Cousins Home Furnishings Presses Its Pursuit of the ‘Toughest Market’

Cousins Home Furnishings doesn’t always act like a company that has not generated a quarterly profit from operations since 1983.

The San Diego-based retailer that operates stores in San Diego, San Francisco and Sacramento recently opened five new stores in Los Angeles, and hopes to eventually add about 10 more locations.

That is an aggressive plan, acknowledged Cousins Chief Financial Officer Conrad Brownlee, who last week described Los Angeles as “the toughest market in North America.�

What makes the struggling furniture retailer qualified to tackle the continent’s roughest market?

Improvement Needed

“We have to keep doing what we’ve been doing,� Brownlee said in an interview late last week. “We just have to get a hell of a lot better at it.�

In an industry where success is dictated by low costs and high volume, Cousins has “sold a hell of a lot of furniture,� Brownlee said. “But we’ve not made any money while we were doing it.�

The numbers for Cousins’ 1987 fiscal year, which ends today “will not be pretty,� according to Wallace Epperson, a Richmond, Va.-based retail analyst with Wheat First Securities Inc. Cousins will post a net annual loss, its fourth since its initial public offering in 1983, Brownlee said.

Cousins reported a third-quarter net loss of $3.8 million and $20.7 million in revenue. Cousins reported an $8.7 million net loss and $64.1 million in revenue for the nine months ended March 31.

Cousins has received help from Brunton Corp., which owns 55% of Cousins’ common stock, and New York-based Warburg Pincus Capital Partners, which holds about 10% of the company’s outstanding common stock. Both Warburg and Brunton recently exchanged debentures for stock.

Price of Stock

However, the swap, which bolstered Cousins’ bottom line, also increased the number of outstanding common shares to 10.1 million from 8 million. The stock, which was unchanged at 2 1/2 Monday, has been mired at about $2 for several years. Cousins went public in 1983 at about $6.

Brownlee stopped short of predicting when the company will log a profitable quarter, but he did suggest that “trends are considerably better than during the third quarter.�

Retail analysts, however, have questioned that optimism.

“I’m always being told that profitability is just around the corner,� one analyst complained.

“We’re talking about real losses here,� according to Epperson, who described Cousins investors as “standing in front of a slot machine and pumping in the quarters.�

Cousins’ bottom line has been hurt by the company’s constant name changes. During the last four years it has been known as RB, Family Home Furnishings, The Brick Warehouse and Furnishings 2000. However, it recently concluded 18 months of doing business as Furnishings 2000, the longest that the chain has used the same name.

“We’re comfortable with our name and our consumer base,� Brownlee said. “But we’re impatient to do better volume.�

High Sales Anticipated

Sales are expected to increase as Cousins opens as many as 10 more stores in Los Angeles. However, the expansion plans could be slowed by a ban recently imposed on the construction of neighborhood shopping malls by the Los Angeles City Council. “Real estate (already) is hard to find in Los Angeles,� Brownlee acknowledged.

Cousins also has once again jiggled its product mix.

The company is dropping the appliances and electronic goods it added just about a year ago, and instead will concentrate on furniture. Cousins added the so-called “white and brown goods� in an attempt to bolster in-store traffic.

However, Cousins’ entry into the appliance and electronic market coincided with an all-out war among Dow Stereo, Circuit City, Mad Jack’s, Federated and a host of other electronic and appliance marketers.

Cousins, which was splitting its advertising budget between furniture and brown and white goods, “didn’t have the bucks� to keep pace with the larger electronics and appliance competitors, Brownlee said.