By CLINT ENGEL
Posted: February 3, 2002
LIVERPOOL, N.Y. — Raymour & Flanigan will open 10 stores and close one this year as it shoots for $400 million in sales in its most aggressive growth spurt to date.
The 43-store company will open five stores in greater Philadelphia — including its first in Atlantic City, N.J. — three in Connecticut and two in upstate New York as it fills in and pushes out from its Northeast base.
Only one of the new units, a 70,000-square-foot store in Henrietta, N.Y., in the Rochester area, is replacing a smaller store. By the end of the year, Raymour expects its store count will reach 52.
Neil Goldberg, president and chief executive officer of the midpriced Top 100 company, said he would be disappointed if sales don't top $400 million, up 27% from $315 million in 2001. While a net nine new stores will be the most ever opened in a single year by Raymour & Flanigan, Goldberg said the expansion is really a continuation of a growth push that began a dozen years ago when Raymour acquired 14-store Flanigan Furniture. He said the strategy aims to create economies of scale in two of its major markets — Philadelphia and Hartford, Conn.
"Our hope is we will maximize our marketing expenditures and leverage distribution and operations networks in these two very important markets," he said.
Great real estate deals
Goldberg added the retailer has been able to take advantage of some great real estate opportunities, probably because of the weak economy.
Raymour, which traditionally buys most of its real estate, is buying all but two of the properties on tap for this year — in most cases, buying vacant buildings it will renovate. In Atlantic City and Exton, Pa., it will build from the ground up.
The company would not disclose its investment in the new stores, but said it will put an estimated $1 million in inventory in each location.
While some furniture stores and other retailers have struggled in the past year, Raymour seems to be doing fine. Same-stores sales increased about 3% last year over 2000, and were well above that when the most depressed upstate New York markets are excluded, Goldberg said.
"When you have competitors that go out of business, it obviously opens up market share that we can recapture and bring over to our stores," said Mark Manders, vice president of marketing and public relations.
Success in a soft economy
Raymour is thriving in a part of the country that has seen better days. A soft economy kept the chain from reaching the 20%-plus sales growth it was looking for early in the year, but it did manage a 12% gain to reach $315 million in furniture, bedding and accessory sales, its fifth consecutive year of double-digit growth.
Manders said the retailer is increasing share in its key markets even while the larger business climate is sagging.
In Albany, for example, where overall furniture and bedding sales were down 6% in 2001 from 2000, Raymour's sales grew 3%, he said.
In Philadelphia, Raymour & Flanigan appears to be benefiting in part from last year's demise of HomeLife Furniture, which closed several stores in the market.
Philly is where Raymour already has seen considerable success and where it will open half its new stores this year. And there's room for more growth, Goldberg said. Raymour probably will open an four more stores there in 2003, rounding out its market coverage.
Manders said Philadelphia has been underserved despite the presence of such big names as Levitz, Seaman's, and Good's Furniture. Raymour entered the scene in 1997, when it acquired five-store Furniture Unlimited of Quakertown, Pa.
"We saw an opportunity to bring our formula and model of customer service to the market and have benefited from that," Manders said. "We see tremendous upside to the market."
With 11 stores today including one in Allentown, greater Philadelphia accounts for more than $100 million of Raymour & Flanigan's annual sales. Manders said that figure should grow to a run rate of $200 million with the stores opening this year.
In greater Hartford-New Haven, Conn., the retailer has opened three stores in the past few years, and this year will add a unit in the Waterbury community and one in Orange on Post Road.
The Post Road store will be in a retail center where some $100 million in annual furniture sales is generated within a one-mile radius, Manders said.
Near its home base, in the Syracuse suburb of Clay, N.Y., the company will build a 72,000-square-foot unit retrofitted with a production studio where Raymour can shoot its TV commercials and still photography.
Like most retailers, Raymour & Flanigan's business struggled after the Sept. 11 terrorist attacks. But by late September, sales were edging back up — a trend that continued into January.
"We're starting off the year in a very strong position," Manders said.
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