Garfinckel, Brooks Brothers, Miller & Rhodes Inc. will report an improvement in first-quarter profits of more than 60 percent, Chairman David Waters told stockholders at the Washington retailer's annual meeting yesterday.
But Waters warned that high interest rates and cautious consumer spending habits make it difficult to predict whether Garfinckel Corp. will get back on the track to higher sales and profits.
Aided by several new stores, sales for February, March and April ran 25 percent ahead of last year, Waters reported. Sales of previously opened stores were up better than 17 percent.
The company's specialty-store divisions are providing most of the growth and will be the primary vehicle for expansion this year, he said.
An expansion program "heavily slanted toward our specialty business, coupled with an expected consumer upturn at year end," should produce a good year, the Garfinckel Corp. chief executive said.
A new Garfinckel's store in Georgetown, 4 more Brooks Brothers stores and 5 additions to the Ann Taylor chain are planned this year, along with 12 units each for Catherine's Stout. Shops and its discount-priced twin, Size Mart.
Additional selling space will be opened up in part of the Garfinckel flagship store downtown when a new distribution center opens in Lanham, Waters added. That center also will be used to expand the corporation's mail-order business. Brooks Brothers and Garfinckels already have extensive mail-order operations, and Ann Taylor is getting into direct marketing.
Two new Miller & Rhodes department stores also are set to open later this year, but Waters said the company is betting most of its money on special retailers because they are more profitable than department stores.
Confronted by a shareholder who complained, "I don't understand why Miller & Rhodes isn't doing better," Waters acknowledged that the Richmond-based subsidiary had "lost some position against Thalheimers," its chief department store rival in Richmond and Tidewater Virginia.
"We had some serious operating problems at Miller & Rhodes that have extended over a several-year period," Waters admitted. He said adding stores to the chain and revising its management are part of an effort "to set a new direction which will make Miller & Rhodes more competitive."
Waters said Garfinckel Corp. has had to reassess its corporate goals after failing to meet its objective of maintaining 20-percent-a-year growth in sales and earnings.
Waters warned that the major obstacle to implementing the corporation's growth plans is the possibility that Garfinckel Corp. could be taken over. Garfinckel's biggest stockholder now is Wickes Corp., a California retail and lumber conglomerate that owns more than 20 percent of the stock and which has indicated an interest in acquiring more.