OFF-PRICE GAMBLE

SEATTLE--While many off-price chains are struggling for survival, Jay Jacobs Inc. is laying the groundwork for converting up to 28 of its units to the off-price format over the next year.
"Off-price is still a good business, and we think we can get a piece of it," Rex Steffey, president and chief executive officer, said in an interview.
Six of the specialty chain's poorly performing budget stores, called Fashion Direction, have been renamed DD Sloane and remerchandised with branded women's apparel at discounted prices.
Jay Jacobs, based here, operates 156 stores, primarily under the Jay Jacobs name. It filed for Chapter 11 in May 1994 and expects to emerge from bankruptcy protection by November. The chain has closed more than 100 stores while in Chapter 11 and is remerchandising to emphasize private label women's apparel.
The mall-based DD Sloane stores, which average about 2,000 square feet, are in Puyallup and Yakima, Wash.; Salem and Beaverton, Ore.; Kalispell, Mont., and Anchorage, Alaska.
At the same time, off-pricers such as Marshalls, Burlington Coat Factory Warehouse and Filene's Basement are suffering declining same-store sales and getting battered by heavy markdowns to reduce inventory. Many of the chains also are attempting to broaden their merchandise assortments to overcome lackluster demand for women's apparel.
Steffey, however, said he is "encouraged" by the sales trends at the six DD Sloane off-price units, which are running "a little bit" ahead of the former Fashion Direction budget outlets. He declined to specify a volume figure, but said the stores have enjoyed the normal "hype and short-term surge" of grand openings.
After evaluating third and fourth quarter results, a decision on whether to convert the remaining 22 Fashion Direction stores early next year to off-price will be made.
Jay Jacobs cut losses to $589,000 in the second quarter from $6.8 million. Total sales fell 29.7 percent to $18.8 million, a reflection of the widespread store closings. Same-store sales were off 1 percent.
Three of the DD Sloane units opened last month and three debuted in late May. The stores carry in-season women's fashion merchandise from brands such as Guess, Esprit, Express and Victoria's Secret.
"We have made it a priority to not buy cheap budget goods," Steffey said. "We try to find things that are good values and that have recognizable labels."
He added, "Getting goods has not been a problem. We can expand that label base as we roll out more stores."
Steffey hired his wife, Sue Steffey, late last year to develop DD Sloane. She had been a buyer and merchandiser for more than 20 years with Paul Harris, William H. Block and Filene's.
To support the new division, Jay Jacobs has created a comic strip built around Dee Dee and her shaggy dog, Sloane, who "travel the world buying fantastic brands at terrific prices."The theme is used in mailers, print ads and in-store signage, hang-tags and banners. There also is an 800 telephone number for shoppers to call Dee Dee for tips and to offer suggestions.
Rex Steffey described Fashion Direction as "a stepsister kind of strategy" that was created to get additional square footage in malls where the company had Jay Jacobs stores. Fashion Direction carried manufactured over-runs and other lower priced goods.
Still, Steffey conceded, the past year has not been good for established off-pricers and department stores have pumped up promotions and reduced the price differential.
"But we're not one of the heavyweights," he noted. "We don't need too many customers to do better than we were doing before. There are people who love the concept and people who hate it. We hope there will be more that love it."
--Robert Spector
Fairchild News Service

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