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The competition from Kohl’s, Macy’s and other retailers will only intensify, threatening Boscov’s. Regional chains have been gobbled up by bigger chains or disappeared on their own, and some national chains such as Federated Department Stores, the parent of Macy’s, have been testing smaller stores in smaller markets, which is Boscov’s country.
"There isn’t a fit there," Lakin contended of major department store chains going into smaller markets. "They don’t do well in populations under one million. We do very well in populations of 250,000 to half a million," typically selling to households with an average income of $70,000, where both the husband and wife work, and there are one or two children. It also has a slightly older average customer profile, around 37, a year or two higher than other department stores.
Boscov’s all-out approach seems to be working. Being privately held, it does not disclose profits, but it’s said to have an operating profit rate of around 6 to 7 percent of sales. That’s about twice that of a prime competitor, the York, Pa.-based Bon Ton, which has hovered around 3 percent.
Lakin did say that last year, Boscov’s earnings before interest and taxes rose 25 percent, although comparisons would be easy considering how difficult 2001 was for all retailers. The company also had a 2 percent comparable-store gain last year, whereas department stores were generally flat or down.
A better comparison is 2000. "It was the best year we’ve ever had," highlighted by a 4 percent comp-store gain, Lakin said. Anything over 3 percent "really helps cover the overhead," he added.
While Bon Ton units average 60,000 square feet and sell primarily apparel, Boscov’s units average 185,000 square feet, with apparel, accessories and shoes representing 55 percent of the volume. Hard lines represent 45 percent of the volume. Private label represents 18 percent of the business, with the key in-house brands, being Hastings & Smith for knits, Preswick & Moore for related separates and updated separates, and Architect for opening price points, according to Thomas S. Crystal, senior vice president and general merchandise manager of ready-to-wear at Boscov’s. The private-label goods are supplied by Associated Merchandising Corp., a unit of Target Corp.