Hiring a consultant helped Tom Phillips create a novel Weekends Only business plan

Tom Phillips isn’t afraid to ask for counsel. As the CEO of Weekends Only Furniture Outlet, he freely admits he wouldn’t know where he would be without the advice of consultants.

“I’m very, very strong on getting consultants — either paid consultants or an advisory board. They just provide such a great value,” he says.

For someone who came from a family of furniture retailers, you’d think it would have been an easy cushion to sit on — simply ask a family member for advice about the failing Phillips Furniture store in Affton, Missouri.

But ready for an out-of-the-box solution, Phillips went outside the business and engaged a consultant to do some research on the situation.

“I didn’t know what to do with the store,” he says. “I hired a consultant to help me brainstorm about it, and what he helped me to see was that in retail, he who has the lower cost of doing business wins — Wal-Mart proves that.

So with that kind of understanding, Phillips thought about how to develop a structure that could thrive with below-market prices. He and his consultant looked around the country and learned of a retailer in Virginia Beach, Virginia, that was operating a clearance center and was only open three days a week.

The idea was born. Now it was on Phillips to see if the idea would work in St. Louis.

Here’s how Phillips opened his mind to new ideas and took the challenge of leading Weekends Only Furniture Outlet, building it to $55 million in annual revenue.

Research, research, research

Just go to a library or bookstore and you’ll see rows and rows of books on self-help topics. While such resources can offer assistance, some problems are so individualized that you need the human touch that analyzes and supports.

When Phillips set out to explore solutions, he drew upon traffic studies from his family business’s general furniture store indicating that 70 percent of the customer foot traffic occurred on the weekends. When it came to purchasing, the decision was largely made by two people.

“It wasn’t normally one individual,” he says. “Couples would come in when they had time together, and that was on the weekends.”

Phillips and his brother David — with consultant Ralph Rosene of Target Systems Inc. who presented the concept — worked out a business plan.

The store would operate just three days a week. Even though Phillips was paying rent, he wouldn’t have the cost of operating the facilities from 9 to 9 like other retailers.

“We wouldn’t have to turn the lights on every day, or at least maybe only turn a few of them on, to keep utilities down,” Phillips says. “We’d have a cost advantage and then we could pass those savings on to our customer.”

David, chief sustainability officer, came up with the name Weekends Only.

“I said, ‘David, that’s perfect. That’s a wonderful thing. All we had to do was add the words ‘furniture outlet’ onto it. Back in 1996 when we were doing this, outlet malls were a big thing,” Phillips says. “They were a big thing, and they really meant something back then, so we put ‘outlet’ into the name, and that’s how the name became Weekends Only Furniture Outlet.”

Another part of the business plan was to focus on using the relationships already established with suppliers. These would be the brand name suppliers that they were carrying in the general furniture store.

“We said, ‘Bring us your closeouts. Give us your overstocks and cancellations. We want all this product and we want to buy it at a discount, and we’re going to pass the savings on to customers,’” Phillips says.

That solidified the business plan, the next step was executing it.

Breaking out

Brainstorming can be a useful tool to break out of conventional or worn-out thinking patterns.

It helped Phillips realize there was a niche that wasn’t being served in the home furnishings industry that was being addressed in apparel by overstock retailers such as T.J. Maxx.

“They had found a way to buy off-price, extreme value products and then pass the savings on to customers,” Phillips says. “That wasn’t being done in home furnishings.

“We had this opportunity in St. Louis to seize that niche and market to the masses because we had brand name galleries, and they were very beautiful and well-appointed and accessorized, but they were expensive. Nobody was really marketing to the masses.”

One other concern was the showroom image. The family decided that a wholesale club approach would convey the message of keeping costs low.

“We adopted more of a Sam’s Club approach — concrete floors, fluorescent lighting, nothing fancy — a no-frills showroom that really demonstrated a warehouse environment, that we’re really keeping our costs low so that we can keep our prices low,” Phillips says.

“We were only going to open three days a week, and customers would have to understand that we’re going to have lower costs so we’re going to pass those savings on to the customers, and that’s what we set about doing.”

Being in the business long enough to understand some of the dynamics of retail pays off as well, Phillips says.

“The weekends only environment presses a week’s amount of customer footsteps and traffic into three days, so it feels like, ‘who can get the deal first before we run out,’” he says. “Many of these deals are limited quantities, and so they see it’s a low price — the lowest price in the market on an item — and then it’s just up to them to decide if they are willing to take a trade-off for what I’ll call the high-touch service that you can get in a general furniture store.”

Choose qualified board members

Asking for and accepting advice is easier for some leaders than others. The mindset is not that different from the one that says it’s a good business practice to get more than one estimate for a remodeling project.

After Phillips opened five Weekends Only stores within five years in addition to a distribution center and installing a new computer system, the funding demands brought a lot of stress to get outside advice.

“I see a great value in looking outside of the four walls of your business and the limited knowledge of your mind to open yourself up to ideas from consultants,” he says. “This led me to form an advisory board where I could have a continual feedback mechanism.”

But there is one important thing to keep in mind: Your advisory board members need to be free of any connection to your business. Phillips says the first time he attempted an advisory board, it didn’t work out.

“I had to scrap it and start over again because I had my accountant, my attorney and my banker — and these were people who were providing a service to me, but I was paying them for their services,” he says. “They were afraid to anger me; they were afraid to challenge me because they didn’t want to lose my account.”

This time, Phillips opted for outside advice.

“I went to a seminar about family business governance,” he says. “I learned how to form an advisory board for a family business of my size, and I set about doing that. In fact, at that seminar I asked one of the presenters if he would be on my board and help me form the board, and that’s what happened.

“He knew of someone in St. Louis who was way ahead of me in retail. In fact, what I was looking for was CEOs or former CEOs of companies who were way ahead of me and where I was going. He knew a man named Craig Schnuck, who was the CEO and president of Schnuck Markets Inc. at the time in St. Louis.”

Phillips convinced Schnuck to join the board and added Rick Meyer, an executive from Save-A-Lot.

“These people meet with me and my wife, Peggy, and then with my executive team four times a year,” he says. “They have been instrumental to me, in creating a succession plan; they convinced me that I should try to recruit one of my children to come into the business to eventually take over the business; they helped with an exit strategy; and they’re great — they give me great feedback on our strategy itself.

“It’s probably one of the single most helpful things that I’ve had in business, this whole concept of outside advisers.”

How to reach: Weekends Only Furniture Outlet, (855) 803-5888 or www.weekendsonly.com

Takeaways

  • A little feedback can open the door to big improvements.
  • Brainstorming can open new ways of looking at worn-out thinking.
  • Find advisory board members who add different perspectives.

The Phillips file

Name: Tom Phillips
Title: CEO
Company: Weekends Only Furniture Outlet

Birthplace: St. Louis

Education: I graduated from Cardinal Glennon College, which is the St. Louis Archdiocesan Seminary College, with a bachelor’s degree in philosophy and a minor in theology.

What was your very first job and what did you learn from it?

My very first job was as an eighth-grade homeroom teacher, also teaching mathematics to sixth, seventh and eighth graders. From that job, I learned that I really love to teach.

What was the best business advice you ever received?

  1. One of my consultants, Joe Hoffman with CMA in Clayton, Missouri, told me, ‘Assuming your strategy is solid, the most important thing is people — having the right talent on the bus.’
  2. When it comes to setting strategy, don’t worry about the ‘how.’
  3. The most important thing regarding people is to capture their hearts and minds.

Who do you admire in business?

I admire Craig Schnuck and the Schnuck family of the Schnuck Markets chain in St. Louis.  They have found a way to successfully grow their business into a regional powerhouse in their industry and, at the same time, have kept their family together. That is a pattern I wish to model myself and our family after.

What is your definition of business success?

Having done my best, and being able to be content with the outcome and the results. This goes to my overarching desire for human happiness.

Target warns 1st-quarter profit will miss forecasts

MINNEAPOLIS, Minn., Tue Apr 16, 2013 — Retailer Target Corp. on Tuesday warned first-quarter earnings would miss expectations, after weaker-than-expected sales of seasonal and weather-sensitive items, sending shares down 1 percent.

Target said adjusted earnings per share would come in slightly below the low end of its prior outlook of $1.10 to $1.20, and same-store sales would be about flat.

Target stood by its full-year forecast for adjusted earnings per share of $4.85 to $5.05 per share.

The company expects to report earnings on May 22.

Shares fell 1.1 percent to $67.70 in premarket trading.

Target quarterly profit tops forecasts

MINNEAPOLIS, Thu Nov 15, 2012 – Target Corp’s quarterly profit beat Wall Street forecasts as the discount chain lured shoppers with a wider variety of food products and 5 percent discounts for its cardholders.

Target said it had earned $637 million, or 96 cents per share, in the third quarter ended on October 27, up from $555 million, or 82 cents a share, a year earlier.

Excluding a gain from the pending sale of its credit card receivables, the profit was 81 cents per share, 4 cents more than what Wall Street analysts were expecting, according to Thomson Reuters I/B/E/S.

The company said it expected to earn between $1.45 and $1.55 a share in the holiday quarter, including expenses linked to its entry into Canada next year. That compares with analysts’ forecasts of $1.51.

Target previously said third-quarter sales had increased 3.4 percent to $16.60 billion. Sales at stores open at least a year were up 2.9 percent. That came largely from higher prices and customers’ buying more items per transaction.

Adding more food to the stores and offering a 5 percent discount to cardholders has attracted shoppers but also weighed on profit rates. Gross margin during the quarter slipped 0.2 points to 30.3 percent of sales.

Target bets on QR codes, exclusive toys this holiday

MINNEAPOLIS, Minn., Wed Oct 3, 2012 – Target Corp. hopes that letting shoppers scan, buy and ship a selection of toys while shopping in its stores and having hundreds of exclusive toys will help drive sales this holiday season, one of its executives told Reuters.

Starting Oct. 14, Target will feature 20 toys at the front of its aisles promoted with signs featuring QR codes. Shoppers with smart phones can scan the codes, those squares with dark boxes and lines, to buy any of those items and have them shipped free.

“Providing this convenience for mom is about ensuring that she’s able to shop the way that she wants to,” said Stephanie Lucy, Target’s vice president of toys and the mother of two who knows about not wanting to ruin the surprise of the holidays.

Giving shoppers this new way to buy merchandise could help differentiate Target from its rivals including: Toys R Us, Wal-Mart Stores Inc. and Amazon.com Inc.

The holiday season accounts for the bulk of toy sales at Target and other U.S. chains. Last year, Target’s toy sales were hurt by Walmart’s layaway push before Thanksgiving. Unlike some other major toy sellers, Target does not offer layaway, which gives shoppers the ability to put goods on hold and pay over time.

Instead, Target uses sales coupons, and free shipping and small discounts for its credit-card holders.

Target’s fourth-quarter sales rose 3.3 percent last year, with sales at stores open at least a year up 2.2 percent, down from a 2.4 percent rise during the year-earlier holiday season. The company has not yet given a forecast for the holiday season, and Lucy declined to give a projection for toy sales.

Target profit beats quarterly expectations; shares up

MINNEAPOLIS, Wed Aug 15, 2012 – Target Corp posted a higher-than-expected quarterly profit and raised its full-year forecast on Wednesday, as it won over shoppers with an expanded selection of food in many stores and discounts for its cardholders.

Shares of the U.S. discount chain rose 1.5 percent to $64.33 in early trading.

Target is testing new strategies, such as opening smaller city stores, as it tries to entice shoppers to visit more often. The company added a wider variety of fresh food to hundreds of stores and will sell a line of holiday goods with upscale department store Neiman Marcus Group Inc. later this year.

Target is also spending as it gets ready to open its first Canadian stores next year.

But those expenses were a bit lower than anticipated, and the results benefited from that as well as higher-than-expected profitability in the company’s credit card unit, said Janney analyst David Strasser, who has a “neutral” rating on Target stock.

Target said it was “very pleased” with the early results from its first three CityTargets, which opened in Chicago, Los Angeles and Seattle in late July. The stores are about two-thirds of the size of the company’s typical locations and carry a limited selection of some goods.

Analysts see CityTarget as a blueprint for how Target plans to run stores in Canada, where its sites are smaller than its typical U.S. shops. Target plans to start opening Canadian stores in March or April, after taking over leases for Zellers stores from Hudson’s Bay Co. in 2011.

“While the initial response from shoppers has been positive, the success of this format will essentially depend on whether Target can make the economics of the model work,” Stewart Samuel, a Vancouver, Canada-based senior analyst with food and grocery research firm IGD, said earlier this week.

Target raises annual profit forecast; shares inch up

MINNEAPOLIS, Wed May 16, 2012 – Target Corp. raised its annual earnings forecast after posting a bigger-than-expected rise in quarterly profit, even as it spends more on plans to open stores in Canada and has concerns about U.S. shoppers’ ability to spend.

The discount chain expects economic uncertainty to continue for the rest of 2012, Chairman and Chief Executive Gregg Steinhafel said on Wednesday.

Shares of Target were up 31 cents to $55.39 in midday trading after rising as high as $56.44 earlier in the session.

“Consumers are not buying more at Target. What’s driving their sales is maybe people are shopping a bit more often,” said Brian Sozzi, chief equities analyst at NBG Productions. “It’s not like people are going in and loading up their baskets as much as they were a couple of years ago.”

Target said it expects sales at stores open at least a year, or same-store sales, to rise about 3 percent this quarter and 3 percent or a little more for the full year. Last year same-store sales rose 3 percent.

Target, which sells basic goods such as soap and paper towels along with limited-edition items from the likes of designer Jason Wu, has been seeing more customers shop using its credit cards, which offer a 5 percent discount and free online shipping.

Target adjusted profit rises for holiday quarter

MINNEAPOLIS –– Target Corp. posted a higher adjusted quarterly profit as the retailer’s sales rose during the holiday season.

Target earned $981 million, or $1.45 per share, in the fiscal fourth quarter, compared with a profit of $1.04 billion, or $1.45, a year earlier. Excluding certain costs, adjusted profit per share came to $1.49, compared to $1.38 a year earlier.

Target expects to earn between $4.55 and $4.75 per share this year, excluding the costs of its entry into Canada. That includes 97 cents to $1.07 per share for the first quarter.

Target previously said that sales rose 3.3 percent to $20.94 billion. Sales at stores open at least a year, or same-store sales, rose 2.2 percent, down from a 2.4 percent rise during the prior holiday season.

The average amount spent per transaction at those established stores rose 1.8 percent as shoppers bought more items and prices were higher.

Target profit tops expectations; shares climb 2.6 percent

MINNEAPOLIS ― Target Corp. posted a much bigger-than-expected jump in quarterly profit on Wednesday as shoppers responded to its increased food selection and 5 percent discount to cardholders.

The U.S. retailer earned $555 million, or 82 cents per share, in the third quarter ended on Oct. 29, up from $535 million, or 74 cents per share, a year earlier.

Target had forecast earnings of 70 cents to 75 cents per share, and analysts on average were expecting 74 cents, according to Thomson Reuters I/B/E/S.

Shares of Target rose 2.6 percent to $54.55 in premarket trading.

The Minneapolis-based company has more than 1,760 U.S. stores and plans to open some in Canada starting in 2013.

Excluding costs related to the plan to open stores in Canada, Target said it earned 87 cents per share.

Target is offering its card holders — who already get a 5 percent discount on purchases — free shipping on any online purchases, hoping to woo shoppers away from other sites such as Amazon.com Inc this holiday season.

It also promoted its Black Friday sale early by having shoppers sign up to get details about the deals, much as larger rival Wal-Mart Stores Inc. did. Target is opening its stores at midnight after Thanksgiving, earlier than before.

The company forecast fourth-quarter earnings of $1.43 to $1.53 per share, excluding certain items.

Target previously said third-quarter sales at stores open at least a year, or same-store sales, rose 4.3 percent and that it expected such sales to rise in a low-to-mid single-digit percentage range in November. It also already reported that third-quarter sales rose 5.4 percent to $16.05 billion.

Target’s move to add groceries to more stores has boosted sales, but also puts a little pressure on profits, as food carries lower margins than merchandise like apparel.

Earlier this month Target said Chief Financial Officer Doug Scovanner would retire in March, its third high-profile departure in less than a month.

Macy’s, Target plan earlier Black Friday openings — midnight

NEW YORK ― Macy’s Inc. is planning its earliest start ever to the holiday shopping season by opening many of its U.S. stores at midnight on Thanksgiving night.

Target Corp. announced a similar move last week, setting the stage for what is likely to be a competitive holiday season for U.S. store chains, with analysts and economists expecting only modest sales gains this year.

The National Retail Federation earlier this month forecast that U.S. retail sales would rise 2.8 percent in November and December, excluding cars, gas, and restaurants.

The fight for sales is likely to be more intense this year for chains that cater to middle-income shoppers who are ready to spend more, but will still be careful with their money, raising the stakes for a good start to the season for discount retailers and department stores.

“We expect significant competition in the moderate market and in electronics,” Richard Hastings, a Global Hunter Securities analyst said, noting that it costs little to keep stores open a few more hours.

While store hours can vary by chain and by location, most chains opened their doors at 3 a.m. or 4 a.m. on the day after Thanksgiving last year.

But opening times have gotten earlier and earlier in recent years, inevitably leading to midnight openings.

Last year, the NRF found that the number of people who began their “Black Friday” shopping at midnight had tripled to 9.5 percent of shoppers.

Shoppers are often lined up outside stores, particularly electronics retailers such as Best Buy, at midnight even if the stores opened just a few hours later. Last year, Best Buy stores opened their doors at 5 a.m.

Other chains that last year opened doors at midnight include video-games chain GameStop and Wal-Mart Stores Inc.

Target profit rises more than expected for second quarter

CHICAGO ― Target Corp. reported a bigger-than-expected rise in quarterly profit on Wednesday as sales perked up when shoppers started buying clothing and other items for kids going back to school in the fall and its credit card business continued to grow.

Shares of Target, which has more than 1,760 U.S. stores and is getting ready to open stores in Canada, rose 4.9 percent to $51.85 in premarket trading.

Target earned $704 million, or $1.03 per share, in the second quarter, up from $679 million, or 92 cents per share, a year earlier.

Analysts, on average, expected it to earn 97 cents per share, according to Thomson Reuters I/B/E/S.

The retailer forecast third-quarter earnings per share of 70 cents to 75 cents, and full-year earnings per share of $4.15 to $4.30.

Analysts were looking for Target to earn 71 cents per share this quarter and $4.12 per share this year.

Earlier this month, Target said second-quarter sales rose 5.1 percent to $15.9 billion, with sales at stores open at least a year up 3.9 percent.

Results in the company’s credit card business also improved. Bad debt expense plunged to $15 million from $138 million and profit rose to $171 million from $149 million.