Pic ‘N’ Save, Back to Its Untidy Ways, Is Posting Higher Sales
While other retailers are moaning about slow holiday sales, Pic ‘N’ Save clerks are hustling around the clock to keep the shelves stocked with deeply discounted Christmas ribbons, garlands, candles, doorknob decorations and stuffed moose heads.
“If you’ve got it, you should flaunt it--and we’ve got it,” brags Len Williams, who was named president and chief executive of the Dominguez-based discount chain a month ago.
Hours after his unanimous appointment by the board, Williams, a veteran retailer, vowed to return Pic ‘N’ Save to its former glory as a bargain hunter’s paradise. He immediately instructed store managers to pull merchandise from the store room and stack it densely along the aisles and on tables.
“You’ve got to let the customers have fun,” said Williams, who is visiting many of the company’s 186 stores, making sure that they are stuffed with holiday goods.
In recent years, under the leadership of former securities lawyer Lewis Merrifield III, Pic ‘N’ Save stores were tidied up. Critics said the neatness drove away loyal customers and hurt sales.
“I never thought being neat was the way to go,” said Lue Flaskerud, manager of the Culver City store. “Williams has gone back to the basics--back to the roots of Pic ‘N’ Save.”
Pic ‘N’ Save reported Thursday that sales in November at stores open for at least one year were up 11.1% from a year earlier. Sales were up 3.5% for the year to date.
The company’s declining earnings, however, have aroused concerns among investors and led to the hiring of Williams. Last year, the company’s profits fell 34% to $30.9 million on sales of $475.2 million.
An investment group led by La Jolla financier David H. Batchelder, citing the weaker earnings, waged a four-month battle this year to acquire Pic ‘N’ Save or to auction it off to the highest bidder. Although the group fell short of that goal, it succeeded in forcing out Merrifield as chief executive and pressured the company to slow its expansion, cut expenses and launch a stock buyback program.
The cost of the corporate reorganization and takeover battle led to Pic ‘N’ Save’s first quarterly loss since becoming a public company in 1971. It posted a loss of $9.3 million for its second quarter ended July 29, the most recent period for which results are available.
Although securities analysts who track Pic ‘N’ Save stock say it’s too early to tell whether Williams’ management strategy will pay off, retail industry analysts think Williams is on the right course.
“Retailing has to be organized disorder to operate effectively,” said Robert Kahn, editor of Retailing Today, a monthly newsletter published in Lafayette, Calif.
“If a store is too neat, people don’t buy,” said Kahn, who has been in the retail business about 50 years. “If things are set up straight as a soldier, people walk by them.”
Kahn said Williams has the right instincts for an off-price retail operation.
“About 50 years ago, Jack Straus, president of Macy’s, wanted everything in the store to look absolutely neat,” said Kahn. “He would come down into the men’s department to make sure all the slacks were stacked up neatly before the store opened its doors. But, as soon as he left, the men’s clothing buyer would flip the slacks up in the air and say, ‘Now they’ll sell!’ ”
Although Williams wasn’t throwing clothes around, he was making sure every department, from housewares to baby clothes, was generously stocked. During a recent visit to the Culver City store, he met a group of avid shoppers who claimed to be having a major “PNS” attack.
“We travel the Pic ‘N’ Save circuit together,” said Barbara Kennedy of West Los Angeles. Within minutes of choosing a shopping cart, Kennedy, her friend Carol Adkins and Adkins’ son, Russ Thomas, had already selected a stuffed moose, bedroom slippers, a set of hair barrettes and a Christmas doorknob decoration.
A beaming Williams happily introduced himself and shook their hands.
Williams watched other shoppers, primarily women with kids, loading their carts with toy trucks, Christmas tree ornaments, wicker baskets and the other holiday doodads that Pic ‘N’ Save is famous for. According to Williams, the secret of the chain’s low prices is being able to move fast--often paying cash and sending a truck to pick up overruns and merchandise mistakes made by other retailers.
Williams hasn’t done much shopping for himself this trip. He’s bought soap, a toothbrush, a pair of $6 ski gloves and “those little chocolate and peanut butter candies.”
And where does he plan to buy his Christmas gifts? “At Pic ‘N’ Save and Tiffany’s--because the stuff in the middle is too boring.”
PIC ‘N’ SAVE AT A GLANCE Pic ‘N’ Save Corp. has 186 stores in the West and South specializing in close-out and other discount goods. An aborted takeover fight and overhaul this year led to its first quarterly loss since becoming a public company in 1971, and for the first half of its current fiscal year, Pic ‘N’ Save lost $3.4 million on sales of $231.6 million.
Year ended Dec. 31 1989 1988 1987 Sales (millions) $475 $402 $362
(millions) $30.9 46.9 47.3
12-month price range 14 3/8-5 3/4
Thursday close (OTC) 8 3/8, + 3/8
