Top 100 Us Speciality Retailers

THE DEFINITIVE RANKING 2OO5

StORES

A S P E C I A L R E P O R T S P O N S O R E D B Y A L L I A N C E D ATA S Y S T E M S

®

SPECIALTY CHAINS THE NATION’S BIGGEST

S

BY DAVID P. SCHULZ

hakeouts and consolidations in other retailer segments — department, drug and grocery stores, in particular — are expanding the possibilities for specialty stores as both suppliers and consumers seek new outlets for merchandise. Specialty retailers, once dismissed as “satellites” meant to fill up mall space between department store anchors, are now a major force in retailing, whether in the context of shopping centers or as freestanding entities.One factor boosting specialty retail is the growth of so-called lifestyle shopping centers. Though the configurations differ, these centers generally are mixed-use facilities incorporating some combination of residential and recreational/entertainment usage with retail stores. The tenor, or lifestyle aspect, is created by the retail tenants, which typically do not include a department store or large general merchandise retailer. Specialty store operators are themselves playing the “lifestyle” card. Big box retailers, such as Best Buy and Bed Bath & Beyond, are using 1 smaller, more intimate locations with narrowly focused offerings to penetrate niche markets. Best Buy, which once again tops the STORES Top 100 Specialty Retailers chart, is using both concept stores and service outlets to address consumers’ lifestyles, while Bed Bath & Beyond is using recent acquisitions to edge beyond its homestore envelope toward other aspects of shoppers’ lifestyles. Best Buy is testing neighS2 STORES / AUGUST 2005

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lliance Data Systems is proud once again to sponsor the

STORES magazine special report on the nation’s Top 100 Specialty Retailers. These companies represent the biggest and best in specialty retail. It’s a pleasure for us to be able to work in this diverse and dynamic industry, and to provide integrated credit and database marketing services to more than a few members of this year’s list. Information is power. That’s why informative resources like

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the STORES report are so valuable. It’s a thorough resource on the prime movers in the industry, with plenty of insight and analysis from the STORES editorial staff. It’s information you’ll use again and again. And while all information is valuable, the right information can be invaluable. It can make you smarter, more aware and better prepared. Whether you’re selling toys or tires, knowing the customer and delivering a product, service or experience that is responsive to his or her needs and expectations is the only way to compete in a marketplace with more choice than ever before. At Alliance, our programs are centered on delivering the “right” information to retailers. We gather and analyze critical data and use that information to help our clients drive sales. We deliver the customer insights and customized solutions that create a deeper relationship between a retailer’s customer and their brand, and turn casual shoppers into dedicated customers. It’s all about learning and adapting to a moving marketplace — a skill these Top 100 companies likely learned long before they earned a coveted spot on this enviable list. So congratulations to this year’s Top 100. And when you’re looking for definitive information about America’s premier specialty stores and sales, refer to this report. When you’re looking to know more and sell more, call Alliance Data Systems. Sincerely, Ivan Szeftel President of Retail Services Alliance Data Systems

STORES AUGUST 2005 S3

TOP 1OO SPECIALTY RETAILERS

4 borhood, or “communi- Always trying to stay ty-centric,” concepts Stu- connected to their dio D and Escape to customers, both reach consumers who are Office Depot and Gap intimidated or otherwise have unveiled new uncomfortable shopping store designs in the in one of its 500-plus last 12 months. warehouse-sized stores. Studio D, in Naperville, Ill., has the feel of a fashion boutique and is clearly appealing to women who make consumer electronics buying decisions. The store has an area for consultation and instruction, which may result in recommendations SO SPECIAL for purchasing items at a WHAT’S ABOUT THEM? large Best Buy store. Among the activities that Can’t figure out why some companies are take place at Studio D represented in the are instruction in creatTop 100 Specialty ing digital scrapbooks Retailers chart and from photographs and others aren’t? See an other sources, as well as explanation of the training in such things as method behind our printing over-sized pic- madness on page S15. tures. S4 STORES / AUGUST 2005

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TOP 1OO SPECIALTY RETAILERS

Rank

To the extent that it is available, STORES gathers performance data from the annual reports of publicly traded retail companies. The Top 100 companies for which STORES has made sales estimates are, in descending order: CompUSA, IKEA, Bass Pro Shops, Hobby Lobby, P.C. Richard, Eddie Bauer, Crate & Barrel, Academy Sports, KB Toys, Fry’s Electronics, Modell’s, J&R Music World and Computer World, BrandsMart USA, Forever 21.

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Company Comment

Headquarters

2004 Revenues Y/Y (000) Change

2004 Earnings (000)

Y/Y Change

No. of Stores

Y/Y Change

Best Buy Minneapolis $27,433,000 11.8% $984,000 39.6% 830 8.2% In reversal of usual claims, Best Buy says recommendations from store associates drives online sales; testing in-store restaurant in Chicago’s Lincoln Park neighborhood Gap San Francisco 16,267,000 2.6 1,150,000 11.6 2,994 -0.9 Moving to strengthen balance sheet and focus on capital structure with moves such as retiring debt ahead of schedule and spending $2.5 billion to repurchase shares

14,448,378 11.4 708,388 44.5 1,680 7.8 Staples Framingham, Mass. Ten stores open in Chicago, home market for its Quill mail order division; 24 stores expected by end of next year and perhaps double that number by the end of 2007 13,564,699 9.8 338,159 22.4 1,190 8.3 Office Depot Delray Beach, Fla. As part of drive to open 100 new stores by the end of next year, 1,000th North American unit bowed in June in Countryside, Ill.; domestic division generates 44% of volume 13,270,196 60.9 173,058 913.5 935 OfficeMax Itasca, Ill. Sam Duncan, late of ShopKo, takes chair/CEO/president reins of company SEC is investigating over accounting issues involving vendor allowances

-4.1

11,100,000 -4.0 252,000 186.4 1,499 -0.1 Toys “R” Us Wayne, N.J. Shareholders OK buyout by private firms; chairman/CEO John Eyler, COO Christopher Kay promptly announce resignations, taking with them $65 million and $14 million, respectively

10,472,364 6.2 61,658 -169.1 612 2.2 Circuit City Richmond, Va. Some executive shuffling after Q1 results were released showing net loss widening to $13 million from $6 million a year ago; SGA expenses rose on inventory write-downs

Limited Columbus, Ohio 9,408,312 5.3 637,272 9.2 3,779 -3.4 Apparel moves to support role as founder Leslie Wexner says, “We’ve reinvented ourselves completely. We are now predominantly a personal care, beauty and lingerie company.”

Blockbuster Dallas 6,053,200 2.4 (1,256,100) 43.5 9,000 0.0 Even with financier Carl Icahn on board as a director, rumors continue to fly about a possible takeover bid, with private equity firms prominently mentioned as candidates AutoZone Memphis, Tenn. 5,637,025 3.3 539,893 5.3 3,483 8.2 Overall sales sagged and same-store sales dropped 5% in Q3 ended in May; margins improved 91 basis points and income rose 3.2%; opened net of 31 stores in the period

Foot Locker New York 5,355,000 12.1 293,000 41.5 3,967 9.9 Operates stores in 17 countries under various Foot Locker names as well as Champs Sports; acquired 11 locations in Ireland last fall to give it nearly 500 units in Europe Bed Bath & Beyond Union, N.J. 5,147,678 15.0 504,964 26.4 663 14.1 With 20% average annual earnings growth, company is Wall Street favorite, particularly among hedge fund managers; rolling Christmas Tree shops beyond Northeast

Barnes & Noble New York 4,873,595 11.5 143,376 -5.5 820 -2.6 As big as it is, a new Harry Potter book due out in July raises hopes for Q2 improvement; divestiture of Game Stop is making year-over-year financial comparisons easier RadioShack Fort Worth, Texas 4,841,200 4.1 337,200 13.0 6,834 -2.4 Cut the ribbon on StoreOne, part of Riverfront headquarters campus in Fort Worth; 10,000-sq.-ft. store is an interactive, hands-on technology education experience for customers 4,375,072 4.8 25,682 -68.4 1,502 4.9 Big Lots Columbus, Ohio Struggling in first half: cut back advertising, which hurt sales, led to markdowns to move inventory and depressed margins; KB Toys bankruptcy ramifications still down the road

Ross Stores Pleasanton, Calif. 4,239,990 8.1 168,541 -25.3 639 12.5 Menswear has underperformed leading to disappointing Father’s Day sales in June; seasonal merchandise has also been below plan so earnings forecasts have been lowered a notch CompUSA Dallas 4,175,000* 0.6 N.A. — 225 0.0 CompUSA/Good Guy megastores (16 in all) opened in June in Seattle, Los Angeles, San Francisco, Sacramento and Portland, Ore.; still has 50 Good Guys, 230 CompUSA stores

Borders Group Ann Arbor, Mich. 3,903,000 4.6 131,900 14.5 1,209 -1.3 Lost in legal ruling by appeals court in San Francisco that state can demand sales tax collection on e-sales even though online division has no property in California Advance Auto Parts Roanoke, Va. 3,770,297 7.9 187,988 50.5 2,652 4.5 Chairman Larry Castellani turns CEO reins over to Mike Coppola as No. 2 auto aftermarket retailer takes impressive strides in gaining on top dog AutoZone

3,393,251 9.8 201,809 13.5 1,012 4.7 Michaels Stores Irving, Texas Consciously implementing Wal-Mart’s strategy of surrounding a city prior to opening urban locations; first NYC stores in Brooklyn and Queens after building in northern N.J. and on Long Island

N.A. – Not available

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*Estimate

STORES AUGUST 2005 S5

TOP 1OO SPECIALTY RETAILERS

35 With its modernistic glass- Suggestive images and-metal decor, Escape is de- push product at signed for young adult city- Abercrombie & dwellers who are already Fitch, while Pep conversant with consumer Boys rev sales with electronic technology. The lo- more traditional cation, in Chicago’s Lincoln sales engines. Park neighborhood, offers the newest gadgets and latest editions of games, which can be tested on consoles installed in booths. The consoles can be rented by the hour and can also be networked for group playing. “We are in the process of reinventing what Best Buy means to its customers,” says CEO Brad H. Anderson, adding that the company is “finding new ways to serve diverse customer groups.” Whether these concept stores are rolled out as chains is another question, however, since profitability is an issue. “Initially, we care more about what we learn than the economic model of those strategies,” Anderson concedes. One Best Buy concept that is being rolled out involves the Geek Squad, techies who provide support for consumers having problems dealing with technology. After a successful test of freestanding locaS6 STORES / AUGUST 2005

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Rank

21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Company Comment

TOP 1OO SPECIALTY RETAILERS Headquarters

2004 Revenues Y/Y (000) Change

2004 Earnings (000)

Y/Y Change

No. of Stores

Y/Y Change

PETsMART Phoenix $3,360,000 12.1% $171,100 22.6% 726 12.9% Americans are fond of their pets and willing to spend on them as results show in both top and bottom lines; now trying to bolster share price with stock buyback Burlington Coat Factory Burlington, N.J. 3,171,000 11.9 N.A. — 362 3.7 With Monroe Milstein, chairman/CEO of family-run firm now 77, company brings in Goldman Sachs to explore strategic alternatives; Wall Street applauds move

Williams-Sonoma San Francisco 3,136,931 13.9 180,087 14.6 552 7.8 Store openings include recycling Pottery Barn locations into Hold Everything stores; CEO Ed Muller says, “West Elm, over time, has the potential to become our largest brand.”

Luxottica Retail Cincinnati 2,892,712 27.8 386,857 20.9 5,500 5.8 After spending $500 million for Cole National, former head offices in Twinsburg, Ohio, have been closed and everything moved to Lenscrafters HQ in southern part of state 2,661,469 11.1 63,142 -15.6 492 11.8 Linens ‘n Things Clifton, NJ After forecasting losses for this year’s Q2, company pins hopes on successful back-to-school season and fall launch of 600-sku collection by Oprah’s Nate Berkus

2,656,500 -0.2 (2,000) — 4,640 -8.4 Payless ShoeSource Topeka, Kan. Matthew Rubel, former executive vice president at J. Crew and CEO at Nike’s Cole-Haan division, takes CEO post in Topeka after Steve Douglas vacates both CEO and chairman posts in July

Berkshire-Hathaway Retail Omaha 2,601,000 12.5 163,000 -1.2 370 0.8 Though Warren Buffett prefers to take a low-profile approach with chains, Kansas City-based Helzberg Diamonds wants to ramp up attention with new creative communications agency

Sports Authority Englewood, Colo. 2,435,863 38.4 34,150 108.7 392 2.1 After a two-year incubation, positive results start to flow from Gart merger as sales begin to build and margins rise; is Dick’s growing enough to challenge for top spot in segment?

Charming Shoppes Bensalem, Pa. 2,332,334 2.0 67,242 65.5 2,221 -0.3 Good last year, looking for more this year; acquisition of Crosstown Traders enhances multi-channel capabilities as Lane Bryant margins rise and Catherine’s posts double-digit comps Zale Dallas 2,304,440 4.2 106,473 — 2,235 Direct sourcing has led to improved margins during FY ended in July; company also imposed “operating disciplines” to bolster bottom line, says CEO Mary L. Forte

0.0

Pep Boys Philadelphia 2,272,896 6.5 23,579 — 595 0.0 With 130 remodels done in two largest markets, 46 had grand re-openings in Philadelphia in June; stores remerchandise and there’s new emphasis on service offerings

Tiffany New York 2,204,831 10.2 304,299 41.2 150 6.4 Indicative of historic Atlantic City’s new-found panache, Tiffany plans opening at The Pier at Caesar’s next year; also growing in Pacific Rim with new store in Brisbane, Australia Dick’s Corapolis, Pa. 2,109,399 43.4 66,909 26.7 234 43.6 Sported 3.2% same-store sales gains in Q1 2005, but real challenge comes from improving performance of Galyan units acquired last year; if not, Wall Street will turn quickly

Sterling Jewelers Akron, Ohio 2,060,000 9.9 274,000 7.7 1,156 4.8 Largest unit of UK-based Signet, Sterling’s Kay Jewelers chain opened its first New York City store in June in the vicinity of Macy’s flagship Herald Square store Abercrombie & Fitch New Albany, Ohio 2,021,253 18.4 217,489 6.0 787 12.4 Always edgy, sometimes controversial but moving full steam ahead right now; Hollister units have been impressive in early 2005, with plans for Europe and Japan in next two years

Electronics Boutique West Chester, Pa. 1,989,382 24.2 52,287 14.3 1,977 29.4 Being acquired for $1.4 billion by Game Stop, even as it enters Iberian market with its own takeover of Jump Ordenadores of Valencia with 141 locations in Spain Pier 1 Imports Fort Worth, Texas 1,897,853 1.6 60,457 -48.8 1,258 6.7 Positive testing in Columbus, Ohio, and Las Vegas last fall led to spring launches of 84-page catalogs, as much to drive traffic into stores as to sell direct to consumers American Eagle Outfitters Warrendale, Pa. 1,881,241 31.1 213,991 256.7 846 -6.5 Regained footing with move back to marketing to teens; exposure on MTV’s Real World Austin hasn’t hurt, but will it carry through the rest of the year? 743 14.1 -37.2 63,277 16.7 1,853,583 AnnTaylor New York Moved head offices from retail-friendly 57th Street to frenzied Times Square as new CEO Kay Krill tries to replicate in main chain what she did for the Loft division stores

Game Stop Grapevine, Texas 1,842,806 16.7 60,926 -4.0 1,826 20.6 Acquisition of Electronics Boutique will create a $3.8 billion video game behemoth, but the specialty store entity will still rank behind Wal-Mart in total category sales

N.A. – Not available

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STORES AUGUST 2005 S7

TOP 1OO SPECIALTY RETAILERS

57 tions in California, the Geek Squad is being expanded over the next 12 to 18 months to as many as 50 stand-alone sites. These 1,500sq.-ft. units won’t carry any merchandise, but will serve as launching pads from which technicians are dispatched to businesses and homes with technology problems. “We would like to claim for Geek Squad a position as the premier national computer service provider,” Anderson says. Best Buy isn’t putting all of its diversification eggs in the single basket of freestanding formats. In June, the company created two “store-within-a-store” concepts at 45 Best Buy locations in 12 cities. The Magnolia Home Theater store offers state-of-the-art home theater systems, as well as design services and professional installations. (The Magnolia appellation comes from the name of a West Coast-based retailer Best Buy acquired several years ago.) The other new store-within-a-store effort, S8 STORES / AUGUST 2005

6 The upcoming holiday season will be critical for both music retailers like FYE and toy sellers like Toys “R” Us.

Best Buy for Business, offers professional consultation to small business owners, as well as products such as electronic notebooks and network servers. Still another lifestyle effort by Best Buy, one addressing the consolidation of the nation’s drug store industry, involves a joint venture with MinneapolisWWW.STORES.ORG

Rank

41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

Company Comment

TOP 1OO SPECIALTY RETAILERS Headquarters

2004 Revenues Y/Y (000) Change

2004 Earnings (000)

Y/Y Change

No. of Stores

Y/Y Change

$1,835,123 38.8% ($5,264) — 378 34.5% TJX U.S. Specialty Framingham, Mass. Flagship HomeGoods topped $1 billion in sales for first time last year but overall performance was disappointing; still planning rollout of freestanding HomeGoods next to T.J. Maxx, Marshalls

Jo-Ann Stores Hudson, Ohio 1,812,400 4.5 46,200 15.2% 850 -4.7 Superstores, now generating nearly 40% of total volume and out performing traditional units; 40 of the larger stores opening this year as 14 smaller stores have been shuttered

Petco Animal Supplies San Diego 1,812,145 12.5 83,673 29.3 335 -48.8 Back in Nasdaq's good graces after delay in filing annual, quarterly reports almost resulted in delisting this spring; company can now concentrate on upgrading communications infrastructure

Hollywood Entertainment Portland, Ore. 1,782,364 5.9 71,288 -11.0 2,006 4.5 As with so much of what Hollywood is about, been searching for partner with deep pockets: first Leonard Green & Partners, then Blockbuster, before settling on Movie Gallery O’Reilly Automotive Springfield, Mo. 1,721,241 13.9 146,050 45.9 1,249 12.6 Operating with co-presidents Greg Henslee and Ted Wise as O’Reilly family establishes succession plan for company with stores from Carolinas to Kansas; Gulf to Great Lakes

1,697,843 4.5 96,396 -7.9 1,049 6.4 Talbots Hingham, Mass. Competitors step up pressure by also targeting 40-something women; Talbots responds with more flair and trend among its classic offerings; plans to open 50 stores this year

Retail Brand Alliance New York/Enfield,Conn. 1,650,000 10.0 N.A. — — — Closed 84-unit August Max and put both Casual Corner chain and Carolee Designs up for sale; more profitable Brooks Bros. grows internationally and gets more attention CSK Auto Phoenix 1,577,460 0.0 36,881 241.6 1,134 In cost-cutting mode to “provide us with operating leverage as our same-store sales improve,” says Chairman and CEO Maynard Jenkins, company is opening 50 new stores

1.8

Cabela’s Sidney, Neb. 1,555,974 11.7 97,215 14.5 10 11.1 Less than a third of sales come at retail in segment that includes Bass Pro Shops and Gander Mountain; opened stores in Fort Worth and Austin, Texas, markets this year

Men’s Wearhouse Houston 1,546,679 11.1 71,032 35.8 707 2.0 Performance has been improving along with the nation’s economy (demand for men’s suits increased during this period) and the formalwear rental business is along for the ride Guitar Center Westlake Village, Calif. 1,513,172 18.7 63,425 72.1 138 The country’s largest retailer of musical instruments — not that there’s much competition — saw sales and earnings grow by double digits in Q1 this year; acquiring Music & Arts Center

11.3

IKEA Plymouth Meeting, Pa. 1,500,000* 7.1 N.A. — 22 22.2 Stepping up pace of North American expansion to 4-5 new stores a year while looking at new markets such as Atlanta, Dallas and Phoenix; also targeting small business customers

Stein Mart Jacksonville, Fla. 1,459,607 8.0 37,973 1,625.3 261 0.0 Selling more goods at full price, with ladies’ apparel, accessories and menswear all showing strength this year; closed five stores in Q1 and pushing some openings back to 2006 General Nutrition Centers Pittsburgh 1,344,700 -5.9 — — 2,642 -3.9 Since director Robert J. DiNicola (late of Zale’s jewelers) took over as interim chairman in December, company has made several short-term changes while laying longer-term plans

Bass Pro Shops Springfield, Mo. 1,400,000* 10.0 N.A. — 26 12.0 Cavernous locations are part emporium, part museum; opened in Macon, Ga., in January with another due in San Antonio by year’s end; first California store set for 2007

L.L. Bean Freeport, Maine 1,410,000 8.9 N.A. — 16 0.0 Coming off strong year in 2004, Bean plans to add six stores — more than in any one year previously — in the New England/Mid-Atlantic region by end of 2007 TransWorld Entertainment Albany, N.Y. 1,365,100 2.6 41,800 81.0 800 -3.9 Video games, accessories pick up slack for sluggish performance of new music and DVD releases, says chairman/CEO Robert Higgins; digital download strategy still being devised Polo Ralph Lauren New York 1,348,645 15.2 190,425 12.5 278 Regained control of many of labels and lines that had been licensed; quickening growth with 50-60 domestic and 20-25 European stores

5.7

1,308,600 3.6 60,300 16.4 1,275 -0.6 Famous Footwear Madison, Wis. Parent Brown Shoe reorganized branded shoe stores, closing 80 Naturalizer units while opening 30 outlet stores, but Famous chain is the engine that drives retail operations — 345 N.A. 8.3 1,300,000* Hobby Lobby Oklahoma City Closing locations on Sunday doesn’t seem to have slowed growth of what are now called “creative centers” rather than stores, with 15 more slated to open prior to year’s end

N.A. – Not available

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*Estimate

7.8

STORES AUGUST 2005 S9

TOP 1OO SPECIALTY RETAILERS

3 based PrairieStone Pharmacy and Park Nicollet Health Services into wellness and health care electronic gadget retailing — everything from air purifiers to sphygmomanometers. All of this comes amidst a push by Best Buy to grow to as many as 1,200 stores in North America and begin opening stores in China before the end of 2006. The company, which has about 850 stores in the United States and Canada, has been opening about 75 locations annually in recent years. That pace will quicken as the company begins to open more compact, 20,000-sq.-ft. units in smaller markets and big city neighborhoods. The push into China involves “lab stores,” which the company describes as “a way to accelerate learning about the diverse consumers” in that country, where the company currently has three sourcing offices. Apparel retailers, led by No. 2 Gap and No. 8 Limited, form the largest subset of the Top 100 Specialty Retailers. Right now, garment manufacturers — still reeling from the Kmart-Sears merger and Federated Department Stores’ blockbuster acquisition of May Department Stores — are S10 STORES / AUGUST 2005

38 trying to figure out where they will sell clothing after suffering through years of sluggish sales and diminishing returns. Domestic apparel sales grew steadily though the 1990s, hitting a high of nearly $176 billion in 2000, according to market research firm NPD Group. The trends have not been very positive since then, however. Annual sales fell each year from that 2000 peak until 2004 when, NPD reWWW.STORES.ORG

Rank

61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80

Company Comment

TOP 1OO SPECIALTY RETAILERS Headquarters

2004 Revenues Y/Y (000) Change

2004 Earnings (000)

Y/Y Change

No. of Stores

Y/Y Change

Claire’s Stores Pembroke Pines, Fla. $1,279,407 12.9% $143,124 24.4% 2,840 1.1% Costume jewelry and accessories offerings were strong last year and have continued to show well early in 2005; European stores, emulating U.S. trends, also sport positive comps in first half Goody’s Family Clothing Knoxville, Tenn. 1,266,993 3.3 15,653 -11.4 358 6.9 Exited Charlotte, N.C., market in January with first store closings in more than a year, though it still has 46 units in Tar Heel state with another outlet opening this fall

1,243,851 27.9 53,676 -2.4 528 1.9 Stage Stores Houston 7 of 10 new stores opened this year are Peebles units as division outperforms Beall’s and Stage stores; distribution functions moved from Knoxville, Tenn., to South Hill, Va. 1,229,762 18.1 105,892 32.6 990 12.9 Pacific Sunwear Anaheim, Calif. Planning a larger prototype (8,000 sq. ft. vs. current 3,600 sq. ft.) for surf-and-skate styles with an eye on 1,400 stores and $2 billion in sales by the end of 2007

1,166,767 18.3 61,263 29.6 605 13.9 Finish Line Indianapolis Q1 earnings up 24%, sales 13% as selling space grew 12%; new prototype for Man Alive chain — now 38 stores strong — selling men’s and ladies’ hip hop fashions 1,157,546 45.1 43,264 88.5 1,056 Children’s Place Secaucus, N.J. Bought 313 Disney Stores last fall with commitment to spend $100 million upgrading them and paying licenses to Disney; now the chain is expanding into outlet shopping centers

52.8

P.C. Richard Farmingdale, N.Y. 1,125,000* 7.1 N.A. — 49 4.3 Largest of the country’s family-owned-and-operated retailers selling major appliances and consumer electronics; service, repairs and contractor sales also part of equation

Genesco Nashville 1,112,681 32.9 48,401 -83.2 1,618 55.6 Journeys is the best performer among the footwear chains, while Hat World continues to dazzle with 7% comps in Q1, even up against a 23% same-store sales rise in prior year

Chico’s FAS Fort Myers, Fla. 1,066,882 38.8 141,206 40.9 668 21.2 Grew from $250 million volume in 2000 to more than $1 billion last year; CEO Scott Edmonds sees the next billion coming even faster, starting with 100 new stores this year New York & Co. New York 1,040,028 8.1 18,106 8.7 477 1.7 Former Limited Inc. chain was sold to Bear Stearns Capital II and then taken public last year; strong accessories sales helped boost comps 7.2% during 2004

Eddie Bauer Redmond, Wash. 1,000,000* -43.5 N.A. — 418 -7.5 All that’s left of Spiegel Inc.; the venerable catalog is no more, and former owner Michael Otto is out of the post-bankruptcy picture; home division shut stores

Aeropostale New York 964,212 31.2 84,112 55.0 561 21.4 18-year-old chain charging along in value-priced apparel for teens segment as fashion-follower able to get trends into stores quickly; lot of room to grow in Calif., Fla. and Texas Crate & Barrel Northbrook, Ill. 925,000* 5.7 N.A. — 130 Gordon Segal wants to stay “entrepreneurial” as website gets high marks for its shopping experience; opened a fourth The Land of Nod kids’ furniture and accessories location

2.4

Cost Plus Oakland, Calif. 908,560 13.3 30,221 -7.5 236 13.5 Q1 was tough as comps dipped 1.9%, but new store openings are on schedule and overall sales continue to grow; CEO search on to succeed retiring Murray Dashe

Tuesday Morning Dallas 897,841 9.1 62,617 16.7 662 14.7 Aiming at 1,000 stores by 2010 and rethinking merchandising approach to appeal to younger shoppers; sales events remain, but stores don’t close as often as they once did Recreational Equipment Kent, Wash. 887,807 10.2 315 32.4 78 Adding stores and expanding catalog distribution as it ventures beyond mountain-climbing gear origins to generic outdoor sporting goods and apparel, though house brands dominate

2.6

Academy Sports Houston 850,000* 7.5 N.A. — 80 14.7 With lack of national powerhouse in sporting goods specialty segment, long-time Texas leader has been growing at double-digit rate for the last 15 years

Urban Outfitters Philadelphia 827,800 50.9 90,489 87.1 142 25.7 Three chains — Urban Outfitters, Anthropologie and Free People — with no two stores alike, brags founder/CEO Richard Hayne, in narrow-focusing on niche markets for under 45s J. Crew New York 804,000 16.5 (100,000) — 198 1.0 With Mickey Drexler at helm, company turned red ink to black in Q1 with a 37% jump in same-store sales; expense controls also influenced bottom line performance

H.H. Gregg Indianapolis 803,199 6.6 29,248 3.7 60 9.1 Consumer electronics and appliance dealer got sales boost from five new stores in Atlanta and other Southeastern markets; adding seven stores in the Carolinas this year

N.A. – Not available

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*Estimate

STORES AUGUST 2005 S11

TOP 1OO SPECIALTY RETAILERS

46 ports, they rose 4 per- Women’s apparel cent — but for a total of sales continue to only $173 billion. plod along, while In addition to stagnant personal products sales, there has been de- and home accesflation in the prices con- sories keep regissumers have paid for ters humming. clothing, which have declined in each of the last six years, according to the federal Bureau of Labor Statistics. With shrinking numbers of department stores and other large dry goods retailers selling clothing and the increased pressure on manufacturers to find new outlets for their wares, the landscape would appear favorable for apparel-selling specialty stores. In light of the elimination of import quotas for sourcing garments from around the world, multiple-format operators such as Limited and 8 Gap should be upbeat, if not ecstatic. Such is not the case, however. The truth is that apparel sales are falling as a percentage of total sales at Limited, and its clothing chains are actually a drag on earnings. Limited, which has opened and closed, bought and sold more retail formats and addressed more lifestyle needs than any other specialty store operator, is going through its own extreme makeover. S12 STORES / AUGUST 2005

Tops, bottoms, suits, slacks, shirts and skirts are not the future of Limited, Leslie Wexner told shareholders this spring. “We’ve reinvented ourselves completely. We are now predominantly a personal care, beauty and lingerie company,” he said, noting that non-intimate apparel accounted for just 29 percent of 2004 sales, while personal WWW.STORES.ORG

Rank

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99

Company Comment

TOP 1OO SPECIALTY RETAILERS Headquarters

2004 Revenues Y/Y (000) Change

2004 Earnings (000)

Y/Y Change

No. of Stores

Y/Y Change

$791,177 14.3% $49,488 0.1% 2,482 15.0% Movie Gallery Dothan, Ala. Picked up where Blockbuster left off in bidding for rival Hollywood Entertainment; acquisition gives company West Coast base and moves it out of rural, small-town markets 784,162 5.3 22,754 -10.2 118 4.4 Haverty Furniture Atlanta Results have been upbeat so far this year, with total sales up 8.1% in first half and same-store sales up 3.5% as management looks for more and a strong finish to 2005 780,300 13.8 N.A. — 1,037 4.7 Jones Apparel Retail New York Cognescenti suggesting acquisition of Barneys New York signals rapid growth for the retailer and a major directional shift for apparel maker in light dust-up with Ralph Lauren 778,905 9.7 34,259 30.3 309 5.5 Big 5 Sporting Goods El Segundo, Calif. Athletic footwear was star performer as company posted 37th consecutive quarter of positive same-store sales results; opening 16-20 new stores this year in western markets 773,809 5.7 34,607 10.3 1,177 6.8 Cato Charlotte, N.C. Consolidating house-brand apparel under the Cato label while focusing on emerging fashion trends and colors; reorganizing product development and sourcing functions

Tweeter Home Ent. Canton, Mass. 771,553 -2.0 (11,662) 0.0 176 1.1 Quit franchise deal with Bang & Olufsen; opened prototype architecture unit in Las Vegas last January that includes offerings of supplier/partners Hewlett Packard, Microsoft

17.4 14,650 -36.6 175 17.4 Sharper Image San Francisco 760,003 Rough start to 2005 — a “transition year,” says CEO Richard Thalheimer — but high expectations for new merchandise lines being unveiled this fall, including MP3 devices

KB Toys Avon/Pittsfield, Mass. 750,000* -10.0 — — 900 -18.2 Planning to emerge from Chapter 11 bankruptcy protection in time for this year’s holiday selling season; has closed 600 stores since filing bankruptcy petition in January 2004 Dress Barn Suffern, N.Y. 754,903 6.8 30,141 274.7 776 0.5 $350 million acquisition of 470-store Maurices chain in January depressed earnings, but adds about $200 million in annual sales for FY ended July 30, 2005 Fry’s Electronics Palo Alto, Calif. 700,000* 2.9 — — 28 Legendary Silicon Valley old-timer stays on cutting edge to meet demands of loyal customer base and innovative merchandise buying and presentations

3.7

Modell’s New York 700,000* 7.7 — — 130 1.6 Though sporting goods is part of official company name, athletic footwear, sporting apparel and other menswear are part of the mix in its East Coast, often urban locations J&R Music/Comp. World New York 700,000* 7.7 N.A. — 6 0.0 Music, computers, audio and video are all part of lower Manhattan world — where half the sales are online or mail order — and now there are housewares on the shelves

BrandsMart USA Hollywood, Fla. 700,000* 9.4 — — 6 20.0 40,000 sku’s worth more than $8 million stuffed into each warehouse-sized store from Palm Beach County to Florida Keys including white goods, brown goods, CE, small appliances and housewares

West Marine Watsonville, Calif. 682,379 3.2 25,534 27.1 376 8.7 Boating supplier in search of president/COO after Richard Everett announced intention to step down after 25 years; CEO Peter Harris assumed president’s title and duties in June

41,364 83.4 568 2.7 12.9 675,834 Too Inc. New Albany, Ohio Though TV campaign didn’t generate the buzz CEO Mike Rayden had hoped, higher margins boosted this year’s Q1 earnings to record level; Justice chain adding 50-60 units

Ultimate Electronics Thornton, Colo. 658,300 -7.7 N.A. — 62 -4.6 Sold 32 stores to CEO Mark J. Wattles in April for $43.8 million and assumption of liabilities; liquidating rest of chain and other assets after Chapter 11 filing Jan. 11, 2005

Hot Topic City of Industry, Calif. 656,468 14.8 39,673 -16.6 679 21.0 Testing Divastyle loyalty card for trendy 15- to 29-year-old set at Torrid, the company’s plus-size, fashion-forward women’s apparel and accessories chain Gander Mountain St. Paul, Minn. 642,140 31.2 (3,547) -77.6 82 7.3 Completed first year as a public company and plans to open 18-20 stores in 2005 in the competitive outdoor sporting goods segment; eyeing $850 million volume this year Forever 21 Los Angeles 640,000 26.7 N.A. — 205 2.5 Growing quickly in both Forever 21 and Forever XXI formats, company purchased Gadzooks at bankruptcy sale and will operate 150 stores under the Gadzooks name

646 -61.4% 9,915 8.2% 594,478 Gymboree San Francisco 100 Matt McCauley takes over as president, reporting to CEO/chair Lisa Harper; sales rose but income slipped in Q1, then turned red in Q2 N.A. – Not available

WWW.STORES.ORG

*Estimate

5.0

STORES AUGUST 2005 S13

TOP 1OO SPECIALTY RETAILERS

SPECIALTY STORE GROWTH A QUARTER-CENTURY OF

1981

Company (Headquarters)

1980 Sales (000)

Petrie Stores (Secaucus, N.J.) $479,000 U.S. Shoe Apparel (Cincinnati) 373,700 Gap Stores (San Bruno, Calif.) 369,800 Limited Stores (Columbus, Ohio) 265,300 Miller-Wohl (Secaucus, N.J.) 201,700 Edison Bros. Apparel (St. Louis) 185,900 Melville Retail Apparel (Rye, N.Y.) 171,000 Brooks Fashion Stores (New York) 148,200 W.R. Grace Retail Apparel (New York) 139,000 Charming Shoppes (Bensalem, Pa.) 126,100

T

Number of Stores 697 620 472 322 268 772 527 401 204 202

itled the “Specialty Store Showcase” and including only clothing stores, the proto-specialty retail store survey was created by STORES editor Joan Bergmann and New York Timesman Isadore Barmash, who had previously worked together at Home Furnishings Daily. Unlike subsequent Top 100 surveys, this showcase listed, in alphabetical order, only nine chains and four conglomerates. The smallest company was Topps & Trowsers at $19.4 million in volume. W.R. Grace was parent of Berman’s, Shepler’s and Diana Shops. U.S. Shoe operated both women’s wear and menswear chains, the largest of which was Casual Corner. Edison Brothers, like U.S. Shoe, a footwear manufacturer whose shoe stores were not included in the study, operated chains such as Fashion Conspiracy, Jeans West and Oak Tree, and Size 5-7-9. Melville was a real conglomerate, operating CVS drug stores and shoe chains like Thom McAn, but only its apparel divisions (Foxmoor, Clothes Bin, Chess King and Metro) were included.

continued on page S15 S14 STORES / AUGUST 2005

73 care generated 30 percent and Crate & Barrel lingerie 41 percent. A decade gives nod to kidsearlier, apparel accounted for focused concept, 71 percent of sales, intimate ap- while "operating parel 25 percent and personal disciplines" have bolstered the bottom care products just 4 percent. More telling is the fact that in line at Zale. 2004, roughly two-thirds of Limited’s sales — and virtually all of its earnings — were rung up by Victoria’s Secret and Bath & Body Works. The situation hasn’t changed much so far this year. Poor performance at the Limited and Express clothing chains pulled down corporate earnings in the first quarter, prompting the company to lower fullyear expectations. Part of Limited’s transformation/reinvention has been precipitated by the consolidation in the drug store and supermarket industries, where huge amounts of personal care and beauty products are sold each year. Thus, Limited’s C.O. Bigelow Apothecary is set to open six units later this year. Bath & Body Works, which has just introduced the Breathe fragrance and skin care line, will launch an online selling site this fall. And just a couple of months ago, Limited bought Slatkin & Co., a maker of merchandise such as scented candles and potpourri. Clothing, even apparel intended for the mass market, is not yet at commodity status, but the consumer loyalty that operators like the Gap have relied on for decades seems to have evaporated in the face of tough competition from the likes of Wal-Mart and Target, fast-moving retailers like H&M and Forever 21 and highly-focused operations like Chico’s. Gap has been in a turnaround mode for a couple of

WWW.STORES.ORG

TOP 1OO SPECIALTY RETAILERS S P E C I A L T Y S T O R E G R O W T H (continued)

1985

Company (Headquarters) Mervyn’s (Hayward, Calif.) Radio Shack (Fort Worth, Texas) Toys “R” Us (Rochelle Park, N.J.) Marshalls (Woburn, Mass.) Nordstrom (Seattle) Petrie Stores (Secaucus, N.J.) Saks Fifth Avenue (New York) Levitz Furniture (Miami) Neiman-Marcus (Dallas) Lerners (New York)

30 years now, a period that has seen the departure of Mickey Drexler (who later resurfaced at J. Crew) and the dawn of the Paul Pressler era. Mistakes have been made, as Pressler readily admitted to securities analysts in May. “At Gap, we are pleased with the progress we’ve made in the menswear business, but are not yet satisfied with our women’s products,” Pressler said. “In our efforts to serve more occasions for women, we broadened our merchandise and design perspective going a bit outside Gap’s iconic aesthetic.” By going for a bigger piece of the pie and falling flat in the process, Gap saw first quarter earnings slip 6.7 percent below last year’s opening period, as total sales decreased 1.1 percent and comparable-store sales fell 4 percent. The closing of a number of stores during the last fiscal year also contributed to the declines. Without putting a name on it, Gap is continuing to experiment with a lifestyle design that addresses consumers by gender rather than as unisexual, metrosexual, asexual — or sexually confused. From a sevenstore test in the Denver area last fall, Gap is expanding the concept to 10 locations in Connecticut and five in the San Diego area. Looking beyond apparel, Gap unveiled an accessories-only store on New York’s Fifth Avenue, displacing a babyGap adjacent to a full-line Gap store. The 800-sq.-ft. space, called Love, was a holiday-inspired effort to promote new packaging and decor for accessories that was intended to roll out to select Gap stores. And moving into territory plowed by Limited, WWW.STORES.ORG

T

1984 Sales (000) $2,141,000 2,133,000 1,702,000 1,190,000 983,000 951,000

815,000 761,000 725,000 700,000

Number of Stores 126 4,717 203 209 39 1,360

40 92 21 800

he fifth edition of the Top 100 Specialty Store Retailers showcased both hardline and softline specialists, including many operators that were not primarily mall-based chains. Thus, fashion stores such as Nordstrom, NeimanMarcus and Saks Fifth Avenue were included, even though they looked like department stores and competed with department stores but weren’t considered department stores because they didn’t have furniture, toys, sporting goods, appliances or luggage departments.

Large-scale, promotions-driven apparel sellers such as Marshalls and T.J. Maxx were included, as was Mervyn’s, the West Coast brainchild of Merv Morris, who had sold the busi-

ness to Minneapolis-based Dayton Hudson 10 years earlier. Dayton Hudson became Target, named for its large discount store division, and only last year did the company sell Mervyn’s, to a group of privately-held investment firms. Compiling the Top 100 with Bergmann was David P. Schulz, former editor of Chain Store Age Executive.

continued on page S16

THE SPECIALTY STORE DEFINED The STORES Top 100 Specialty Retailers is an annual survey that provides a snapshot of leading merchants whose offerings are limited to a single category or closelyrelated classifications of merchandise typically found in a traditional full-line department store. Retailers have evolved, merchandising options have split and merged and re-split, and some new ones have come into existence since the survey was begun 25 years ago, so distinctions that were once quite clear may now have blurred. Excluded from the specialty store chart are such broadline

retailers as discount stores, warehouse clubs and dollar/closeout stores, as well as supermarkets, drug stores, convenience stores, building materials dealers, auto dealerships and service merchants such as beauty salons, barber shops, gasoline service stations and travel agencies. The ratings on the chart are determined by sales volumes and revenues as of the end of the 2004 fiscal year. Estimates, where they appear, are based on information from company executives, consultants, industry observers, securities analysts and/or vendors. STORES AUGUST 2005 S15

TOP 1OO SPECIALTY RETAILERS S P E C I A L T Y S T O R E G R O W T H (continued)

1990

Company (Headquarters) Toys “R” Us (Rochelle Park, N.J.) The Limited (Columbus, Ohio) Kinney Shoe (New York) Radio Shack (Fort Worth, Texas) Circuit City (Richmond, Va.) Marshalls (Woburn, Mass.) T.J. Maxx (Framingham, Mass.) Gap (San Bruno, Calif.) Petrie Stores (Secaucus, N.J.) U.S. Shoe Apparel (Cincinnati)

B

1989 Sales (000)

Number of Stores

1,677,000 1,587,000 1,258,000 1,234,000

352 960 1,569 1,721

$4,788,000 4,648,000 3,042,000 2,940, 000 2,097,000 1,939,000

404 3,188 3,604 4,821 149 347

y the 10th year, the Top 100 Specialty Store Retailers

ranking was taking on an appearance that would be recognizable to today’s readers, with names such as Toys “R” Us, Limited, Radio Shack and Gap clustered near the top of the chart. Conglomerates were represented by their components rather than as entities themselves; thus U.S. Shoe’s apparel stores — led by Casual Corner — rested in the 10th spot, while the shoe divisions were ranked in the 71st position. Another U.S. Shoe subsidiary, holding down the No. 28

rung, was LensCrafters. Kinney Shoe, and its Foot Locker chain, ranked third representing F.W. Woolworth, while the five-and-dime retailer also owned 99th-ranked Little Folks apparel stores. New to the chart this year were West Coast consumer electronics retailer The Good Guys, Clothestime, Contempo Casuals, Gantos, Claire’s Stores and Circus World, a toy retailer. Merry-Go-Round was the hottest chain, jumping from No. 56 to No. 33 in one year.

1995

Company (Headquarters) Toys “R” Us (Paramus, N.J.) Limited (Columbus, Ohio) Melville Specialty (Rye, N.Y.) Circuit City (Richmond, Va.) Best Buy (Eden Prairie, Minn.) Tandy (Fort Worth, Texas) Office Depot (Del Ray Beach, Fla.) Woolworth Specialty (New York) TJX (Framingham, Mass.) Gap (San Francisco)

1994 Sales (000)

Number of Stores

4,943,679 4,226,199 3,977,000

6,920 420 7,406

$8,745,586 7,320,792 5,674,747 5,582,947 5,079,557

3,842,818 3,722,940

1,115 4,867 3,227 204 204

1,098 1,508

continued on page S17 S16 STORES / AUGUST 2005

Gap has launched Gapbody, offering personal care, beauty, fragrance and lingerie. Eleven Gapbody units are slated to open this year. Office supply stores are a small but strong niche, claiming three of the first five spots on the Top 100 Specialty Retailers chart. Ranked third, fourth and fifth, Staples is the largest, Office Depot is a rung below and the extensively restructured OfficeMax — bulked with former Boise Cascade operations — is a close third in sales volume. As with all the office supply dealers, Staples is really a conglomerate with direct-selling and small-business operations, as well as a presence in several regions around the globe. Even with its base of small- and home-business customers, however, Staples addresses lifestyle issues in many of its efforts. A test of selling office supplies in supermarket aisles was so successful that it began rolling out the concept in July to more than 550 Stop & Shop stores on the East Coast. Earlier this year, Staples opened its first stores in the Chicago area, where it plans to have 20 units in operation by December and as many as 50 within the next two or three years. The Chicago stores are of the “Back to Brighton” type, named for the Massachusetts town where the concept was unveiled four years ago. The model involves enhanced customer service that includes a greater presence of store associates in areas where shoppers tend to have more questions. There is also upgraded technology consultation and assistance, and a WiFi section in the store for the free use of customers. In describing the store interior, Staples regional manager Bob Wolfe says, “We use color schemes that serve to Talk about a pressure catch the eyes of consumers cooker . . . OfficeMax across the store and include a holds the No. 5 spot, number of lifestyle photos to trailing Staples at No. 3 and Office help tell a story.” OfficeMax is being reshaped Depot at No. 4 on following a convoluted evolu- the Top 100 list.

5 WWW.STORES.ORG

TOP 1OO SPECIALTY RETAILERS S P E C I A L T Y S T O R E G R O W T H (continued)

W

66 tion over the past 18 months. The one-time Kmart subsidiary based in Shaker Heights, Ohio, was taken over by forest products company Boise Cascade, which then shed its timber business, merged OfficeMax with its business products and services unit and renamed the entire company OfficeMax. Earlier this year there was a major shakeup in the executive suite, capped by the April arrival of Sam Duncan as president and CEO. Duncan, former president of Fred Meyer, had been head of ShopKo Stores until it was sold to a private equity firm earlier this year. In late June, Duncan added the duties of chairman. Office Depot is also operating with new leadership. In March, Steve Odland was recruited as chairman and CEO. Odland had been chairman, CEO and president at AutoZone. Both Office Depot and OfficeMax have been ramping up store openings in order to keep pace with Staples. Office Depot is opening as many as 60 stores this year, primarily in the Northeast and New England. Office Depot made a similar move into the same territory in 1998, only to close many of the stores within a couple of years. Many of the new stores Office Depot is opening are former Kids “R” Us locations

ith Rick Gallagher now editor and pubElectronics, lisher of STORES, a lot was office supply new about the 15th edition stores rise to of the Top 100 Specialty prominence Stores. Along with the NRF, STORES had moved from New York’s garment district to Washington, D.C. Retail conglomerates with specialty store operations were listed by total volume. No. 3 Melville, for example, sported an impressive portfolio that included Marshalls, Wilsons House of Leather, Bob’s Stores, Footaction, Thom McAn, Kay-Bee Toys (as it was known then), Linens ’n Things and This End Up, among others.

2000

Company (Headquarters)

1999 Sales (000)

Circuit City (Richmond, Va.) $12,614,390 Best Buy (Minneapolis) 12,494,023 Toys ‘R’ Us (Paramus, N.J.) 11,862,000 Gap (San Francisco) 11,635,462 Office Depot (Del Ray Beach, Fla.) 10,263,280 Limited (Columbus, Ohio) 9,723,334 Staples (Westborough, Mass.) 8,842,460 TJX (Framingham, Mass.) 8,795,347 CompUSA (Dallas) 6,321,391 OfficeMax (Shaker Heights, Ohio) 4,842,698

A

Number of Stores 658 357 1,548 3,018 825 2,913 1,129 1,357 104 946

new century was dawning, and the Top 100 Specialty Store Retailers reflected the technology bubble that had yet to burst. Consumer electronics specialists Circuit City and Best Buy ranked first and second on the chart. Office supply retailers — no small sellers of computers and other electronic machines themselves — nailed down three of the Top 10 spots. There were signs of change elsewhere on the chart, as well. Resting in the 11th position was Venator, the venerable former F.W. Woolworth en route to becoming what it is today — Foot Locker. Limited, which has long been an incubator of retail concepts, had spun off the Victoria’s Secret stores and catalog

and a few other concepts into a company called Intimate Brands, ranked No. 12 with sales of $4.5 billion. Just a couple of years later, Limited brought Intimate Brands back into the

fold and the recombined company was called Limited Brands. WWW.STORES.ORG

STORES AUGUST 2005 S17

TOP 1OO SPECIALTY RETAILERS

I

THE ECONOMY

WILL IMPROVING CONSUMER CONFIDENCE BOOST SALES?

nflation may or may not be on the move, but don’t count on Alan Greenspan and the Federal Reserve to provide any clear guidance. The board raised the federal funds rate 0.25 percent on June 30, but didn’t provide a lot of explanation for the move, much less enlightenment as to where the economy might be headed for the second half of this year. For retailers who watch what shoppers are doing, however, the news is that consumer confidence hit a three-year high in June, moving up to 105.8 on the monthly index developed by the Conference Board, a New York-based economic research organization. The June uptick came on the heels of a rise to 103.1 in May. “The improvement in consumers’ mood suggests that business activity and labor market activity will continue to pick up over the next several months,” says Lynn Franco, director of the Conference Board’s Consumer Research Center. “And with consumers in better spirits and job con-

acquired from Toys “R” Us last year. Four of the Top 10 specialty store retailers are living on past glory and struggling to remain relevant in the 21st century: Toys “R” Us (6), Circuit City (7), Blockbuster (9) and AutoZone (10). Toys “R” Us has been downsizing for more than a year as its status as category killer continues to diminish. WalMart surpassed TRU several years ago as the nation’s largest seller of 16 toys. TRU’s management had been searching for new directions, but apparently not successfully or fast enough for a consortium of private investors, which offered shareholders a price premium for their common stock to take the company private. Once the purchase was finalized in June, chairman and CEO John Eyler and COO Christopher Kay left TRU. Investment companies Bain Capital and Kohlberg Kravis Roberts, together with Vornado Realty Trust, have not said what they plan to do with the company. But Michael Souer, an analyst with Standard & Poor’s, observes that the new owners “obviously think the company is worth a lot more and perhaps [former] management was the problem in realizing that shareholder value.” Circuit City — once larger than Best S18 STORES / AUGUST 2005

cerns remaining relatively steady, there is little reason to expect a dramatic shift in consumer spending.” Consumer prices have moderated since the beginning of the year — actually declining in May for the first time in 10 months — while the economy as a whole has exhibited slow-but-steady growth. While most observers feel the Fed will continue to raise the funds rate (perhaps to 4 percent by the end of the year), how this impacts consumer spending and retailers’ prospects for the second half of 2005 is the question of the moment. “Despite fears that consumers are finally throwing in the towel, [June’s] results show that consumers’ desire to shop remains intact,” says Steve Spiwak, an economist with market research firm Retail Forward. “Job growth, home buying and the recent stock market run-up are providing a solid foundation for near-term spending prospects.”

Buy after transforming itself from Wards stores during the go-go electronics years — is another company in search of a successful operating plan. Earlier this year, the company announced the closing of 19 superstores, five regional offices and a distribution center. The shuttered stores showed “no reasonable expectations of positive cash flow and [were] without relocation opportunities over the near term,” says W. Alan McCullough, chairman and chief executive of Circuit City. Ever since its unsuccessful attempt to take over rival Hollywood Entertainment, Blockbuster has become a battleground for deep-pocketed investors. With the video rental market shrinking in the face of online direct-delivery competition, billionaire financier Carl Icahn fought his way onto Blockbuster’s board of directors specifically to make the company more receptive to putting itself up for sale. AutoZone has come under fire for failing to keep up the appearance of its stores and being inattentive to customers in favor of paying off creditors. St ORES 39

David P. Schulz, a New York-based writer and editor, reports on U.S. and foreign retailers for several publications. WWW.STORES.ORG

TOP 1OO SPECIALTY RETAILERS COMPANY

Abercrombie & Fitch

HEADQUARTERS

New Albany, Ohio

RANK

35

Academy Sports

Houston

Aeropostale

New York

72

New York

39

Advance Auto Parts American Eagle Outfitters AnnTaylor AutoZone

Barnes & Noble

Bass Pro Shops

Roanoke, Va. Warrendale, Pa. Memphis, Tenn. New York

77 19

38 10 13

Springfield, Mo.

55

Berkshire-Hathaway Retail

Omaha

27

Big 5 Sporting Goods

El Segundo, Calif.

Bed Bath & Beyond Best Buy Big Lots

Blockbuster

Borders Group

Union, N.J.

Minneapolis

Columbus, Ohio Dallas

Ann Arbor, Mich.

12 1

84

15

9

18

BrandsMart USA

Hollywood, Fla.

93

Cabela’s

Sidney, Neb.

49

Charming Shoppes

Bensalem, Pa.

Burlington Coat Factory Cato

Chico’s FAS

Children’s Place

Burlington, N.J.

Charlotte, N.C.

85

Fort Myers, Fla.

69

66

Pembroke Pines, Fla.

61

Richmond, Va.

CompUSA

Dallas

Cost Plus

Crate & Barrel

29

Secaucus, N.J.

Circuit City

Claire’s Stores

22

Oakland, Calif.

Northbrook, Ill.

7

17

74

73

CSK Auto

Phoenix

48

Dress Barn

Suffern, N.Y.

89

Dick’s

Corapolis, Pa.

33

Eddie Bauer

Redmond, Wash.

71

Famous Footwear

Madison, Wis.

59

Electronics Boutique

West Chester, Pa.

Finish Line

Indianapolis

Forever 21

Los Angeles

Game Stop

Grapevine, Texas

Foot Locker Fry’s Electronics Gander Mountain Gap

General Nutrition Centers

New York

36

65

11

99

Palo Alto, Calif.

90

St. Paul, Minn.

98

Pittsburgh

54

San Francisco

40 2

Genesco

Nashville

68

Guitar Center

Westlake Village, Calif.

51

H.H. Gregg

Indianapolis

Goody’s Family Clothing Gymboree

Knoxville, Tenn. San Francisco

Haverty Furniture

Atlanta

Hollywood Entertainment

Portland, Ore.

Hobby Lobby

WWW.STORES.ORG

Oklahoma City

62

100 80

82

60

44

COMPANY

Hot Topic IKEA

HEADQUARTERS

City of Industry, Calif.

Plymouth Meeting, Pa.

J&R Music/Computer World New York J. Crew

Jo-Ann Stores

New York

79

88

Freeport, Maine

Linens ‘n Things

Clifton, NJ

Men’s Wearhouse

Houston

Michaels Stores

92

Avon/Pittsfield, Mass.

L.L. Bean Luxottica Retail

52

42

New York

Limited

97

Hudson, Ohio

Jones Apparel Retail KB Toys

RANK

Columbus, Ohio

Cincinnati

83 56

8

25

24

50

Irving, Texas

20

Movie Gallery

Dothan, Ala.

81

Office Depot

Delray Beach, Fla.

O’Reilly Automotive

Springfield, Mo.

45

Anaheim, Calif.

64

Modell’s

New York & Co. OfficeMax

P.C. Richard

Pacific Sunwear

Payless ShoeSource Pep Boys

New York

New York

Itasca, Ill.

Farmingdale, N.Y. Topeka, Kan.

Philadelphia

91 70 4 5

67

26

31

Petco Animal Supplies

San Diego

43

Pier 1 Imports

Fort Worth, Texas

37

PETsMART

Polo Ralph Lauren RadioShack

Phoenix

New York

Fort Worth, Texas

Recreational Equipment

Kent, Wash.

Ross Stores

Pleasanton, Calif.

Retail Brand Alliance Sharper Image

San Francisco

87

Staples

Framingham, Mass.

Sterling Jewelers

Akron, Ohio

Tiffany

New York

Talbots

Houston

Jacksonville, Fla.

Hingham, Mass.

TJX U.S. Specialty

Framingham, Mass.

Toys “R” Us

Wayne, N.J.

Too Inc.

14

76

47

Englewood, Colo.

Stein Mart

58

New York/Enfield,Conn.

Sports Authority Stage Stores

21

New Albany, Ohio

16

28

63 3

53

34 46

32

41

95 6

TransWorld Entertainment

Albany, N.Y.

57

Tweeter Home Ent.

Canton, Mass.

86

Urban Outfitters

Philadelphia

Tuesday Morning

Ultimate Electronics

Dallas

Thornton, Colo.

75

96

78

West Marine

Watsonville, Calif.

94

Zale

Dallas

30

Williams-Sonoma

San Francisco

23

STORES AUGUST 2005 S19

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