By  on December 29, 2010

DownEast Outfitters is virtually a household name in its native Utah and neighboring Idaho, but the purveyor of affordable and straightforward feminine apparel staples is working to become known elsewhere.

The 41-unit retailer plans to add 12 to 17 stores next year in what is shaping up to be its most aggressive expansion push since brothers Charlie, Bill and Jonathan Freedman started in the retail business with their first off-price outpost in 1991. Over the last five years, DownEast has spread beyond Utah and Idaho into Arizona, California, Washington, Nevada and Wyoming, and the expansion push is expected to continue and introduce the retailer possibly to Colorado, Texas and Oregon, if not next year than shortly thereafter.

“We have been expanding outside of our core market really on a trial basis, trying new stores in new states, looking to see how our product is received by the local customer bases in those regional malls. We have been really encouraged by the strong sales results in our locations,” said Klane Murphy, who became chief executive officer of DownEast in 2006. “Lease conditions are favorable. We are in the value sector, and our concept is growing, and landlords are looking for retailers that are expanding now and offering attractive deals to open at their centers.”

DownEast Basics is driving the growth and currently accounts for almost half the company’s store portfolio. The concept was launched in 2005 and is dedicated to private-label apparel. DownEast’s other two concepts are DownEast Home & Clothing, which has 15,000- to 20,000-square-foot stores with furniture and clothing, and DownEast Outfitters, a format averaging 3,000 square feet at which sales are split between the private-label DownEast Basics line and off-price merchandise.

At malls, DownEast Basics is placed in the company of juniors apparel retailers or apparel stores geared toward a slightly older demographic. Jonathan Freedman, a senior vice president at DownEast, described the look of the stores as shabby chic and said design elements include polka dots, stripes, and images of birds and trees. Murphy said a typical shopper is a young mother or college-age woman who also patronizes the likes of J. Crew, Anthropologie, Aéropostale and Abercrombie & Fitch.

DownEast Basics began life as a T-shirt line geared to layering that was sold at kiosks inside malls. At one point, DownEast Basics was available at around 40 kiosks, but stellar performance convinced the company’s management that the line could succeed at stores and the kiosk model was phased out in 2008 and 2009 in favor of full-sized stores. Outside of its own stores, DownEast Basics is wholesaled to roughly 1,000 doors — a number Murphy expects will increase to 1,300 or 1,400 by the end of next year —and wholesale is responsible for 10 to 20 percent of DownEast’s overall revenues.

DownEast Basics has matured from Ts to become a complete line to fulfill a multitude of women’s wardrobe needs. Freedman said 30 to 40 percent of unit sales are from the basic Ts, but skirts, tops, dresses and cardigans in “pretty equal proportions” make up the remaining 60 to 70 percent. He also noted that accessories, denim and sweaters are on the rise for DownEast Basics. Denim averages $50, sweaters $30, Ts $12, dresses $32, skirts $28, fashion tops $22, and accessories $10 to $16.

“Our traditional customer was driven to our stores because of layering Ts,” said Murphy. “They now view us as offering a lot of great options across the various categories.”

For 2010, Murphy estimated privately held DownEast as a whole would generate between $40 million to $50 million in retail sales and would be up about 20 percent from the year before. In terms of annual sales per square foot, he said, “We do better than the mall average at every location I can think of.”

Five years from today, Murphy projected that DownEast would have 100 to 150 stores and might consider seeking private equity funding to help fuel growth, but most likely will be content to rely on self-financing. “Limiting your growth to your available cash, aside from being a risk-averse thing to do, is a very healthy thing to do, and we can sustain the growth over a five-year trajectory with our internal funds,” said Charlie Freedman, who, like his brother, has the title of senior vice president at DownEast. “The companies that are looking for private equity tend to make hasty decisions about their customer base and expand too quickly.”

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