishings side of our business and implement initiatives to improve profitability."
"Now as we move into the New Year, part of our strategy as we've talked about before is migrating away — we're not getting out of the furniture business — but we're definitely migrating away from high priced furniture, which is getting more and more difficult to sell," Feld said. "We're going to have a much greater reliance on accent pieces and headboards for beds and things of this nature."
An example is with dining tables, which have been shrunken from 22 to 15 sets, and fewer going forward. Also, pieces that retail for more than $1,000, like some sofas, are being removed from the selling floor.
Cost Plus also plans to cross-merchandise its home accent pieces to more areas throughout the store to try to boost home sales.
"I'm glad we have a lot of other levers to pull on throughout the store to drive customer traffic," Feld said. "But we see a continued softening of furniture and the home categories, and it's really nothing in particular. It's really everything around in the home."
With regards to the still-vacant top merchant position, Feld said Cost Plus has done "a lot of retooling internally below [the top merchant position], and my plan is to have a permanent solution and structure that I will announce before the end of this fiscal year."