Restructuring measures paying off for apparel retailer

Nov 05, 2008 (The Knoxville News Sentinel - McClatchy-Tribune Information Services via COMTEX) -- GDYS | Quote | Chart | News | PowerRating -- After months of aggressive belt-tightening and downsizing as it fought through bankruptcy, Goody's Family Clothing expects to turn a profit by the end of the year, CEO Paul White said.

"It's huge. We've been very busy," said White, who took the helm of the Knoxville-based apparel retailer in March.

The company filed for Chapter 11 bankruptcy protection in June.

But after four months, Goody's was able to emerge from bankruptcy as a leaner operation focused on appealing to consumers in smaller communities throughout the South and Midwest.

"It was very exciting to get through that. Obviously, we've got to keep working on the business and get through a challenging Christmastime, but the first leg of the journey we've been able to put behind us," White said, adding that "everyone has been rooting for Goody's."

As part of its restructuring, Goody's closed 69 stores and will close five more between now and Christmas.

The company also shut down a distribution center, closed a New York office and exited its aviation department.

It also downsized the work force at its Knoxville headquarters and tightened its belt at stores in the chain.

While continuing to focus on providing affordable apparel, the company also is branding itself as a destination for gifts.

Goody's has more than doubled the amount of non-apparel merchandise and developed its own bath and body line called Magnolia Spa.

It also added a Fan Zone in all locations, devoted to local college teams, while bringing new vendors like Chaps for Men, and expanded others, including plus sizes for its Ashley Judd collection.

"Even in difficult times, you can't sit back and not evolve," White said. "Obviously we feel we have a very viable company and brand. It's been very successful for 55 years. Our responsibility is to move forward from that."

In a recent interview, Goody's CEO Paul White answered questions about the company's reorganization and business strategy going forward.

QUESTION: Why file for Chapter 11 bankruptcy protection?

ANSWER: I came here to help Goody's, but I didn't come here with the predisposed notion that Goody's is going to go into bankruptcy and that's going to be the best way for us to proceed. But as we dug into the business here at the company and with our sponsors, we really felt a need to restructure the business. We needed to restructure it operationally. We needed to bring it back to the core markets and the core customers where we've been successful in the past. And we needed to right-size the organization to support that business. ...

Everything we've done has been to right-size the organization to the new size of the company, which is now going to be smaller but frankly much more profitable than it was in the past. I would be remiss if I didn't say a huge advantage that we had during this process was the dedication of the Goody's team to making it happen and be successful. We had a tremendous commitment to Goody's from our business partners, whether it be manufacturers or the financial institutions and the other people out there that we do business with, and, of course most importantly, the loyalty of our customer base.

Q: Why did Goody's close its e-commerce division?

A: It's a business that frankly we'd love to be in but we have to figure out first. We have to understand how to do it profitably. When you look at e-commerce for our type of business and a business of our size, it's a real challenge because of the investment of inventory and people and the fulfillment of the orders and taking returns and all the operational aspects of it. So we really felt it was best for us at this point to use our site as an informational site and get the underlying business aligned with our consumer and our market and then re-evaluate going forward if we think there is a profitable way to manage that business.

Q: To what extent is the economy hurting Goody's?

A: I don't think there is a retailer out there who is satisfied with their business today. We're certainly not, and we feel we have tremendous opportunities to improve our business as we go forward. We're starting from a different place given the situation we've been in, but we certainly acknowledge and know that there's a need out there to deliver great merchandise, great product and a great value to our customers, and that's our commitment to them that we're going to deliver them.

Q: What's next for Goody's?

A: Frankly, we're really excited to move forward. This has been a tremendous challenge for the organization, and it's required much time to orchestrate, and we look forward to being able to shift all that time from some of the financial work that we've been accomplishing to really totally focusing on taking care of our customer and offering new and exciting things that keep her energized and excited to come to Goody's.

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