Solo Serve Corporation Business Information, Profile, and History
San Antonio, Texas 78219
History of Solo Serve Corporation
Solo Serve Corporation is a Texas-based chain of off-priced or discount retail stores offering a wide array of name-brand and other merchandise at prices substantially less than those found at department stores such as J.C.Penney's and Sears or specialty clothing stores. The company's stores are located throughout Texas and Louisiana, and sell such items as clothing for men, women, and children, fragrances and perfumes, hosiery, shoes and, in certain stores, a range of high-quality home furnishings. Yet over the past two decades, Solo Serve has experienced a host of financial and management difficulties, including filing for bankruptcy in 1994, and a notification by NASDAQ that the company stock could no longer trade on the exchange. Nonetheless, company owner-managers have not given up hope and, far from failure, Solo Save has fought its way out of bankruptcy and is looking forward to a more successful and profitable future.
Solo Serve Company was founded in 1919 by a group of investors interested in establishing a retail store that would meet the needs of people living in and around San Antonio, Texas. World War I was just ending, and the U.S. government had been encouraging its citizens to be cautious consumers, since many of the essential war materials such as rubber and tin were used by the Armed Forces to conduct operations in Europe. The state of Texas, with many people still living in a manner of the "Wild West," did not have access to the clothing and various other kinds of merchandise found in traditional department and specialty retail stores located on the East Coast or Midwestern states. A small group of businessmen decided it would be profitable, as well as meet the needs of many Texans, to open a retail store that sold a full range of merchandise. One of the most important decisions made by the original investment group was that the cost of items sold in the store would be at significantly discounted prices. This decision was made to attract the widest possible range of customers.
The store was a success from the day its doors opened for business. During the 1920s, as the store grew and its customer base expanded, women's clothing, men's clothing, and children's clothing were the most profitable merchandise sold. The state of Texas at this time in U.S. history was transformed from largely remote rural areas to a burgeoning, bustling conglomeration of modern cities with streetlights, automobiles, and symphony halls. Yet, in spite of the potential for even greater growth, the original investors made a commitment to serving the populace of San Antonio, thus the decision was made to concentrate on providing retail services in a highly localized area.
The store suffered significantly during the Great Depression of the 1930s. After the stock market crash of 1929, many people in Texas lost their jobs, small and big businesses went bankrupt, numerous banks were unable to pay their customers, and the farming and ranching communities, two of the most important components in the state's economy, were devastated by foreclosures. Not until Franklin Delano Roosevelt's election as president in 1932 was there a ray of hope that the economy might revive. When Roosevelt proclaimed a bank holiday and implemented sweeping reforms throughout the banking industry, and also initiated a government-led strategy to address the debilitating effects of the Depression, people from the state of Texas engaged in a collective sigh of relief. Yet the store was hit hard during these years, and forced not only to release employees from their jobs, but to cut back on the amount of merchandise offered to the public for sale.
World War II and the Prosperity of the Postwar Era
When the U.S. Pacific Fleet was surprised and attacked by the Japanese Air Force at Pearl Harbor, Hawaii, in December 1941, the original store in San Antonio, Texas, was still struggling to survive. The beginning of the war not only changed the course of almost every American, but also led to the revival of many businesses throughout the country. As manufacturing for wartime material increased, and as people went back to work after the lean years of the Great Depression, people were able to buy more goods than they had in the previous decade. The San Antonio store began to prosper once again, and management purchased large amounts of clothing, shoes, perfume, and other items for sale.
It was not until after the war was officially over, however, that the store began to profit from the servicemen returning from overseas and the rising demand for consumer goods which swept the country. U.S. industry had been rejuvenated by the war effort, and now every person who wanted a job was hired at a competitive wage. The store's buyers purchased up-to-date women's fashions, accessories, and shoes, as well as household furniture and appliances for those servicemen and their wives who were starting the "baby boom." Soon the store hired more employees, renovated the site initially purchased in 1919, and implemented an aggressive advertising campaign in the expanding community around San Antonio. As revenues shot up so did profits, and by the end of the 1950s the once small retail store had grown into one of the most successful businesses in San Antonio.
Having prospered throughout the 1950s, the store in San Antonio was ready to meet the challenges of the future. Changing demographics across the nation, including the exodus from urban areas to the newly created suburbs, significantly altered the way the retail business conducted its operations. The store in San Antonio saw its future in expanding, so management decided to open a new store to serve the growing population on the fringes of the city. Built to almost the same specifications as its original site, the store opened for business in May 1959, and sold the same items. The population around San Antonio continued to grow and the store grew with it. By the end of the 1960s, the company had doubled its revenues since the opening of the second store, and was ready to make another strategic expansion.
The 1970s and 1980s
The next 20 years were very good ones for Solo Serve Corporation. The two stores the company operated were performing so well during the entirety of the 1970s, with profits skyrocketing, the company's customer base increasing at a dizzying rate, and the number of employees burgeoning, that the revenues accrued were set aside to implement a major growth strategy. Management had decided by the end of the 1970s that it was an appropriate time to implement a comprehensive and thoroughgoing expansion program. One of the main reasons management made this decision was due to the rising popularity of large strip shopping centers and malls. Shopping malls were replacing the traditional stores normally found on the main retail street of every town across the United States, and management saw this growth as an opportunity to reap ever larger profits.
Confident in the future, management at Solo Serve opened three stores in 1981 alone, two more in San Antonio, and one in Austin, Texas. After a short year of reorganization and consolidation, the company opened four new ones in 1983, including another store in Austin, two in New Orleans, and one in Baton Rouge, Louisiana. In September 1994, another store was opened for business in Mobile, Alabama. At this point, one would have thought that company management might slow down and make sure the expansion program was working well. However, the executives at Solo Serve continued their expansion at a hectic pace, and opened four new stores in 1985, including two additional stores in New Orleans, and one each in Corpus Christi, Texas, and San Antonio. By the end of the decade, three more stores were opened, thus bringing the total number of new stores to 16.
Growth and Retrenchment During the 1990s
Sales remained high, but profits slowed dramatically, and management considered the prospect of not building any new stores during the early years of the 1990s. The more influential members of the company's board of directors, however, pushed hard for a continuance of the expansion program. Not only did this group of directors win the debate, but they were even able to accelerate the growth process. Thus in 1990, Solo Serve Corporation opened six new stores in San Antonio, Houston, McAllen, and Austin, Texas. Five more stores were added in 1991, in El Paso, Houston, and Laredo, Texas. In 1992 Solo Serve management and its board of directors surprised even themselves--a total of 11 more stores were opened, with new locations such as Brownsville and Waco, Texas. With two more stores opened for business in 1993, the company counted 24 stores debuting to the public within four years. At the end of fiscal 1993, Solo Serve Company had a total of 43 stores in operation throughout Texas, Louisiana, and Alabama.
In order to fuel this heady growth, Solo Serve Corporation made its initial offering of public stock in April 1992. By trading its shares on the NASDAQ stock exchange management expected to raise significant amounts of revenue to continue the expansion plan. Sales of the company stock, though, were not as good as expected; as operating costs for the new stores began to increase, management at Solo Serve soon realized that its rapid growth strategy was backfiring. Increased competition, weakness in the apparel industry itself, and the inability of the company to procure certain discounted merchandise in the quantities it wanted and at the optimum time for sales led to dramatically decreasing revenues. As a result, on July 21, 1994 Solo Serve Corporation was forced to file for bankruptcy under Chapter 11 of the Bankruptcy Code. In 1995 General Atlantic Corporation, a holding company, purchased all of the company's preferred stock, and Solo Serve became a wholly owned subsidiary.
Net revenues and profits continued to decrease, however, and the financial condition of the company remained precarious. In April 1996, Solo Serve was finally able to climb out of bankruptcy, but suffered another setback when it was informed that its common stock would no longer be traded on the NASDAQ stock exchange, since it had fallen below the $1 minimum. From that time onward, the company began trading on the over-the-counter market. In 1997 and 1998, management at the company arranged to purchase all of the common stock and most of the preferred stock held by General Atlantic Corporation. This was done in order to regain control of the company's direction, and rebuild its core retail business in the stores operating throughout Texas and Louisiana.
During 1997 the company made a concerted effort to expand its product offering of brand name linens, bedding, glassware, furniture, and decorative accents. These products were in addition to the brand-name merchandise apparel sold to men, women, and children. Along with the expansion of its product line, the company also developed and implemented a special marketing campaign specifically oriented toward the socioeconomic background of the people that lived in the general area of each Solo Serve store. Despite these moves, management was forced to close a number of the stores and release their employees. At the end of fiscal 1998, Solo Serve Corporation was operating 27 stores, down from a high of 43 during the early 1990s.
Slowly, Solo Serve Corporation seemed to be inching its way back to financial stability. New management had been hired in 1997 and 1998 to evaluate all of the company's stores, close those that were underperforming, and open new ones in potentially lucrative markets. By December 1998, management had opened two new stores, and was planning to open two more by the year 2000. If the new management proved capable of exploiting genuine opportunities and new markets for its off-price retail stores, while keeping operating costs under control, Solo Serve Corporation stood a good chance of returning to profitability over the long term.
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