Bob’s Stores finished its first full year under the TJX umbrella with $291 million in sales, a $17 million operating loss and only one net new store, bringing the total number of doors to 32 at year-end. Management said the performance of the division was below expectations and still a “work in progress”, but the team was able to increase gross margin “significantly” in the division. The business had been planned “down to flat”, based on a new promotional cadence put in place for the year that drastically reduced the number of circulars.
Management may have given some hint on the direction this division will take — possibly back to its roots as a strong destination for the young male — as the Bobs team eliminated classifications like lingerie and infants and toddlers, which they said were “not a good fit with this business.”
TJX tested a new smaller store format for the division in 2004, a format which is 36,000 to 40,000 square feet, rather than the existing 45,000 square foot size. They said they will continue to grow Bob’s Stores “slowly and deliberately” as they did in 2004, opening just two stores for the year and closing one. In 2005, they plan to add five stores to “fill in existing markets.”
Management also said they tested new promotional levels, dramatically reducing the number of circulars and coupons, and made inventory management improvements. For example, Bobs mailed out 468 pages of circulars in 2003, with 168 pages in the November/December holiday period. For 2004, Bobs mailed out just eight pages for the holiday period. They said that Bobs needs to become less dependant on huge marketing budgets and “giving goods away” with large POS clearances. Also, year-end inventory on a per store basis was down 4% versus the prior year.
