Top 100 US Speciality Retailers

StORES

A SPECIAL REPORT SPONSORED BY ALLIANCE DATA SYSTEMS

T H E D E F I N I T I V E R A N K I N G 2 O O 5

®

Specialty retailers, once dismissed as “satellites” meant to fill up mall spacebetween department store anchors, are now a major force in retailing, whetherin the context of shopping centers or as freestanding entities.One factor boost-ing specialty retail is the growth of so-called lifestyle shopping centers. Thoughthe configurations differ, these centers generally are mixed-use facilities in-corporating some combination of residential and recreational/entertainmentusage with retail stores. The tenor, or lifestyle aspect, is created by the retailtenants, which typically do not include a department store or large generalmerchandise retailer.

Specialty store operators are themselves playing the “lifestyle” card. Bigbox retailers, such as Best Buy andBed Bath & Beyond, are usingsmaller, more intimate locationswith narrowly focused offeringsto penetrate niche markets.

Best Buy, which once againtops the STORES Top 100 Spe-cialty Retailers chart, is usingboth concept stores and serviceoutlets to address consumers’lifestyles, while Bed Bath & Be-yond is using recent acquisi-tions to edge beyond its home-store envelope toward otheraspects of shoppers’ lifestyles.

Best Buy is testing neigh-S2 STORES / AUGUST 2005 WWW.STORES.ORG

Shakeouts 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.

THE NATION’S BIGGEST

SPECIALTYCHAINSSPECIALTYCHAINSBY DAVID P. SCHULZ

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WWW.STORES.ORG

Alliance 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

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 pre-

pared. 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 mar-

ketplace 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 cus-

tomer and their brand, and turn casual shoppers into dedicat-

ed 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 Sys-

tems.

Sincerely,

Ivan Szeftel

President of Retail Services

Alliance Data Systems

YY

STORES AUGUST 2005 S3

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borhood, or “communi-ty-centric,” concepts Stu-dio D and Escape toreach consumers who areintimidated or otherwiseuncomfortable shoppingin one of its 500-pluswarehouse-sized stores.

Studio D, in Naperville, Ill., has the feel ofa fashion boutique and is clearly appealing towomen who make consumer electronicsbuying decisions. The store has an area forconsultation and instruction, which may re-sult in recommendationsfor purchasing items at alarge Best Buy store.Among the activities thattake place at Studio Dare instruction in creat-ing digital scrapbooksfrom photographs andother sources, as well astraining in such things asprinting over-sized pic-tures.

Always trying to stay

connected to their

customers, both

Office Depot and Gap

have unveiled new

store designs in the

last 12 months.

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TOP 1OOSPECIALTY RETAILERS

WHAT’S SO SPECIAL ABOUT THEM?

Can’t figure out whysome companies arerepresented in the Top 100 SpecialtyRetailers chart andothers aren’t? See anexplanation of themethod behind ourmadness on page S15.

WWW.STORES.ORG STORES AUGUST 2005 S5

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 STOREShas made sales estimates are, in descending order: CompUSA, IKEA, Bass Pro Shops, Hobby Lobby, P.C. Richard, Eddie Bauer, Crate & Barrel, Academy Sports, KBToys, Fry’s Electronics, Modell’s, J&R Music World and Computer World, BrandsMart USA, Forever 21.

N.A. – Not available *Estimate

TOP 1OO SPECIALTY RETAILERS

1 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’sLincoln Park neighborhood

2 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 torepurchase shares

3 Staples Framingham, Mass. 14,448,378 11.4 708,388 44.5 1,680 7.8

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 bythe end of 2007

4 Office Depot Delray Beach, Fla. 13,564,699 9.8 338,159 22.4 1,190 8.3

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 divisiongenerates 44% of volume

5 OfficeMax Itasca, Ill. 13,270,196 60.9 173,058 913.5 935 -4.1

Sam Duncan, late of ShopKo, takes chair/CEO/president reins of company SEC is investigating over accounting issues involving vendor allowances

6 Toys “R” Us Wayne, N.J. 11,100,000 -4.0 252,000 186.4 1,499 -0.1

Shareholders OK buyout by private firms; chairman/CEO John Eyler, COO Christopher Kay promptly announce resignations, taking with them $65million and $14 million, respectively

7 Circuit City Richmond, Va. 10,472,364 6.2 61,658 -169.1 612 2.2

Some executive shuffling after Q1 results were released showing net loss widening to $13 million from $6 million a year ago; SGA expenses rose oninventory write-downs

8 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.”

9 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 men-tioned as candidates

10 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 netof 31 stores in the period

11 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 nearly500 units in Europe

12 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 shopsbeyond Northeast

13 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 financialcomparisons easier

14 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 educa-tion experience for customers

15 Big Lots Columbus, Ohio 4,375,072 4.8 25,682 -68.4 1,502 4.9

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

16 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 earningsforecasts have been lowered a notch

17 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 50Good Guys, 230 CompUSA stores

18 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 prop-erty in California

19 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 dogAutoZone

20 Michaels Stores Irving, Texas 3,393,251 9.8 201,809 13.5 1,012 4.7

Consciously implementing Wal-Mart’s strategy of surrounding a city prior to opening urban locations; first NYC stores in Brooklyn and Queens afterbuilding in northern N.J. and on Long Island

Company Headquarters 2004 Revenues Y/Y 2004 Earnings Y/Y No. of Y/YComment (000) Change (000) Change Stores ChangeR

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With its modernistic glass-and-metal decor, Escape is de-signed for young adult city-dwellers who are alreadyconversant with consumerelectronic technology. The lo-cation, in Chicago’s LincolnPark neighborhood, offers thenewest gadgets and latest editions of games, whichcan be tested on consoles installed in booths. Theconsoles can be rented by the hour and can also benetworked for group playing.

“We are in the process of reinventing what BestBuy means to its customers,” says CEO Brad H. An-derson, adding that the company is “finding newways to serve diverse customer groups.” Whetherthese concept stores are rolled out as chains is an-other question, however, since profitability is an is-sue.

“Initially, we care more about what we learn thanthe economic model of those strategies,” Andersonconcedes.

One Best Buy concept that is being rolled out in-volves the Geek Squad, techies who provide supportfor consumers having problems dealing with tech-nology. After a successful test of freestanding loca-S6 STORES / AUGUST 2005 WWW.STORES.ORG

Suggestive images

push product at

Abercrombie &

Fitch, while Pep

Boys rev sales with

more traditional

sales engines.

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STORES AUGUST 2005 S7WWW.STORES.ORG

N.A. – Not available


21 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 withstock buyback

22 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 Streetapplauds move

23 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 tobecome our largest brand.”

24 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 insouthern part of state

25 Linens ‘n Things Clifton, NJ 2,661,469 11.1 63,142 -15.6 492 11.8

After forecasting losses for this year’s Q2, company pins hopes on successful back-to-school season and fall launch of 600-sku collection byOprah’s Nate Berkus

26 Payless ShoeSource Topeka, Kan. 2,656,500 -0.2 (2,000) — 4,640 -8.4

Matthew Rubel, former executive vice president at J. Crew and CEO at Nike’s Cole-Haan division, takes CEO post in Topeka after Steve Douglasvacates both CEO and chairman posts in July

27 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 withnew creative communications agency

28 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?

29 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 andCatherine’s posts double-digit comps

30 Zale Dallas 2,304,440 4.2 106,473 — 2,235 0.0

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

31 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 emphasison service offerings

32 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 newstore in Brisbane, Australia

33 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

34 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 HeraldSquare store

35 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 forEurope and Japan in next two years

36 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 loca-tions in Spain

37 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 selldirect to consumers

38 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 theyear?

39 AnnTaylor New York 1,853,583 16.7 63,277 -37.2 743 14.1

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 forthe Loft division stores

40 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 totalcategory sales


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tions in California, the Geek Squad is beingexpanded over the next 12 to 18 months toas many as 50 stand-alone sites. These 1,500-sq.-ft. units won’t carry any merchandise, butwill serve as launching pads from which tech-nicians are dispatched to businesses andhomes with technology problems.

“We would like to claim for Geek Squad aposition as the premier national computerservice provider,” Anderson says.

Best Buy isn’t putting all of its diversifica-tion eggs in the single basket of freestandingformats. In June, the company created two“store-within-a-store” concepts at 45 BestBuy locations in 12 cities. The MagnoliaHome Theater store offers state-of-the-arthome theater systems, as well as design servic-es and professional installations. (The Mag-nolia appellation comes from the name of aWest Coast-based retailer Best Buy acquiredseveral years ago.)

The other new store-within-a-store effort,

Best Buy for Business, offers professional consulta-tion to small business owners, as well as productssuch as electronic notebooks and network servers.

Still another lifestyle effort by Best Buy, one ad-dressing the consolidation of the nation’s drug storeindustry, involves a joint venture with Minneapolis-

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The upcoming

holiday season will

be critical for both

music retailers like

FYE and toy sellers

like Toys “R” Us.





41 TJX U.S. Specialty Framingham, Mass. $1,835,123 38.8% ($5,264) — 378 34.5%

Flagship HomeGoods topped $1 billion in sales for first time last year but overall performance was disappointing; still planning rollout of freestandingHomeGoods next to T.J. Maxx, Marshalls

42 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 smallerstores have been shuttered

43 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 onupgrading communications infrastructure

44 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, beforesettling on Movie Gallery

45 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 toKansas; Gulf to Great Lakes

46 Talbots Hingham, Mass. 1,697,843 4.5 96,396 -7.9 1,049 6.4

Competitors step up pressure by also targeting 40-something women; Talbots responds with more flair and trend among its classic offerings; plans toopen 50 stores this year

47 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 internationallyand gets more attention

48 CSK Auto Phoenix 1,577,460 0.0 36,881 241.6 1,134 1.8

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

49 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

50 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 rentalbusiness is along for the ride

51 Guitar Center Westlake Village, Calif. 1,513,172 18.7 63,425 72.1 138 11.3

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

52 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

53 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 pushingsome openings back to 2006

54 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-termchanges while laying longer-term plans

55 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 Cali-fornia store set for 2007

56 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 byend of 2007

57 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; digitaldownload strategy still being devised

58 Polo Ralph Lauren New York 1,348,645 15.2 190,425 12.5 278 5.7

Regained control of many of labels and lines that had been licensed; quickening growth with 50-60 domestic and 20-25 European stores

59 Famous Footwear Madison, Wis. 1,308,600 3.6 60,300 16.4 1,275 -0.6

Parent Brown Shoe reorganized branded shoe stores, closing 80 Naturalizer units while opening 30 outlet stores, but Famous chain is the enginethat drives retail operations

60 Hobby Lobby Oklahoma City 1,300,000* 8.3 N.A. — 345 7.8

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


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based PrairieStone Pharmacy and ParkNicollet Health Services into wellness andhealth care electronic gadget retailing —everything from air purifiers to sphygmo-manometers.

All of this comes amidst a push by Best Buyto grow to as many as 1,200 stores in NorthAmerica and begin opening stores in Chinabefore the end of 2006. The company, whichhas about 850 stores in the United States andCanada, has been opening about 75 loca-tions annually in recent years. That pace willquicken as the company begins to open morecompact, 20,000-sq.-ft. units in smaller mar-kets and big city neighborhoods.

The push into China involves “lab stores,”which the company describes as “a way toaccelerate learning about the diverse consumers” in thatcountry, where the company currently has three sourcingoffices.

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 theKmart-Sears merger and Federated Department Stores’blockbuster acquisition of May Department Stores — are

trying to figure out where they will sell clothing after suf-fering through years of sluggish sales and diminishing re-turns.

Domestic apparel sales grew steadily though the 1990s,hitting a high of nearly $176 billion in 2000, according tomarket research firm NPD Group. The trends have notbeen very positive since then, however. Annual sales felleach year from that 2000 peak until 2004 when, NPD re-

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61 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

62 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 outletopening this fall

63 Stage Stores Houston 1,243,851 27.9 53,676 -2.4 528 1.9

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.

64 Pacific Sunwear Anaheim, Calif. 1,229,762 18.1 105,892 32.6 990 12.9

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 theend of 2007

65 Finish Line Indianapolis 1,166,767 18.3 61,263 29.6 605 13.9

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

66 Children’s Place Secaucus, N.J. 1,157,546 45.1 43,264 88.5 1,056 52.8

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

67 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 contractorsales also part of equation

68 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

69 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 with100 new stores this year

70 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

71 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 divisionshut stores

72 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 togrow in Calif., Fla. and Texas

73 Crate & Barrel Northbrook, Ill. 925,000* 5.7 N.A. — 130 2.4

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

74 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

75 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 closeas often as they once did

76 Recreational Equipment Kent, Wash. 887,807 10.2 315 32.4 78 2.6

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

77 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 15years

78 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-focusingon niche markets for under 45s

79 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 bottomline performance

80 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 inthe Carolinas this year


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ports, they rose 4 per-cent — but for a total ofonly $173 billion.

In addition to stagnantsales, there has been de-flation in the prices con-sumers have paid forclothing, which have de-clined in each of the last six years, accordingto the federal Bureau of Labor Statistics.

With shrinking numbers of departmentstores and other large dry goods retailers sell-ing clothing and the increased pressure onmanufacturers to find new outlets for theirwares, the landscape would appear favorablefor apparel-selling specialty stores. In light ofthe elimination of import quotas for sourc-ing garments from around the world, multi-ple-format operators such as Limited andGap 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 actual-ly a drag on earnings. Limited, which has opened andclosed, bought and sold more retail formats and addressedmore lifestyle needs than any other specialty store opera-tor, is going through its own extreme makeover.

Tops, bottoms, suits, slacks, shirts and skirts are not thefuture of Limited, Leslie Wexner told shareholders thisspring. “We’ve reinvented ourselves completely. We arenow predominantly a personal care, beauty and lingeriecompany,” he said, noting that non-intimate apparel ac-counted for just 29 percent of 2004 sales, while personal

Women’s apparel

sales continue to

plod along, while

personal products

and home acces-

sories keep regis-

ters humming.

8

46





81 Movie Gallery Dothan, Ala. $791,177 14.3% $49,488 0.1% 2,482 15.0%

Picked up where Blockbuster left off in bidding for rival Hollywood Entertainment; acquisition gives company West Coast base and moves it out ofrural, small-town markets

82 Haverty Furniture Atlanta 784,162 5.3 22,754 -10.2 118 4.4

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 astrong finish to 2005

83 Jones Apparel Retail New York 780,300 13.8 N.A. — 1,037 4.7

Cognescenti suggesting acquisition of Barneys New York signals rapid growth for the retailer and a major directional shift for apparel maker in lightdust-up with Ralph Lauren

84 Big 5 Sporting Goods El Segundo, Calif. 778,905 9.7 34,259 30.3 309 5.5

Athletic footwear was star performer as company posted 37th consecutive quarter of positive same-store sales results; opening 16-20 new storesthis year in western markets

85 Cato Charlotte, N.C. 773,809 5.7 34,607 10.3 1,177 6.8

Consolidating house-brand apparel under the Cato label while focusing on emerging fashion trends and colors; reorganizing product developmentand sourcing functions

86 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/partnersHewlett Packard, Microsoft

87 Sharper Image San Francisco 760,003 17.4 14,650 -36.6 175 17.4

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

88 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 bankrupt-cy petition in January 2004

89 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 July30, 2005

90 Fry’s Electronics Palo Alto, Calif. 700,000* 2.9 — — 28 3.7

Legendary Silicon Valley old-timer stays on cutting edge to meet demands of loyal customer base and innovative merchandise buying and presentations

91 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

92 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 arehousewares on the shelves

93 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

94 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 assumedpresident’s title and duties in June

95 Too Inc. New Albany, Ohio 675,834 12.9 41,364 83.4 568 2.7

Though TV campaign didn’t generate the buzz CEO Mike Rayden had hoped, higher margins boosted this year’s Q1 earnings to record level; Jus-tice chain adding 50-60 units

96 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 Chapter11 filing Jan. 11, 2005

97 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 accessorieschain

98 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 $850million volume this year

99 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 underthe Gadzooks name

100 Gymboree San Francisco 594,478 8.2% 9,915 -61.4% 646 5.0

Matt McCauley takes over as president, reporting to CEO/chair Lisa Harper; sales rose but income slipped in Q1, then turned red in Q2


ank

care generated 30 percent andlingerie 41 percent. A decadeearlier, apparel accounted for71 percent of sales, intimate ap-parel 25 percent and personalcare products just 4 percent.

More telling is the fact that in2004, roughly two-thirds ofLimited’s sales — and virtually all of its earnings —were rung up by Victoria’s Secret and Bath & BodyWorks. The situation hasn’t changed much so far thisyear. Poor performance at the Limited and Expressclothing chains pulled down corporate earnings in thefirst quarter, prompting the company to lower full-year expectations.

Part of Limited’s transformation/reinvention hasbeen precipitated by the consolidation in the drugstore and supermarket industries, where hugeamounts of personal care and beauty products aresold each year. Thus, Limited’s C.O. Bigelow Apothe-cary is set to open six units later this year. Bath & BodyWorks, which has just introduced the Breathe fra-grance and skin care line, will launch an online sellingsite this fall. And just a couple of months ago, Limit-ed bought Slatkin & Co., a maker of merchandisesuch as scented candles and potpourri.

Clothing, even apparel intended for the mass mar-ket, is not yet at commodity status, but the consumerloyalty that operators like the Gap have relied on fordecades seems to have evaporated in the face of toughcompetition from the likes of Wal-Mart and Target,fast-moving retailers like H&M and Forever 21 andhighly-focused operations like Chico’s.

Gap has been in a turnaround mode for a couple ofS14 STORES / AUGUST 2005 WWW.STORES.ORG

SPECIALTYSTOREGROWTH

A Q U A R T E R - C E N T U R Y O F

Crate & Barrel

gives nod to kids-

focused concept,

while "operating

disciplines" have

bolstered the bottom

line at Zale.

73


continued on page S15

1981Company (Headquarters) 1980 Sales Number

(000) of Stores

Petrie Stores (Secaucus, N.J.) $479,000 697

U.S. Shoe Apparel (Cincinnati) 373,700 620

Gap Stores (San Bruno, Calif.) 369,800 472

Limited Stores (Columbus, Ohio) 265,300 322

Miller-Wohl (Secaucus, N.J.) 201,700 268

Edison Bros. Apparel (St. Louis) 185,900 772

Melville Retail Apparel (Rye, N.Y.) 171,000 527

Brooks Fashion Stores (New York) 148,200 401

W.R. Grace Retail Apparel (New York) 139,000 204

Charming Shoppes (Bensalem, Pa.) 126,100 202

Titled 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 compa-

ny 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.

years now, a period that has seen the departure ofMickey Drexler (who later resurfaced at J. Crew) andthe dawn of the Paul Pressler era. Mistakes have beenmade, as Pressler readily admitted to securities ana-lysts in May.

“At Gap, we are pleased with the progress we’vemade in the menswear business, but are not yet satis-fied with our women’s products,” Pressler said. “Inour efforts to serve more occasions for women, webroadened our merchandise and design perspectivegoing a bit outside Gap’s iconic aesthetic.”

By going for a bigger piece of the pie and falling flatin the process, Gap saw first quarter earnings slip 6.7percent below last year’s opening period, as total salesdecreased 1.1 percent and comparable-store sales fell4 percent. The closing of a number of stores during thelast fiscal year also contributed to the declines.

Without putting a name on it, Gap is continuing toexperiment with a lifestyle design that addresses con-sumers by gender rather than as unisexual, metrosex-ual, asexual — or sexually confused. From a seven-store test in the Denver area last fall, Gap is expandingthe concept to 10 locations in Connecticut and five inthe San Diego area.

Looking beyond apparel, Gap unveiled an acces-sories-only store on New York’s Fifth Avenue, dis-placing a babyGap adjacent to a full-line Gap store.The 800-sq.-ft. space, called Love, was a holiday-in-spired effort to promote new packaging and decor foraccessories that was intended to roll out to select Gapstores. And moving into territory plowed by Limited,


30


S P E C I A L T Y S T O R E G R O W T H (continued)

continued on page S16


(000) of Stores

Mervyn’s (Hayward, Calif.) $2,141,000 126

Radio Shack (Fort Worth, Texas) 2,133,000 4,717

Toys “R” Us (Rochelle Park, N.J.) 1,702,000 203

Marshalls (Woburn, Mass.) 1,190,000 209

Nordstrom (Seattle) 983,000 39

Petrie Stores (Secaucus, N.J.) 951,000 1,360

Saks Fifth Avenue (New York) 815,000 40

Levitz Furniture (Miami) 761,000 92

Neiman-Marcus (Dallas) 725,000 21

Lerners (New York) 700,000 800

The fifth edition of the Top 100 Specialty Store Retailers

showcased both hardline and softline specialists, includ-

ing many operators that were not primarily mall-based

chains. Thus, fashion stores such as Nordstrom, Neiman-

Marcus 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. Com-

piling the Top 100 with Bergmann was David P. Schulz, former

editor of Chain Store Age Executive.

THE SPECIALTY STORE DEFINEDThe STORES Top 100 Specialty

Retailers is an annual survey thatprovides a snapshot of leadingmerchants whose offerings are lim-ited to a single category or closely-related classifications of merchan-dise typically found in a traditionalfull-line department store. Retailershave evolved, merchandisingoptions have split and merged andre-split, and some new ones havecome into existence since the sur-vey was begun 25 years ago, sodistinctions that were once quiteclear may now have blurred.

Excluded from the specialtystore chart are such broadline

retailers as discount stores, ware-house clubs and dollar/closeoutstores, as well as supermarkets,drug stores, convenience stores,building materials dealers, autodealerships and service merchantssuch as beauty salons, barbershops, gasoline service stationsand travel agencies.

The ratings on the chart aredetermined by sales volumes andrevenues as of the end of the 2004fiscal year. Estimates, where theyappear, are based on informationfrom company executives, consult-ants, industry observers, securitiesanalysts and/or vendors.


Gap has launched Gapbody, offering personal care,beauty, fragrance and lingerie. Eleven Gapbody unitsare slated to open this year.

Office supply stores are a small but strong niche,claiming three of the first five spots on the Top 100Specialty Retailers chart. Ranked third, fourth andfifth, Staples is the largest, Office Depot is a rung be-low and the extensively restructured OfficeMax —bulked with former Boise Cascade operations — is aclose third in sales volume.

As with all the office supply dealers, Staples is real-ly a conglomerate with direct-selling and small-busi-ness operations, as well as a presence in several regionsaround the globe. Even with its base of small- andhome-business customers, however, Staples addresseslifestyle issues in many of its efforts. A test of sellingoffice supplies in supermarket aisles was so successfulthat it began rolling out the concept in July to morethan 550 Stop & Shop stores on the East Coast.

Earlier this year, Staples opened its first stores in theChicago area, where it plans to have 20 units in oper-ation by December and as many as 50 within the nexttwo or three years.

The Chicago stores are of the “Back to Brighton”type, named for the Massachusetts town where theconcept was unveiled four years ago. The model in-volves enhanced customer service that includes agreater presence of store associates in areas whereshoppers tend to have more questions. There is also up-graded technology consultation and assistance, and aWiFi section in the store for the free use of customers.In describing the store interior, Staples regional man-ager Bob Wolfe says, “We usecolor schemes that serve tocatch the eyes of consumersacross the store and include anumber of lifestyle photos tohelp tell a story.”

OfficeMax is being reshapedfollowing a convoluted evolu-


Talk about a pressure

cooker . . . OfficeMax

holds the No. 5 spot,

trailing Staples

at No. 3 and Office

Depot at No. 4 on

the Top 100 list.

5continued on page S17



(000) of Stores

Toys “R” Us (Rochelle Park, N.J.) $4,788,000 404

The Limited (Columbus, Ohio) 4,648,000 3,188

Kinney Shoe (New York) 3,042,000 3,604

Radio Shack (Fort Worth, Texas) 2,940, 000 4,821

Circuit City (Richmond, Va.) 2,097,000 149

Marshalls (Woburn, Mass.) 1,939,000 347

T.J. Maxx (Framingham, Mass.) 1,677,000 352

Gap (San Bruno, Calif.) 1,587,000 960

Petrie Stores (Secaucus, N.J.) 1,258,000 1,569

U.S. Shoe Apparel (Cincinnati) 1,234,000 1,721

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

ranking was taking on an appearance that would be rec-

ognizable 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 compo-

nents 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 posi-

tion. 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.


(000) of Stores

Toys “R” Us (Paramus, N.J.) $8,745,586 1,115

Limited (Columbus, Ohio) 7,320,792 4,867

Melville Specialty (Rye, N.Y.) 5,674,747 3,227

Circuit City (Richmond, Va.) 5,582,947 204

Best Buy (Eden Prairie, Minn.) 5,079,557 204

Tandy (Fort Worth, Texas) 4,943,679 6,920

Office Depot (Del Ray Beach, Fla.) 4,226,199 420

Woolworth Specialty (New York) 3,977,000 7,406

TJX (Framingham, Mass.) 3,842,818 1,098

Gap (San Francisco) 3,722,940 1,508


tion over the past 18 months. The one-time Kmartsubsidiary based in Shaker Heights, Ohio, was takenover by forest products company Boise Cascade,which then shed its timber business, merged Office-Max with its business products and services unit andrenamed the entire company OfficeMax.

Earlier this year there was a major shakeup in the ex-ecutive suite, capped by the April arrival of Sam Dun-can as president and CEO. Duncan, former presidentof Fred Meyer, had been head of ShopKo Stores untilit was sold to a private equity firm earlier this year. Inlate June, Duncan added the duties of chairman.

Office Depot is also operating with new leadership.In March, Steve Odland was recruited as chairmanand CEO. Odland had been chairman, CEO and pres-ident at AutoZone.

Both Office Depot and OfficeMax have been ramp-ing up store openings in order to keep pace with Sta-ples. Office Depot is opening as many as 60 stores thisyear, primarily in the Northeast and New England.Office Depot made a similar move into the same ter-ritory in 1998, only to close many of the stores with-in a couple of years. Many of the new stores Office De-pot is opening are former Kids “R” Us locations


66


With Rick Gallagher

now editor and pub-

lisher of STORES, a lot was

new about the 15th edition

of the Top 100 Specialty

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.


(000) of Stores

Circuit City (Richmond, Va.) $12,614,390 658

Best Buy (Minneapolis) 12,494,023 357

Toys ‘R’ Us (Paramus, N.J.) 11,862,000 1,548

Gap (San Francisco) 11,635,462 3,018

Office Depot (Del Ray Beach, Fla.) 10,263,280 825

Limited (Columbus, Ohio) 9,723,334 2,913

Staples (Westborough, Mass.) 8,842,460 1,129

TJX (Framingham, Mass.) 8,795,347 1,357

CompUSA (Dallas) 6,321,391 104

OfficeMax (Shaker Heights, Ohio) 4,842,698 946

Anew 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 con-

cepts, 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.

Electronics,office supplystores rise toprominence



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 cen-tury: Toys “R” Us (6), Circuit City (7), Blockbuster (9) andAutoZone (10).

Toys “R” Us has been downsizing for more than a yearas its status as category killer continues to diminish. Wal-Mart surpassed TRU several yearsago as the nation’s largest seller oftoys. TRU’s management had beensearching for new directions, but ap-parently not successfully or fastenough for a consortium of privateinvestors, which offered shareholdersa price premium for their commonstock to take the company private.Once the purchase was finalized inJune, chairman and CEO John Eylerand COO Christopher Kay left TRU.

Investment companies Bain Capitaland Kohlberg Kravis Roberts, togeth-er with Vornado Realty Trust, havenot said what they plan to do with thecompany. But Michael Souer, an ana-lyst with Standard & Poor’s, observesthat the new owners “obviously thinkthe company is worth a lot more andperhaps [former] management wasthe problem in realizing that share-holder value.”

Circuit City — once larger than Best

Buy after transforming itself from Wards stores during thego-go electronics years — is another company in search ofa successful operating plan. Earlier this year, the companyannounced the closing of 19 superstores, five regional of-fices 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 Cir-cuit City.

Ever since its unsuccessful attempt totake over rival Hollywood Entertain-ment, Blockbuster has become a bat-tleground for deep-pocketed investors.With the video rental market shrink-ing in the face of online direct-deliverycompetition, billionaire financier CarlIcahn fought his way onto Block-buster’s board of directors specificallyto make the company more receptiveto putting itself up for sale.

AutoZone has come under fire forfailing to keep up the appearance ofits stores and being inattentive to cus-tomers in favor of paying off credi-tors. StORES

David P. Schulz, a New York-basedwriter and editor, reports on U.S.and foreign retailers for several pub-lications.

Inflation 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, how-

ever, 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-

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 pro-

viding a solid foundation for near-term spending

prospects.”

THE ECONOMY WILL IMPROVING CONSUMER CONFIDENCE BOOST SALES?

16

39


COMPANY HEADQUARTERS RANK COMPANY HEADQUARTERS RANK


Abercrombie & Fitch New Albany, Ohio 35

Academy Sports Houston 77

Advance Auto Parts Roanoke, Va. 19

Aeropostale New York 72

American Eagle Outfitters Warrendale, Pa. 38

AnnTaylor New York 39

AutoZone Memphis, Tenn. 10

Barnes & Noble New York 13

Bass Pro Shops Springfield, Mo. 55

Bed Bath & Beyond Union, N.J. 12

Berkshire-Hathaway Retail Omaha 27

Best Buy Minneapolis 1

Big 5 Sporting Goods El Segundo, Calif. 84

Big Lots Columbus, Ohio 15

Blockbuster Dallas 9

Borders Group Ann Arbor, Mich. 18

BrandsMart USA Hollywood, Fla. 93

Burlington Coat Factory Burlington, N.J. 22

Cabela’s Sidney, Neb. 49

Cato Charlotte, N.C. 85

Charming Shoppes Bensalem, Pa. 29

Chico’s FAS Fort Myers, Fla. 69

Children’s Place Secaucus, N.J. 66

Circuit City Richmond, Va. 7

Claire’s Stores Pembroke Pines, Fla. 61

CompUSA Dallas 17

Cost Plus Oakland, Calif. 74

Crate & Barrel Northbrook, Ill. 73

CSK Auto Phoenix 48

Dick’s Corapolis, Pa. 33

Dress Barn Suffern, N.Y. 89

Eddie Bauer Redmond, Wash. 71

Electronics Boutique West Chester, Pa. 36

Famous Footwear Madison, Wis. 59

Finish Line Indianapolis 65

Foot Locker New York 11

Forever 21 Los Angeles 99

Fry’s Electronics Palo Alto, Calif. 90

Game Stop Grapevine, Texas 40

Gander Mountain St. Paul, Minn. 98

Gap San Francisco 2

General Nutrition Centers Pittsburgh 54

Genesco Nashville 68

Goody’s Family Clothing Knoxville, Tenn. 62

Guitar Center Westlake Village, Calif. 51

Gymboree San Francisco 100

H.H. Gregg Indianapolis 80

Haverty Furniture Atlanta 82

Hobby Lobby Oklahoma City 60

Hollywood Entertainment Portland, Ore. 44

Hot Topic City of Industry, Calif. 97

IKEA Plymouth Meeting, Pa. 52

J&R Music/Computer World New York 92

J. Crew New York 79

Jo-Ann Stores Hudson, Ohio 42

Jones Apparel Retail New York 83

KB Toys Avon/Pittsfield, Mass. 88

L.L. Bean Freeport, Maine 56

Limited Columbus, Ohio 8

Linens ‘n Things Clifton, NJ 25

Luxottica Retail Cincinnati 24

Men’s Wearhouse Houston 50

Michaels Stores Irving, Texas 20

Modell’s New York 91

Movie Gallery Dothan, Ala. 81

New York & Co. New York 70

Office Depot Delray Beach, Fla. 4

OfficeMax Itasca, Ill. 5

O’Reilly Automotive Springfield, Mo. 45

P.C. Richard Farmingdale, N.Y. 67

Pacific Sunwear Anaheim, Calif. 64

Payless ShoeSource Topeka, Kan. 26

Pep Boys Philadelphia 31

Petco Animal Supplies San Diego 43

PETsMART Phoenix 21

Pier 1 Imports Fort Worth, Texas 37

Polo Ralph Lauren New York 58

RadioShack Fort Worth, Texas 14

Recreational Equipment Kent, Wash. 76

Retail Brand Alliance New York/Enfield,Conn. 47

Ross Stores Pleasanton, Calif. 16

Sharper Image San Francisco 87

Sports Authority Englewood, Colo. 28

Stage Stores Houston 63

Staples Framingham, Mass. 3

Stein Mart Jacksonville, Fla. 53

Sterling Jewelers Akron, Ohio 34

Talbots Hingham, Mass. 46

Tiffany New York 32

TJX U.S. Specialty Framingham, Mass. 41

Too Inc. New Albany, Ohio 95

Toys “R” Us Wayne, N.J. 6

TransWorld Entertainment Albany, N.Y. 57

Tuesday Morning Dallas 75

Tweeter Home Ent. Canton, Mass. 86

Ultimate Electronics Thornton, Colo. 96

Urban Outfitters Philadelphia 78

West Marine Watsonville, Calif. 94

Williams-Sonoma San Francisco 23

Zale Dallas 30

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