Belk Inc., which is investing heavily in modernizing its business, expects to reach $6 billion in revenues in five years, chairman and chief executive officer Tim Belk said at the National Retail Federation annual convention on Tuesday.
Last year, the company was just shy of $4 billion, but the Charlotte, N.C.-based, family-run regional department store, expects significant growth through its $600 million, five-year modernization program, which Belk detailed during his presentation at the Jacob K. Javits Convention Center. He said $270 million will be spent on remodels and expansions; $263 million will be spent on new technology; $42 million has been earmarked for branding, and $14 million will be devoted to enhancing service.
Belk is about one year into its modernization, which encompasses everything from updating the image to spotlight “modern, Southern style,” to growing its assortment of contemporary and Southern designers, while reducing its dependence on traditional labels. At the same time, Belk is getting aggressive developing a stable of exclusive private labels and in March will launch an exclusive men’s collection called Made Cam Newton, in association with the Panthers quarterback.
In addition, the company has begun developing omnichannel capabilities, though Belk acknowledged, “We haven’t mastered omni. We are still in the trenches.” Customers who shop Belk both online and in stores spend roughly three times the amount of those who shop just the stores, and 10 times the amount of those who shop just online. In 2009, only 1 percent of Belk’s sales were conducted online. Last year, 3.3 percent of Belk’s sales were online. “We are on track to hit 10 percent by 2015,” Belk said. He added that digital has been accretive to in-store comparable sales. “We believe we can export the Southern state of mind,” Belk said, suggesting that Belk’s offerings can sell beyond the market reach of the stores. Belk’s road map to becoming a true omnichannel retailer involves replatforming e-commerce, replacing point-of-sale systems, building up mobile capacity, integrating customer data and establishing enterprise inventory.
Investments so far seem to be paying off. Belk’s third-quarter net income last year increased to $11.1 million compared with $600,000 in the same prior-year period. Net income excluding noncomparable items increased to $9.8 million compared with $1.4 million in the prior-year period.