Lane Hamm describes the process he and his company, Weekends Only, went through to get a Paycheck Protection Program loan as painful and anxious with plenty of sleepless nights.
The ordeal, as arduous as it was, secured the Webster Groves-based company a $2.3 million PPP loan through PNC Bank in the program’s first round of funding, and after Weekends Only sales plummeted 80% due to the pandemic.
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“First you’re wondering if you’re going to be in business. Then it’s, ‘how are we going to pay our bills? What’s it going to take?’” Hamm, president and CEO, said of Covid-19’s impact on his business. “It’s kicked our asses.”
But the discount furniture retailer isn’t to be counted out. Weekends Only, named for its strategy of operating Friday through Sunday, is hoping it will create a solid cushion from competitors by focusing its expansion plan on smaller markets. It comes on the heels of Hamm assuming the CEO role from Tom Phillips, who retired after 23 years and will serve as executive chairman and consultant.
“Lane has the skillset we need, and he has demonstrated he can lead through change and make the hard decisions required to take this company to the next level, especially during this tough time of Covid-19. No one could have predicted this virus, but under his leadership the company has been in front of doing what’s right, right now, for our customers and employees,” Phillips said in a statement.
Weekends Only furloughed most of its 400 employees but did not have any permanent layoffs, and it’s begun to see sales pick back up. It also received rent abatement from about half of its landlords. The retailer is still facing challenges with its supply chain, particularly with its upholstery manufacturers “straining to keep up” and is out of stock on some critical products, Hamm said.
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But there are other signs business is returning. Weekends Only restarted negotiations to finalize a lease on a new location, a deal that was put on hold due to uncertainties with Covid-19 and is expected to be complete in weeks’ time.
“The other question is financing. I like many aspects of the Main Street Lending Program, but the government remains slow in providing actionable details to commercial banks about requirements for the program,” Hamm said. “I expect banks to be careful in underwriting new deals in the short term, which is why the 95% government backstop is critical to keep capital investment going at this time.”
The lease is part of the company’s expansion plan into smaller markets with 400,000 to 1 million people, underserved areas that Hamm said are primed for the Weekends Only concept of offering a range of styles and prices on products available the same weekend.
It’s targeting that market in large part due to a competitor, Bob’s Discount Furniture, which has over 119 stores nationwide. Additionally, Bob’s has three stores in St. Louis and two in Indianapolis, where Weekends Only also has two stores.
“They’re a strong competitor and are much bigger than we are with sales over $1 billion. Bob’s has hurt (us), and candidly that’s why we’re focused on smaller markets. We don’t have Bob’s huge ad budget,” Hamm said.
It’s battled strong competitors before, such as online retailer Wayfair, which pushed Weekends Only to improve its online experience and product selection.
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Wayfair remains a big competitor even during the pandemic. The publicly traded company reported second quarter 2020 earnings to be up 90% year over year as customers headed to its website while brick-and-mortar stores closed. Wayfair’s stock price has risen 700% since March, according to Barron’s.
Furniture and home furnishings store sales in May grew by 89.7% over April’s revised totals, which were down 48.4% from March 2020, according to the latest available data from the U.S. Census Bureau. But revenue growth of the $63 billion industry is expected to decline 4.2% this year due to falling consumer spending, research market firm IBISWorld said.
That doesn’t alarm Hamm, who points back to the foundations of Weekends Only.
“One of the things we’ve benefited from is that we’re a family business who’s prudent with the debt we’re carrying,” Hamm said. “That’s what separates us from the headlines.”
Weekends Only
Source: https://tholansonnha.com
Category: Finance
