1875 East Main Street
Duncan, South Carolina 29334
Telephone: (864) 433-8888
Fax: (864) 433-9784
Incorporated: 1984 as J. K. Apparel, Inc.
Sales: $298.99 million (1997)
Stock Exchanges: NASDAQ
SICs: 5621 Women's Clothing Stores; 5641 Children's and Infants' Wear Stores; 5632 Women's Accessories and Specialty Stores
One Price Clothing Stores, Inc., operates a chain of off-price specialty stores offering a wide variety of first quality, contemporary, in-season apparel and accessories for missy, junior, and plus-sized women and children.... We sell merchandise at substantially discounted prices by taking advantage of situations such as imbalances between supply and demand, order cancellations, and vendor needs for liquidity. Unlike most off-price retailers, One Price Clothing sells only first quality merchandise. Our commitment to fashion, quality, and exceptional value has earned us a loyal customer following in our markets.
Headquartered in South Carolina, One Price Clothing Stores, Inc., is a retailer of women's and children's clothing and accessories. This chain of stores sells only quality merchandise--no seconds or damaged goods--that is contemporary and in season. Most items are sold for a uniform price, typically below that of competing stores for similar merchandise. To achieve this advantage, One Price Clothing Stores stocks overproduced, canceled, odd-lot, and liquidated items. The chain also capitalizes on discounts for purchasing merchandise in large quantities. One Price Clothing Stores frequently locates its retail outlets in lower-income areas.
One Price Clothing Stores sells women's and children's apparel and accessories to consumers through company-owned retail stores in the continental United States, Puerto Rico, and the Virgin Islands. In order to succeed in the highly competitive world of retail apparel, the company sells its merchandise at lower prices than department stores, specialty retailers, discount stores, manufacturer-owned outlet stores, and other off-price retailers. One Price Clothing Stores generally purchases quality merchandise for its stores at discounted prices and at favorable terms from manufacturers, jobbers, importers, and other vendors. The company, which does not franchise its outlets, carefully plans its stores and maintains its flexibility to ensure profitable operations.
Mr. Jacobs Has an Idea: 1984
Henry D. Jacobs, Jr., founded the company in 1984 as a North Carolina corporation under the name J. K. Apparel, Inc. After changing the company to a South Carolina corporation named One Price Clothing Stores, Inc., Jacobs ultimately incorporated in Delaware in April 1987. In May of that year, the company issued its initial public offering of common stock.
One Price Clothing Stores headquartered its corporate offices and distribution center on 82 acres in Duncan, South Carolina. In 1993 the company expanded the corporate offices by 28,000 square feet. Two years later it expanded the distribution center to 500,000 square feet, an increase of about 90,000 square feet. Both expansions served to better support the company's future growth.
The One Price Concept
The company opened its first store in 1984. With merchandise for juniors, misses, and children, the store offered a variety of contemporary, in-season clothing. Fashionable sportswear comprised typically stocked items, namely knit tops, pants, blouses, shirts, skirts, sweaters, jackets, and shorts. Other items included dresses, swimsuits, lingerie, raincoats, and accessories such as scarves, socks, belts, handbags, jewelry, and fragrances. All merchandise was comparable to items carried by department and specialty stores, except each item in the One Price Clothing Store sold for seven dollars. Even two- and three-piece ensembles sold for seven dollars, less than half of the price of some competing merchandise elsewhere. The store was not dependent on any single group of customers, but the value- and fashion-conscious woman--usually from lower- or middle-income levels--became the average customer.
Rapid Expansion During the 1980s and 90s
Rapid expansion followed that first store as the One Price concept was embraced by the company and its customers. "There's no sticker shock," Jacobs explained in WWD. "It simplifies inventory and operating procedures. The discipline required--in cost control, merchandise, real estate, expenses--is enormous. It's probably the reason why many who have tried it are now out of business." Yet Jacobs's stores were successful. Even the chain's more specialized areas held their own in sales. For example, in 1994 accessories accounted for 11 percent of One Price Clothing Stores' net sales, increasing to 12 percent the next year. Similarly, the company attributed 10 percent of its net sales to children's clothing in 1994 through 1996.
In 1990, the company registered "One Price" as a trademark with the U.S. Office of Patents and Trademarks. Awarded incontestable status, One Price Clothing Stores intended to renew the trademark as valuable and significant to its business. The company also registered "One Price" and its Spanish equivalent--"Un solo precio"--in Mexico; however, as of 1997, the company did not use the trademark there. Instead One Price Clothing Stores used "Ropa a un precio," a registered trademark in the United States, at stores with significant populations of Spanish-speaking customers. The company also received approval to register "One Price" and "One Price Plus" in Canada, but&mdash in Mexico--the company did not use the trademark in Canada as of 1997.
By 1993, the company operated more than 500 stores, each selling merchandise for seven dollars. Fifty stores were added in the Los Angeles market alone in 1994--five of them within two months.
One Price Clothing Stores established its first wholly owned subsidiary in February 1994, 10 years after the opening of its first store. Operations for One Price Clothing Store of Puerto Rico, Inc., began in May 1994. Within three years, 29 stores operated in Puerto Rico.
At the end of 1996 One Price Clothing Stores operated 645 stores in 27 states and Puerto Rico. The company opened 23 stores in 1996, relocated 11 others, and closed 66 underperforming stores. It planned to open 65 new stores in 1997, relocating 10 and closing 30 underperforming establishments. The company further expanded the One Price concept by establishing One Price Clothing-U.S. Virgin Islands in 1997. This second wholly owned subsidiary began operations in March of that year. According to Jacobs's statement in the 1996 annual report, "This new store in St. Croix opened with extremely strong initial sales." Thus, One Price Clothing Stores expected similar ventures in the future. As Jacobs explained further: "We continue to search for new locations providing the right mix of demographics and market access needed to fuel future growth." In total, One Price Clothing Stores anticipated 680 stores in operation during 1997.
The Purchasing Strategy
In order to achieve the One Price concept, the company looked for vendors that needed excess capacity, import quotas, or liquidity. It also targeted suppliers unable to dispose of their merchandise through regular distribution channels. Essentially, One Price Clothing Stores bought merchandise discontinued because of color or style changes by manufacturers. It purchased overproduced merchandise, orders canceled by regular retailers, and unordered catalog merchandise. The company also bought odd-lot and broken-size assortments.
This strategy gave One Price Clothing Stores distinct purchasing advantages. For instance, it could buy merchandise in large quantities at greatly reduced prices. Such opportunistic buying allowed the company to purchase merchandise close to or during actual selling seasons--later than department stores or specialty retailers. One Price Clothing Stores then had the ability to react to trends that developed in each selling season. Often the company bought selected merchandise in advance of the selling season as well.
With a reputation for reliability in the industry, One Price Clothing Stores purchased merchandise inventories on credit. In all, the company dealt with nine hundred vendors, none supplying more than 10 percent of One Price Clothing Stores' annual total purchases. The chain maintained no long-term or exclusive agreements with vendors and easily added new vendors if they could provide quality merchandise at a low price.
One Price Clothing Stores designed its outlet operations for customer convenience. The stores presented merchandise attractively, with all apparel on hangers and with much of the merchandise organized by classification, color, and style. The chain accepted cash, checks, and major credit cards as payment from customers and devised a liberal return and exchange policy. The company kept its stores open seven days each week from 10 a.m. to 9 p.m., although One Price Clothing Stores adhered to slightly shorter hours on Sundays. The company generally staffed each store with a full-time manager, one or two assistant managers, and up to ten sales associates. One Price Clothing Stores entrusted its senior vice president of stores with responsibility for its retail establishments and appointed two directors of store operations. Regional sales managers oversaw nine districts, with district sales managers assigned responsibility for 10 or 12 individual stores. District sales managers made regular site visits, promoted sales, trained staff, consulted about store layout and merchandise, and oversaw company operations and management policies.
Though One Price Clothing Stores maintained outlets throughout the continental United States and in selected U.S. territories, many of the company's stores were concentrated in certain areas. Texas, for example, had 87 One Price Clothing Stores at the beginning of 1997. Florida followed with 62, and 50 stores were located in California. Georgia was home to more than 40 One Price Clothing Stores.
Despite their locations, all of the company's stores shared a similar design in 1997. Each was about 3,300 square feet, with 2,400 square feet of selling space. The company leased all facilities at five- to 10-year initial terms, with one or two five-year renewal options. Seventy percent of the leases and renewal agreements were set to expire in 1997.
In 1997, 85 percent of the company's stores were located in strip shopping areas and 15 percent were situated in central business districts or malls. One Price Clothing Stores leased most of its facilities in or near communities with populations of 40,000 to 50,000 or in large metropolitan areas.
Weakness in Women's Apparel
Due to prolonged weakness in women's apparel, One Price Clothing Stores embarked on a program to address the critical situation in the retail environment in 1996. It began with customer surveys to re-identify its customer base, customer needs, and customer opinions of the chain. The company developed and tested new marketing and advertising campaigns, as well as adopted a new approach to markdowns.
One Price Clothing Stores reevaluated its stores, too. It remodeled 48 and re-fixtured about 400 stores. During 1995 and 1996, the company closed 89 underperforming stores and sought locations for new stores based on future demographics and market access.
Since sales in women's retail apparel are seasonal, One Price Clothing Stores changed its fiscal year in 1996 to better conform to seasonal patterns. The adjustment made comparing the company's quarterly and annual reports with those of its competitors easier. Prior to fiscal 1996, the company's financial year ran from January through December. Sales were lower in the first and third quarters--January through March and July through September--and higher in the second and fourth quarters--April through June and October through December. Sales, then, coincided with the transition of seasonal merchandise, so markdowns in transition times caused operating expenses as a percentage of sales to increase. After the change, however, the fiscal year ran from February through January. The first and second quarters--February through July&mdash⁄owed higher sales and operating results than the third and fourth quarters--August through January. One Price Clothing Stores started to see greater absolute and relative sales performance in the second half of the year due to the greater selection of fall and winter merchandise.
One Price Clothing Stores also put a new merchandise replenishment system in place and continued its rigorous management of inventory levels and mix. The company instituted a sophisticated computerized inventory management system--including point-of-sale cash registers--that allowed the daily and weekly review of each store's sales and inventories. Armed with this information, decision makers could change the merchandise mix or purchasing strategies based on customer demand.
Now One Price in Name Only
One Price Clothing Stores even planned to expand its merchandising mix starting in 1997. The company added more categories and styles of merchandise; for example, jeans, silk jogging sets, sweats, heavy jackets, and plus sizes. It also initiated alternative price points instead of all merchandise at seven dollars. Though the majority of items reflected the standard price, up to 20 percent of a store's merchandise assortment could vary in price. Core inventory remained at seven dollars, but some items dropped to five or six dollars. Half of the chain's stores converted to the new format in May 1997, with the remainder of stores scheduled for August 1997.
The change in strategy resulted in improved sales and profitability. Customers responded positively to the new prices, and sales increased. "The sales increases and overwhelmingly positive customer survey responses generated during our testing of this new strategy led us to announce plans for a chain-wide roll out," Jacobs explained in the company's 1996 annual report. "We expect this new approach to our business ... to generate improvement in sales and profitability."
Principal Subsidiaries: One Price Clothing Store of Puerto Rico, Inc.; One Price Clothing-U.S. Virgin Islands.
Berton, Brad, and Karen Glover, "One Price Clothing Stores Plans to Enter Southland Market in a Big Way," Los Angeles Business Journal, May 9, 1994, p. 24.
"Kelley Named President, CEO of One Price," WWD, April 2, 1997, p. 16.
Lee, Georgia, "One Price Clothing Stores: Big Profits from $7 Sales," WWD, November 17, 1993, p. 6.
"Shapiro Exits as President of One Price," Daily News Record, April 3, 196, p. 12.
Source: International Directory of Company Histories, Vol. 20. St. James Press, 1998.