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Cost Plus weighs benefits of booze

Cost Plus World Market is expecting to grow its 218-unit chain to 600 stores by 2011, with 100 of those sites to be alcohol free, the company said during the Lehman Brothers Retail Seminar.

"Alcohol does drive traffic," said John Luttrell, senior vice president and chief financial officer.

But, he explained, of its current stores, six are non-alcoholic and "have similar bottom lines (to the stores that do sell alcoholic beverages). We built those (non-alcoholic) stores about 1,000 square feet smaller, which reduces our occupancy rate by about 4 percent."

The company also cited gains in merchandising and back-end productivity over the past two years, with the implementation of improved systems and the addition in mid-2002 of a 500,000-square-foot distribution center in Virginia to more rapidly service East Coast stores.

"The positive effect of all of these efforts on our overall productivity and profitability has been dramatic," said Murray Dashe, chairman, president and CEO.

For example, he said, by the end of 2002, the time it took for product to move from the distribution center to the store shelf improved by nearly 65 percent. The processing of individual skus is now 45 percent faster.

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