At Home Finds Itself the Right Store at the Right Time

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If you\’re looking for a story about yet another retailer devastated by the Covid pandemic, barely surviving and on the brink of insolvency…this isn\’t it.

But if you want something positive, about how a retailer, seemingly written off before the pandemic, has risen to the occasion and gotten back on its game with its prospects looking up for the future, welcome to the story of At Home.

As recently as this past April the home furnishings Big Box store, with about 220 locations around the country — all of them closed — was on many people\’s shortlists for retail oblivion, its stock trading at under $2 a share and long-term prospects decidedly dismal.

[callout]The typical At Home store is a Home Goods location on steroids. It is a Bed Bath & Beyond that goes far, far beyond in its offerings. It’s a Target or Walmart-sized building without the clothing, the groceries, the drug store or consumer electronics. Just home…and nothing but home.[/callout]

But a funny thing happened on the way to oblivion. As it began to reopen its stores, At Home was suddenly the right store at the right time. With people stuck in their homes, skipping vacations, travel and eating out, the home furnishings business found itself in the sweet spot in the marketplace: everyone was interested in fixing up their homes, freshening up the décor and generally making them look better., the research company that tracks in-store traffic, says \”At Home may be one of the biggest beneficiaries\” of the home surge. \”Visits in May were already up year-over-year by 4.8 percent, but June visits spiked with a 34.1 percent year-over-year increase. Impressively, this wasn\’t just pent up demand and a unique environment where individuals recognized the short term need for more items to spruce up their homes,\” said. \”Instead, the peak sustained into July with a 20.7 percent year-over-year increase.\”

Making Itself At Home

Making households look better is pretty much all At Home is about. Its giant stores — some approaching 200,000 square-feet — are vast landscapes of rugs, accent furniture and décor, mirrors and framed artwork, outdoor furniture, china and glass and tabletop, bed and bath textiles, housewares and generally more things for your home than you thought possible.

The typical At Home store is a Home Goods location on steroids. It is a Bed Bath & Beyond that goes far, far beyond in its offerings. It\’s a Target or Walmart-sized building without the clothing, the groceries, the drug store or consumer electronics. Just home…and nothing but home.

And while other home furnishings sellers, from Wayfair online to RH and Williams Sonoma both online and in-store, are also feeling the home love during the stay-at-home period, At Home seems to be as well-positioned — or better — than most for a number of critical reasons:

  • It has, first and foremost, the largest furnishings and décor stores in the country. Maybe selection isn\’t quite the drawing card it used to be in the e-commerce age, but for shoppers who want to see and feel the merchandise in person, nobody else comes close. Average store size is 100,000 square feet — a nice plus during social distancing requirements — with 50,000 skus.
  • It has taken advantage of its competition\’s woes. With its stores heavily weighted to the south and Sunbelt it reopened more locations faster than some other stores competing for the same customers, such as Home Goods and Bed Bath. Just as cabin fever is driving some of the business we\’re seeing at off-price stores like those in the TJX group and Ross, the need to get out has played to At Home\’s strength.
  • Its competition has struggled…or even gone away. If you think of At Home as a giant Pier 1, that retailer\’s collapse and ongoing liquidation has created some white space in the home sector that it has nicely filled. The closing of at least one-third of the Tuesday Morning locations has also created opportunities. And any number of other retail closings — from Penney to Sears to Stage Stores to Macy\’s — have all contributed to At Home gaining share.
  • Its merchandising strategy seems to play to the times. Its heavy emphasis on outdoor and seasonal goods is a good fit for staycations and backyard weekends. It also offers kitchen and cookware products for the eat-at-home trend and even in home office, its assortment is strong, though it does not carry any consumer electronics or computers. Virtually everything in At Home is private label, meaning its goods are hard to price shop online.

Good News…and Not

The results of all of this positioning have been impressive, starting with the stock price. The first week of April, the share price had dropped to barely $1.40. This past Friday it closed at $15.54, an astronomical rise of more than ten times. Needless to say, it\’s a 52-week high though in 2018 it traded as high as nearly $37.

In preliminary, unaudited quarterly results released in late July, the company said it had seen same-store sales rise 42 percent and that it expected to show a profit of at least $82 million for the period, which would put it nicely above recent results. Last year the company did $1.5 billion in annual sales.

And in announcing all of this, CEO Lee Bird said At Home could triple in size to more than 600 doors, though he did not give a time frame. \”We\’re a growth company,\” he told CNBC. \”We\’ve been growing almost 20 percent …for the past seven years,\” according to the CNBC report.

At Home has indeed been growing from its humble roots built on the foundation of the former Garden Ridge, a similarly merchandised store that was more heavily into the crafts space but went into bankruptcy in 2004 and a decade after reemerging it rebranded in 2015 as At Home. It has grown substantially ever since, moving far beyond its Texas headquarters and southern base.

But its problems over the past few years have not been without notice. Many of its stores are in less-than-prime real estate, often converted former locations of retailers like Kmart and other big-box discounters. These are often in out-of-the-way strip centers or free-standing, meaning they are not as bad as mall locations but certainly not in premier locations.

And then there\’s e-commerce…or the lack of it. At Home has had no online business at all until this year and even as it scrambled to get something up and running as its stores shut down it the best it could do was a BOPIS (buy online, pick-up store) set-up, along with home delivery. It still does not have the ability to do traditional online business. In a marketplace where e-commerce is approaching a quarter of all sales, this is a severe lability and a serious cost item the company will need to address at some point.

And sometimes the company itself hasn\’t been sure it\’s been on the right path. Last September, after poor results and in the midst of the Trump tariff wars that were taking their toll on its supply chain, Bird said \”We obviously lost the faith of our investors\” in an interview with the business press. At the time he said At Home would be slowing down its expansion plans and expected to be fully online by 2022. While the former has happened, there\’s been little talk about the e-commerce plans more recently.

Nevertheless, at the time, he said, \”We know we have a huge white space in front of us. I feel good about the adjustments we\’ve made.\” Right now, those adjustments do seem to be paying off even if At Home\’s recent good news seems to be much more about external factors than anything specific it has done. But that\’s the thing about retailing: location, location, location can also mean much more than where your store is located geographically.

Being in the right location in the marketplace can be every bit as important. Just ask a smiling Lee Bird.



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