By  on September 21, 1994

HENDERSON, N.C. -- One year after filing Chapter 11, Rose's Stores Inc. is emerging from bankruptcy as a leaner operation with big plans to grow its fashion apparel business and a strategy to compete with Wal-Mart.

After scaling down to 113 stores in 10 Southeastern states from more than 200 this year, Rose's, a full-line regional mass merchant, filed a reorganization plan Aug. 1. The company should be out of Chapter 11 by April 30, 1995, according to its new president and chief executive officer, Edward Anderson.

"We have significant challenges ahead and plenty of work to do during the fourth quarter," he said. "But basically, our strategy is in place."

Anderson, Rose's former chief financial officer, succeeded George Jones as president and ceo on Aug. 22, when Jones resigned to become president of worldwide licensing with Warner Bros. consumer products. Anderson also assumed the position of chairman, succeeding Lucius Harvin, who resigned.

Sales for 1994 are projected at $800 million, with modest same-store sales growth in the mid-single-digit range over last year for the 113 surviving stores.

As an example of Rose's commitment to apparel growth, the company will convert one to three stores in 1995 into prototypes featuring 50 percent apparel and 50 percent home goods.

Anderson said the company is not planning to open or close stores.

"We're staying 95 percent on the status quo, consistent with the strategy we initiated in 1992," he said.

That strategy evolved from the company's struggles prior to filing for bankruptcy.

"The company wasn't prepared for competition with Wal-Mart. Sales slipped, and we didn't have adequate financing," said Rob Gruen, senior vice president of merchandising. "Our main task was to define and adequately address our customer."

Research revealed a mid-to-low-income customer base that was 73 percent female, living in rural areas and small towns, whose primary concern was value. Rose's, which had always offered a wide selection, cut down hard goods, such as certain hardware, paint and automotive parts, and increased apparel assortments. Apparel has grown from 25 to 30 percent of total inventory in the past two years, with a goal of 34 percent of total business within the next few years.

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