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Linens 'N Things, Inc. Business Information, Profile, and History

stores company home sales

6 Brighton Road
Clifton, New Jersey 07015
U.S.A.

Company Perspectives:

Our business strategy is to offer a broad selection of high quality, brand name home furnishings merchandise at exceptional everyday value s, provide superior guest service, and maintain low operating costs. Our mission is to exceed the expectations of our guests in every stor e, every day.

History of Linens 'N Things, Inc.

Linens 'n Things, Inc. is one of the nation's leading large-format sp ecialty retailers of home textiles, housewares, and decorative home a ccessories. In 2005, the company operated more than 500 stores in 45 states and five Canadian provinces. The retailer maintained impressiv e growth during the 1990s but stalled out during the early years of t he 21st century. When a series of initiatives failed to turn things a round, the merchandiser opened the door to potential suitors in 2005, agreeing to be acquired in November by a newly formed entity control led by Apollo Management, L.P.

Creating a Retail Prototype: 1958-83

Eugene Wallace Kalkin laid the initial groundwork for Linens 'n Thing s, Inc. when he was only 22 years old and began what would be a seven -year stint with Allied Purchasing Corp., the buying office for the s econd largest department store chain in the United States. In 1958 he entered into a partnership with the retail discount chain known as G reat Eastern Mills, Inc.; in that company's stores, called Great East ern Linens, Inc., Kalkin set up leased-linen departments. Meanwhile, Great Eastern Mills sold its business and its 50 percent share of Gre at Eastern Linens to Diana Stores Corporation, a ladies' apparel stor e chain with a strong market position in the southern United States. Thereupon, Diana Stores opened a chain of stores, named Miller's Disc ount Department Stores, in which Great Eastern Linens operated the li nen and curtain department.

Diana Stores later sold its company and its 50 percent interest in Gr eat Eastern Linens to Beverly Hills-based Daylin Inc., a national cha in of department stores that leased departments for health and beauty aids. In 1970 Daylin bought Kalkin's share of Great Eastern Linens i n exchange for Daylin stock. In 1975, however, Daylin filed for bankr uptcy, and Kalkin's stock became almost worthless. During an intervie w reported in the May 1998 issue of the UVM Record, a Universi ty of Vermont publication, Kalkin recalled how this bankruptcy affect ed both his finances and his self-esteem: "It was absolutely a devast ating blow to my life. To me, there was no alternative but to go back into business," said Kalkin.

Kalkin did just that. In 1975, from the Daylin bankruptcy court, he b ought seven of the leased departments and specialty stores he had sta rted for that company. This seven-unit retail chain with annual sales of $2 million was the beginning of Linens 'n Things, Inc., one o f the country's first specialty retail stores dedicated to home furni shings and decorative accessories. Having experienced the unpredictab le consequences related to dependency on landlords, Kalkin turned awa y from the operation of leased departments and applied a novel set of merchandising techniques to the development of Linens 'n Things as a chain of specialty retail stores.

Eugene Kalkin had learned about the European hypermarchés, stores in which storage cubes filled with food or general merchan dise were piled up to the ceiling, thereby saving space and reducing expenses. This merchandising concept later became popular in the Unit ed States in discount chain stores, such as those of Sam's Club, BJ's Wholesale Club, and Home Depot. Influenced by the concept of the hypermarché no-frills warehouse environment, Kalkin used h is retailing experience to create the retail industry's off-price pro totype. He opted for stores with high ceilings in order to save space by installing ten-foot high, warehouse-type shelving for piling up s torage cubes. He could then display in 7,000 square feet the quantity of merchandise that previously would have taken 12,000 to 13,000 squ are feet. In this way, Linens 'n Things cut expenses--especially for rent, lighting, and taxes--and turned a profit while selling quality products at discount prices. "When I went into off-price, the timing was right and we had the right physical format," Kalkin later comment ed in an interview for a June 1990 story in Home Fashions Magazine .

The soft economy of the 1970s did elicit enthusiastic consumer respon se to Linens 'n Things' off-price stores. Other retailers in the home textiles industry kept an eye on the chain's rapid growth. For insta nce, Bloomingdales' Norman Axelrod--who would later serve as Linens ' n Things' CEO, president, and chairman--remembered that "Gene Kalkin was very dynamic." "Selling brand names in a low-cost environment was a groundbreaking concept," Axelrod commented in a 1995 interview for Business News New Jersey.

Transition and Refocus: 1983-95

By 1983 Melville Corporation (later known as CVS Corporation) was als o attracted to Linens 'n Things--by then a 55-store chain with sales of over $85 million--and soon acquired the chain. After the sale, Kalkin stayed on to direct the company for two years and was succeed ed by his longtime assistant, Robert L. Karan. Sales from 116 stores reached $145.3 million for 1985; $163.4 million from 131 stor es for 1986; $175.8 million from 144 stores in 1987; and $180 million from 140 stores by 1988.

Karan's marketing philosophy, however, was very different from that o f Kalkin, who was attuned to the volatile, evolutionary nature of the retail industry and had noted an emerging trend to larger stores. In fact, before Kalkin's departure, the company already had experimente d with the profitable operation of an 18,000-square-foot store and ha d begun to increase the "things" side of the business in order to mee t customer requests for a larger selection of decorative home accesso ries. Karan, however, held back on making changes and, according to L asseter's article, he "scrimped on spending to keep prices low, and s ales stagnated." In January 1988, Melville Corporation asked Norman A xelrod--then senior vice-president at Bloomingdales in New York City- -if he would run Linens 'n Things. Axelrod reportedly hesitated becau se the company had "a lot of problems," but Stan Goldstein, Melville' s chairman, agreed to invest more money in Linens 'n Things, and in 1 988 Axelrod joined the company as chief executive officer.

Axelrod had kept abreast of the radical and dramatic changes taking p lace in industry and individual lifestyles during the 1980s. Corporat e structures were crumbling. Banks, brokerage houses, department stor es, and specialty stores were undergoing bankruptcy, acquisitions, an d/or consolidation. As for lifestyles, as Barbara Solomon pointed out in an August 1991 article in Realities of Retailing, during t he 1980s many married people had settled in the suburbs and their dis cretionary buying power was reduced by mortgages, children, medical b ills, and the need to save for the future. Moreover, many women had e ntered the workforce and had less time to visit downtown banks and st ores; instead, they went to branch locations in the malls near their homes and increasingly frequented specialty stores. In addition, depa rtment stores had become less efficient; more often than not it took several months for new merchandise to reach the shelves. In short, ma ny retailers had lost touch with consumers.

Consequently, Axelrod's initial undertaking was to iron out some of L inens 'n Things' wrinkles and to learn about the needs and spending h abits of its "guests," as the company called its customers. With a ne w management team, Axelrod guided the major part of Melville's first $15 million investment into upgrading the technology in the compa ny's stores; a highly sophisticated point-of-sale system encompassing application of the Universal Product Code (UPC) and electronic data interchange (EDI) was installed. These UPC and EDI systems allowed th e stores to track exactly what was selling on a day-to-day basis, the reby making it possible to keep lower levels of inventory and to have a more precise policy of maintaining what people wanted. This line o f thinking was underscored by Daniel Raff, an industry analyst quoted in Solomon's 1991 article: "Some of the success of specialty stores has to do with the fact that they have a more sophisticated way of kn owing what they're selling. A big part of retailing is having the pro duct in stock and having it out on the floor."

However, maintaining an inventory large enough to meet consumer deman d and having products out on the floor required much space. Axelrod r ecognized that the superstore concept that had inspired Kalkin might solve the space problem. In September 1988 Linens 'n Things opened it s first superstore in Rockville, Maryland. In 1989 the company starte d to convert its store base to superstores ranging in size from to 35 ,000 to 40,000 square feet and began to close all but the most profit able and traditional stores.

The superstore format was meant to save a customer's time by having i nventory visible and accessible on the selling floor for immediate pu rchase. To further enhance customer satisfaction and loyalty, Linens 'n Things strove to provide prompt, knowledgeable sales assistance an d enthusiastic customer service. The company offered competitive wage s, training, and personnel development in order to attract and retain well-qualified, highly motivated employees dedicated to providing ef ficient customer service. Recognizing the increasing propensity of co nsumers to spend more on home decor, Linens 'n Things targeted its pr oduct selection to reflect the broadening trends of the 1990s.

The breadth and depth of Linens 'n Things' extensive merchandise offe rings enabled guests to select from a wide assortment of styles, name brands, colors, and designs within each of the company's six major p roduct lines. An effort was made to present merchandise in a more vis ually appealing, customer-friendly manner. The company emphasized its "won't be undersold" policy and explored opportunities to increase s ales in its "things" merchandise without sacrificing market share or customer image in the "linens" side of the business. "Linens did not engage in high/low discounting but held two clearance events annually , in January and June," noted James Mammarella in Discount Store N ews, an industry publication. He also commented that the company did distribute seasonal fliers containing promotional offers but that "the main message, expressed in the store's slogan, was consistent: 'We give you more for less. Everyday'."

From 1988 through 1995 Linens 'n Things introduced 101 superstores, r esulting in the closing of 85 traditional stores. However, although t he total number of stores increased only by 15, the company's gross s quare footage more than tripled, going from 1.4 million square feet o n January 1, 1992, to 4.8 million square feet by the end of 1995. Net sales, after slow growth from 1988 to 1992, increased annually with added momentum.

With a view toward maintaining a low-cost operating structure, the co mpany also instituted centralized management and operating programs a nd also invested significant capital in its infrastructure for distri bution and management-information systems. In 1995 the company began full operation of its 275,000-square-foot, state-of-the-art distribut ion center in Greensboro, North Carolina. The center's EDI capabiliti es optimized allocation of products to the sites having the highest p otential for sales and inventory productivity. Use of this center res ulted in lower freight expense averages, more timely control of inven tory shipment to stores, improved inventory turnover, better in-stock positions, and improved data flow. Freed from the responsibility of receiving inventory, sales associates had more time to be present on the selling floor to serve the company's guests.

Expanding and Refining: 1996-99

In October 1995 CVS Corporation, Linens 'n Things' parent company, de cided to spin off some of its subsidiaries. On November 26, 1996, Lin ens 'n Things effected an initial public offering (IPO) of its common stock; CVS retained approximately 32.5 percent of the shares, but so ld them during 1997.

In response to consumer demands for one-stop shopping destinations, L inens continued to balance its merchandise by bringing in a fuller as sortment of "things." This shift significantly impacted net sales; th e "things" side of its business increased from less than 10 percent o f net sales in 1991 to 35 percent in 1996. The company's long-term go al was to increase the sale of "things" merchandise to approximately 50 percent of net sales. The chain also moved toward more upstairs br ands and more elegant presentations of its merchandise.

In a continual effort to offer the best possible customer service, Li nens 'n Things also installed satellite transmission for credit card authorizations and upgraded its point-of-sale (POS) system. The compa ny also further refined its planning process through a comprehensive EDI system used for substantially all purchase orders, invoices, and bills of lading. Combined with automatic shipping notice technology u sed in the distribution systems, the EDI system created additional ef ficiencies by capturing data through bar codes, thereby reducing cler ical errors and inventory shrinkage.

By the end of 1996, net sales increased 25.4 percent to $696.1 mi llion, as compared to $555.1 million in 1995. The company opened a total of 36 superstores in 1996, increasing gross square footage by 28 percent to approximately 4.6 million square feet.

Linens 'n Things superstores continued to grow in size, number, and p roduct line. The operative strategy was to expand market share in new and existing markets, to increase store-productivity levels at exist ing units, and to penetrate new markets in which the company could be come a leading operator of superstores for home furnishings. New mark ets were located primarily in the western region of the United States , in trading areas of 200,000 persons within a ten-mile radius and ha ving the demographic characteristics that matched the company's targe t profile. According to Alan M. Rifkin and Kevin M. Hunt's Home Fu rnishings Handbook, Linens 'n Things targeted its product selecti on "to reflect the broad trends of the 1990s, with an emphasis on con sumers' increasing propensity to spend more on home decor." The compa ny succeeded in making "its stores an exciting experience for today's consumer, who continued to prefer home-related goods at the expense of apparel," wrote Rifkin and Hunt.

Linens 'n Things' net sales for 1997 increased 25.6 percent to $8 74.22 million, compared with $696.1 million for the same period i n 1996. During 1997, the company opened 25 new stores and closed 18 s tores. Total square footage of stores increased 16.2 percent to 5.5 m illion square feet; sales from traditional stores represented less th an 5 percent of total sales. In April 1998 the Linens 'n Things board of directors approved a two-for-one split of the company's common st ock to be effected in the form of a stock dividend distributed on May 7, 1998. Commenting on the results of the first quarter of 1998, Cha irman and CEO Axelrod declared that the company began 1998 "with an i mproved sales and earnings performance, which carried over from a str ong 1997 performance. ... The operating margin for the quarter showed meaningful improvement over the prior year as a result of the increa se in comparable store net sales, improved selling mix, and lower mar kdowns."

The surprise to the bedding industry was that although sales of beddi ng-specialty chains dropped to 11 percent in 1997 from 13 percent in 1996, "superspecialists Bed Bath & Beyond, Inc. and Linens & Things, Inc. have been growing, both financially and in importance to the whole textiles industry," wrote David Gill in a 1998 issue of Home Textiles Today. By way of explanation, Gill quoted Chip Fon tenot, president and CEO of New York-based Decorative Home Accents: " You have to understand that there are only two specialty chains that are of any size, Linens 'n Things and Bed Bath & Beyond and both of these are emphasizing 'things.' Fewer and fewer customers are runn ing to these stores to buy sheets, while more and more of them are ru nning there to buy kitchen magnets," quipped Fontenot. Linens 'n Thin gs' broad mix of "things" was obviously in sync with the increasing t rend of consumer spending for the home.

In 1998 the company was operating 176 stores (153 superstores and 23 smaller, traditional-size stores) in 37 states. The traditional store s averaged approximately 10,000 square feet in size while the superst ores ranged from 38,000 to 50,000 square feet. The stores carried bra nd name "linens," that is, home textiles, such as bed linens, towels, and pillows, and "things," such as housewares and home accessories. The superstores were located predominantly in power-strip centers and , to a lesser extent, in shopping malls. More than 25,000 stock-keepi ng units (SKUs) supported the company's six product categories: bath, home accessories, housewares, storage, top-of-the-bed, and window tr eatments. The company bought its inventory from approximately 1,000 s uppliers, 95 percent of whom were in the United States. The superstor es represented Linens 'n Things' desire to create a compelling one-st op shopping experience for the time-pressed consumer. The company car ried many name brands, including Wamsutta, Martex, Fieldcrest, and Wa verly in domestics; Libbey, Ravel, Lancaster Colony, Zwiesel Glas, an d Luminarc in glassware; Sango, Mikasa, Sakura, Tienshen, and Gibson in stoneware; Calphalon, Circulon, and Farberware in cookware; and Br aun and Krups in appliances. Linens 'n Things also sold an increasing amount of merchandise (about 10 percent) under its own private label , LNT, in order to supplement the offering of brand name produ cts with other high-quality merchandise sold at value pricing below r egular department store prices and comparable with, or below, sale pr ices at department stores.

The company planned to open 30 superstores in 1998 while closing 13 t raditional stores, thereby expanding its square footage by 17 percent , and to maintain this expansion rate through the next several years by opening 35 to 40 superstores annually. Moreover, the company's abi lity to keep in step with changing trends and lifestyles, its flexibl e merchandising strategy, and its continually updated POS and MIS sys tems all allowed the company to increase market share through expansi on and increased productivity. In the late 1990s, the company was wit hin reach of increasing "things" by up to 50 percent and was graduall y closing its remaining traditional stores as the annual increase of its superstores kept consumers coming to Linens 'n Things for quality home textiles, housewares and home accessories "at everyday low pric es."

During 1998, Linens 'n Things sales topped $1 billion for the fir st time in its history. Sales climbed to $1.07 billion, up 22 per cent from 1997. As for net income, it jumped 47.6 percent to $38. 1 million. The company posted strong figures the next year as well. N et income increased by 36.8 percent and sales by 22 percent.

Changing Linens: 2000-05

Confident in the light of three years of uninterrupted growth, Linens 'n Things moved to extend its chain of stores even further. The comp any planned to open at least 50 new stores. The first Canadian units were also on the docket for 2000. Chairman and CEO Norman Axelrod pre dicted the market north of the border could sustain a total of 40 to 50 of the home-goods stores.

As far as the company's Internet strategy, Axelrod told HFN The We ekly Newspaper for the Home Furnishing Network: "We want to make sure a Web site won't negatively impact our sales, and we see no sign ificant advantage to rush to market." He explained, "We want to keep the e-commerce site integrated with store operations."

However, the chain's outlook experienced a reversal in the early year s of the 21st century. As part of its self improvement drive, Linens 'n Things planned to close 17 of its 343 locations during 2002, elimi nating the underperforming stores. Problems in the crucial linens end of the business needed to be ironed out. The company introduced a se ries of initiatives they hoped would work out the wrinkles. Home T extiles Today reported in February 2002, "This effort, headed by Steve Silverstein, president, will build on introducing new products, sharpening price points, strengthening the accessories business and increasing marketing support."

During early 2003, Axelrod set forth a corporate goal of growing reve nues from $2 billion to $4 billion within three years. The pr onouncement came in the wake of the departure of the company's presid ent who had headed Linens 'n Things for less than two years. The high ly hands-on Chairman and CEO Norman Axelrod was in no hurry to bring in a new president, according to Home Textiles Today.

To meet the goal, sales per square foot, which had been on the slide, would have to improve. Linens 'n Things sales per square foot lagged behind Bed Bath & Beyond to a tune of $60, according to the February 2003 Home Textiles Today article.

A new chief merchandising officer was appointed in 2003 to aid Axelro d in his quest to improve performance, Mike Duff reported in a Septem ber 2003 DSN Retailing Today article. In addition, another set of initiatives were set in place: more "things" to join the product offering mixture; the number of store-level personnel increased, line ns continued to receive added attention; and managers gained greater control over the items they carried in their stores, tuning in to reg ional preferences. Moreover, new labels, including Yankee Candle, Wav erly, and Nautica Home, added in 2002, continued to help results.

The merchandising moves served to intensify head-to-head competition with the company's more powerful rival, a challenging position. "Bed Bath & Beyond has been among the most successful retailers in the United States over the past several years and shows no signs of slow ing down. Yet in this case, differentiation may not be an option. Str oud's, Lechters, HomePlace and Waccamaw all have, in one way or anoth er, tried to drive a business strategy based on differentiating from Bed Bath & Beyond. Each suffered so severely that only one, Strou d's, still exists--and that as a scaled-back privately held remnant," Duff wrote.

The search for the key to improving the company's position continued. In March 2005, Jack Moore, president and chief operating officer, an nounced that Linen 'n Things would move its product lines toward the "better" segment of the retail world, citing the dominance of mass ma rketers in the "good" category. By September, a possible sale had bee n added to its list of strategic alternatives. Two months later, the company formally announced that it had agreed to be acquired by Apoll o Management, L.P. for a price of $28 per share.

Principal Competitors: Bed Bath & Beyond, Inc.; Pier 1 Imp orts, Inc.; Target Corporation.

Chronology

  • Key Dates:
  • 1975: Personally affected by the bankruptcy of Daylin Inc., Eu gene Wallace Kalkin forms a seven-unit retail chain with annual sales of $2 million.
  • 1988: Linens 'n Things opens its first superstore, in Rockvill e, Maryland.
  • 1998: Sales top $1 billion for the first time.
  • 2002: Company begins closing underperforming stores.
  • 2005: Company announces agreement to be acquired.
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over 9 years ago

Customer Service



July 25, 2006



Today a friend and myself were shopping at your outlet at Beacon Hill Calgary, Alberta Canada. We stopped to hear the sales person helping another couple with a memory foam matteress pad. A sale sign above the display of materess pads said: Buy one at full price get the other for 1/2 price. My friend had been looking at these memory foam pads and I suggested the the two of them go together and purchase two and split the difference. The salesperson was in agreement. She went to get another one but the store only had one queen size. She called the Brentwood Outlet and was told they would hold two queen size for us. We hurried to the Brentwood store and the manager Megan rudely informed us that these items were not part of the sale and would not honor the other stores sale. We urged her to call the manager at Becon Hill Tony and she said he told her these were not on sale as well. Whether the sign a Beacon Hill was in the wrong place or the staff and manager have a communication problem we don't really know, but I feel the sale should have been honored. As we left the Brentwood store she was making fun of us with other customers.

I feel both managers should be spoken to about how they dealt with this matter.

Mickey Edinga

Calgary Alberta Canada


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