At Home steps up expansion plans

With big-box locations that can accommodate social distancing and e-commerce fulfillment, the home furnishing retailer sees room to grow to 600+ stores

PLANO, Texas — Coming off the best same-store sales increase in its history, At Home will pick up the expansion pace next year and plans to keep its foot on the gas for the foreseeable future as it aims to nearly triple its store count.

The 219-store home decor superstore chain has been winning with consumers during this pandemic, despite wrestling with its share of supply chain issues. Net sales for the fiscal third quarter ended Oct. 24 jumped 47.5% to $470 million while comparable store sales increased a record 44.1%.

Net income swung to a profit of $47.1 million, or 71 cents per share, vs. a loss of $14.6 million, or 23 cents per share, for the same period a year ago.

On a conference call with the investment community, Chairman and CEO Lee Bird said the company has been growing faster than the competition and picking up market share for many years and, “Our long-term goal is to continue to expand our market share significantly.

“We have the potential for 600-plus stores, which is nearly three times larger than our current footprint.”

Next year, he said, At Home expects to open 12 to 15 stores, up from the previous plan of seven to 10 openings. And after that, it plans to resume a pace of 10% annual store growth, in new and under-penetrated markets, he said. (That would be about 23 stores the following year, as it pushes toward that eventual 600-store figure.)

var gi_protocol = document.location.protocol;
var gi_redir = “”;
var gi_dasrc = gi_protocol + “//display.hcgmedia.com/?dsid=548202072085523523&pid=329&skid=76&if=0&at=0&alid=728_90&adtype=0&exty=1&special=0&redir=” + gi_redir + “&r=” + Math.random();
document.write(“”);

var gi_protocol = document.location.protocol;
var gi_redir = “”;
var gi_dasrc = gi_protocol + “//display.hcgmedia.com/?dsid=57420208119551504&pid=329&skid=76&if=0&at=0&alid=728_90&adtype=3&exty=1&special=0&redir=” + gi_redir + “&r=” + Math.random();
document.write(“”);

Among the markets where the company sees strong growth potential: California, where At Home has only four stores but sees room for 80 to 90 units; the New York Tri-State area, where it has 11 stores but sees the potential for 50 to 60; the Midwest, where it could more than double its 50 stores to 120; and South Florida, where “we have only one store and are barely scratching the surface,” Bird said on the call.

The retailer is targeting first-year revenue per store of $6 million, earnings before interest, taxes depreciation and amortization margin of 30% and payback on its investment in about two years. Bird suggested that might be a conservative estimate as “recent stores are on track to outperform these expectations.”

Average revenue per store is $7 million and some of At Home’s more mature market stores are doing $10 million a year, he said.

Several factors appear to be fueling At Home’s recent success and accelerated expansion plans, including the success of a loyalty program and other go-to-market strategic initiatives, but many factors appear to tie back to value in the sheer size of its locations. 

“The unique advantage of our large-store format has never been more evident than during traffic surges, including over the Black Friday weekend,” President and Chief Operating Officer Peter Corsa said on the call  And even as coronavirus cases surge across the United States again, Corsa said the company doesn’t expect to be “significantly impacted by potential capacity restrictions due to our large store size, which could further differentiate us from some of our smaller-format competitors.”

At Home is new this year to the e-commerce game, but store size is playing to its advantage there, too, offering the retailer efficient fulfillment centers for shoppers buying online and taking delivery or buying online and picking up in-store.

“Our evolving omnichannel approach will not only allow us to prioritize customer convenience but also significantly expand our customer reach,” Bird said.  “Our large warehouse-like stores offer the flexibility to pivot and adapt as our channel mix changes while sustaining a highly profitable model, both in-store and online.” 

And even though it’s just getting started on omnichannel, it’s already profitable. 

When you combine At Home’s store expansion plans with its ability to increase revenue per store and omnichannel, “you can see why we believe we have a long runway ahead,” he said.

And finally, At Home is nearly alone in the size of the stores it’s looking to open. Bird said the retailer’s real estate pipeline “is super deep,” in both quality and quantity.

“The economics are working in our favor because of the supply of locations that are out there,” he said. 

“The rents that we’re getting are fantastic because we’re one of the only national retailers, if not the only (one), that looks for boxes that are 80,000 square feet and above.

“And there’s a lot to look for out there.”

var gi_protocol = document.location.protocol;
var gi_redir = “”;
var gi_dasrc = gi_protocol + “//display.hcgmedia.com/?dsid=578202081881555635&pid=329&skid=76&if=0&at=0&alid=728_90&adtype=3&exty=1&special=0&redir=” + gi_redir + “&r=” + Math.random();
document.write(“”);

var gi_protocol = document.location.protocol;
var gi_redir = “”;
var gi_dasrc = gi_protocol + “//display.hcgmedia.com/?dsid=582202091474319419&pid=329&skid=76&if=0&at=0&alid=728_90&adtype=3&exty=0&special=0&redir=” + gi_redir + “&r=” + Math.random();
document.write(“”);

var gi_protocol = document.location.protocol;
var gi_redir = “”;
var gi_dasrc = gi_protocol + “//display.hcgmedia.com/?dsid=5892020108184154614&pid=329&skid=76&if=0&at=0&alid=728_90&adtype=3&exty=1&special=0&redir=” + gi_redir + “&r=” + Math.random();
document.write(“”);

var gi_protocol = document.location.protocol;
var gi_redir = “”;
var gi_dasrc = gi_protocol + “//display.hcgmedia.com/?dsid=566202081191214486&pid=329&skid=76&if=0&at=0&alid=728_90&adtype=3&exty=1&special=0&redir=” + gi_redir + “&r=” + Math.random();
document.write(“”);