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MONROE, Mich. — Buoyed by more than two years of double-digit same-store sales growth, La-Z-Boy is embarking on an aggressive expansion of its branded retail stores that aims to boost the store network to more than 400 locations in five years.
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Dubbed the 4-4-5 strategy – 400 stores, averaging $4 million in sales, in five years – the company says the expansion will include stores in at least seven new markets.
About 60% of the new stores will be company-owned. The remainder will be built by licensees.
"With our stores as successful as they have been over the past two-plus years, our dealers are interested in opening new stores," said Kurt Darrow, La-Z-Boy’s chairman, president and CEO. "Together with them, we will aggressively work on the execution of our build-out strategy."
Currently, there are 312 La-Z-Boy Furniture Galleries stores, 93 of which are company-owned.
All of the new stores will feature a new design format that debuted in 2011. At present, only 16 existing stores have the new format, Darrow said.
"Building our branded distribution channel is the mainstay of our growth strategy right now," he said.
The new stores will carry the name La-Z-Boy Home Furnishings and Décor, although Darrow said the name change won’t be apparent in corporate marketing efforts for some time since only a small number of stores currently have the new name.
In the current fiscal year, which ends in April 2014, Darrow said about 20 store projects – including new store openings, remodels and relocations – are underway or will begin soon. In subsequent fiscal years, 20 to 25 projects are slated annually until the network grows to at least 400 stores.
"We conducted demographic research to identify locations throughout the United States and Canada for La-Z-Boy Furniture Galleries stores, and determined the network can add approximately 80 stores," Darrow said. "Some are in ‘dark’ markets (which have no La-Z-Boy stores) and others are in existing markets that need additional stores."
The newest market for La-Z-Boy stores is southeast Michigan, practically in the back yard of its corporate headquarters in Monroe. He said the first southeast Michigan store opened about a month ago in Sterling Heights, two more will open this fall, and a fourth is scheduled for 2014.
Next year should also see the first La-Z-Boy stores in the Minneapolis/St. Paul market, and Darrow said the company also is eyeing the Miami, Memphis, Rochester, N.Y., Naples, Fla., Bakersfield, Calif., and Corpus Christi, Texas, markets for future locations.
Plus, he believes existing markets such as Boston and South Florida could support an additional four to five stores each.
"It’s a combination of building up our existing markets, having a number of new markets and probably acquiring a few of our current licensees if it’s mutually beneficial," said Darrow.
Achieving a $4 million per-store annual sales average will require a healthy bump from the current $3.7 million average, but he said he remains confident the larger number is achievable.
The most recent quarter’s 12.7% same-store increase marked 2½ years of double-digit same-store growth, and it’s no coincidence the string of winning quarters began about the same time La-Z-Boy launched its "Live Life Comfortably" national advertising campaign featuring actress Brooke Shields.
Darrow said the campaign has been a big success because it emphasizes the fact that the company makes a wide range of stylish products, not just recliners.
"It is expanding our consumer base by driving more consumers and younger consumers to the brand, and once she sees the array of products we offer, as well as the possibilities for accessorization to create a beautiful room, we are increasing the average ticket," he said.
He said sales increases also are being driven through more use of in-home design services that are available at no charge in La-Z-Boy stores. In addition to the living room, it allows the designer to decorate the consumer’s bedroom and/or dining room using products from La-Z-Boy’s case goods division.
That also increases the average ticket and increases the level of satisfaction for the consumer, he said.
"We have had a steady cadence of new product introductions that appeal to a wider consumer base – on-trend, stylish stationary furniture that supports the messages delivered through our advertising campaign," said Darrow.
He said stationary upholstery and power motion upholstery are the company’s fastest-growing categories.
