David’s Bridal, Inc.

views updated

David’s Bridal, Inc.

44 West Lancaster Avenue, Suite 250
Ardmore, Pennsylvania 19003
U.S.A.
Telephone: (610) 896-2111
Fax: (610) 896-6131
Web site: http://www.davidsbridal.com

Public Company
Incorporated: 1990
Employees: 1,445
Sales: $132.7 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: DABR
NAIC: 44812 Woman’s Clothing Stores; 44815 Clothing Accessory Stores

David’s Bridal, Inc. is the largest retail bridal chain in the country. Whereas the bulk of the company’s sales come from off-the-rack bridal dresses, the company also sells accessories and special occasion dresses. David’s Bridal sells gowns under private labels, such as Michelangelo, Lady Eleanor, St. Tropez, and Santa Monica, and it holds exclusive licenses for wedding gowns from popular designers Gloria Vanderbilt, Jessica McClintock, and Oleg Cassini. The company’s 100-plus stores are bridal superstores, which differ from traditional bridal salons in that they stock thousands of gowns in sizes two through 26. At a bridal salon, the bride-to-be usually tries on a sample gown and then orders the gown in her size. Because her gown must be ordered, her fitting can take several months to complete. At David’s Bridal stores, the bride-to-be can pick out a gown in her size and often can take it home the same day. David’s Bridal is the only bridal superstore that has achieved a national presence. The company maintains a high profile via radio, television, and billboard advertising. Nearly all of the gowns sold at David’s Bridal stores are foreign made, and the average gown costs $500. Investor Robert Calhoun owns about 25 percent of the company.

A 1950s Bridal Salon

David’s Bridal started in 1950 as a small bridal salon in Fort Lauderdale, Florida. South Floridian entrepreneur Phil Youtie purchased the salon in 1972 and opened several others throughout the state. From 1973 to 1988 Youtie owned 18 salons, which he operated primarily as leased bridal boutiques in department stores under the David’s banner.

Youtie’s traditional bridal salons developed a strong presence throughout Florida, but Youtie believed that times were changing. He observed many future brides flocking around clearance racks. He believed that brides in the 1980s were different from brides in the past, who often spent a great deal of time and money selecting and purchasing a wedding gown. “I saw a busy, intelligent bride-to-be who didn’t have the time, patience, or money to shop for a wedding gown the old way,” Youtie explained in Chain Store Age Executive with Shopping Center Age.

Youtie was right. The late 1980s marked the beginning of many changes in the bridal industry—and in the country as a whole. The United States was at war in the Persian Gulf and in a recession. The lifestyle of contemporary women was changing. More brides were on a tight budget; they were planning weddings with shorter guest lists and fewer bridesmaids, and they were borrowing gowns instead of buying them. In the Sun-Sentinel, Youtie described the bridal market as being in terrible shape because brides wanted to do everything smaller. Youtie was determined to adapt his salons to meet these changes.

David’s Bridal Wearhouse in 1990

In 1990 he teamed up with childhood friend Steven Erlbaum, who was the founder of the Philadelphia-based Mr. Good Buy chain. The two men incorporated the company and launched the first David’s Bridal Wearhouse in Hallendale, Florida. The bridal warehouse was the first of its kind. Stores were larger than average—about 12,000 square feet as compared with the average 2,500-square-foot bridal salon—and carried a full selection of wedding gowns in many different sizes and special occasion dresses and accessories, including headpiece foundations, gloves, and shoes. Unlike traditional bridal salons with luxurious interiors and full-service sales associates, the Wearhouse had no frills; customers searched through racks and racks of wedding gowns with little help from sales associates. Signs were posted in the Wearhouse warning customers that sales were final and that there were no onsite alterations.

Although the Wearhouse offered little in terms of comfort, brides-to-be could expect a bargain. They could walk out with a designer replica costing only about $150 to $900. A bride could expect to pay about 35 percent less for a gown at a David’s Bridal Wearhouse. “We offer substantial savings,” Erlbaum said in the Philadelphia Business Journal. “Today’s bride, more than ever, is price-conscious. She is older than ever before and more likely to be paying for the gown herself,” he explained.

In the bridal industry, reactions to the Wearhouse were mixed. Many felt that the company’s discount trend was cutting into the business of traditional bridal salons. They claimed that the bridal business was a service business and that Youtie was cutting out the service and offering much-too-low prices. Said designer Paula Varsalona in the Sun-Sentinel, “This is the most important day in your life. It is not a time to save money.”

David’s Bridal became known as the “Wal-Mart” of the wedding industry—a title the company rejected. “There is little brand name recognition apart from the very upper end of the price spectrum in the bridal business,” Erlbaum explained in Chain Store. “We cover all price points and all segments of the market, from blue-collar to affluent,” he claimed.

Youtie believed that the Wearhouse attracted customers other than those who shopped at traditional bridal salons and, therefore, did not take away their business. “We get people who would have never gone to a regular bridal shop in here,” he said. “We get people who are getting married in two weeks and just don’t have the time for all of that.” He countered that the Wearhouse was not taking business away from several of his traditional bridal salons, which were operating in different parts of Florida. As the company expanded, however, its stores drove many bridal salons out of business. Although some smaller bridal salons, such as those found in department stores, found ways to adapt and compete with David’s, most struggled. “If a store was teetering financially before David’s Bridal opens, it probably won’t survive,” remarked Erlbaum in the Philadelphia Business Journal. Most bridal salons lacked the volume that would allow them to buy in bulk and offer discounts. So many brides flocked to David’s $99 sales that the sales attracted media attention. “Just like in any other business, people care about price,” Youtie said in the South Florida Business Journal, adding, “We simply adjusted and it’s paid off.”

Change and Expansion in the Mid-1990s

In 1994 and 1995, David’s Bridal grew from 14 to 36 stores. The company hired a new management team to better handle its new stores and upgraded its existing stores. The company decided to convert its warehouses to bridal superstores. A bridal superstore offered the wide selections of a bridal warehouse, but with nicer surroundings and better service. Many of the company’s competitors were converting to superstores as a way to adapt to the changes in the market, such as a faster-paced lifestyle, a decline in department stores, and foreign manufacturers’ willingness to do business with discount bridal stores. David’s Bridal felt that superstores were the best way to go. “We found that the warehouse concept to many customers meant like Home Depot—a barebones operation with no service,” Erlbaum said in the Philadelphia Business Journal. “When it comes to a wedding, it’s the most important day of a woman’s life. She likes to be pampered, and she wants all the fuzzies. She wants to shop in some place that’s comfortable and not threatening.”

David’s Bridal believed that superior customer service was the key to the company’s future success. Management knew that if a bride-to-be bought a dress at David’s Bridal and was satisfied with the service, she was more likely to buy the bridesmaids’ dresses there. If the bridesmaids liked their dresses, they were more likely to come back to David’s Bridal when they were looking for their own bridal gowns. Erlbaum claimed that superior service was the best way to build market share.

The company’s new and upgraded bridal superstores had better lighting, comfortable dressing rooms, stylish interiors, and onsite alterations. A bride-to-be was greeted by a personal sales consultant who would stay with the bride-to-be as long as she was needed. When they entered the store, brides-to-be were asked to complete a questionnaire that helped sales consultants find them the perfect gown. The company dropped the “Wear-house” from its name.

In 1996 the company named Robert Hurth as president. Hurth was formerly the chief financial officer of Melville Corporation in Rye, New York. Youtie wanted Hurth to manage the financial side of the company, so he could concentrate on fashion. Youtie planned to work with buyers and vendors and travel the globe selecting fabrics. Paul E. Taub, vice-president of marketing, explained in the Philadelphia Business Journal that it was imperative that the company’s bridal gowns be absolutely breathtaking. “One thing is certain,” he said, “when the mother of the bride cries, the store has made a sale.”

Company Perspectives:

Since 1950, hundreds of thousands of satisfied brides and their parties have purchased their wedding apparel at David’s Bridal Every year, many bridal shops throughout the country mysteriously disappear, leaving thousands of brides stranded. At David’s Bridal, our commitment to our customers is to continue to grow, being the only nationwide chain to celebrate a 50th anniversary.

Going Public in 1999

David Bridal’s quick expansion and store upgrades put a strain on its capital resources and inventory controls. Because of its expenses, the company posted a loss of $415,000 in 1996. The company lacked a distribution center, and most merchandise flowed directly to its stores. In time, the company had an excess inventory of bridal and special occasion gowns.

Even though the company’s earnings rose to $2.6 million in 1997 and to $5.8 million in 1998, it planned to go public. Youtie and Erlbaum were the principal shareholders before the company’s initial public offering (IPO).

With its IPO, David’s Bridal raised $104 million by selling eight million shares, including 6.39 shares sold by existing stockholders such as Erlbaum, who sold 1.2 million shares. The company used the capital to reduce the debt it had incurred with its expansion and upgrades and to fund further expansion and a new distribution center.

Also in 1999, David’s Bridal launched an e-commerce Web site. Realizing that its internal management team knew more about retail than technology, the company hired an outside web development firm to oversee the project. Customers could use the web sight to learn more about the different styles of gowns at the stores and to find a store closest to them.

A Bright Future

Although David’s Bridal cannot create more weddings to boost its business, it can profit on the more than two million weddings in the United States each year. The company has succeeded in capturing a large portion of the industry’s market share and should continue to grow in the future. In 1999 Erlbaum said that the company’s biggest challenge was finding enough people to work in its stores. Youtie expected the company to continue to thrive and said that he still found the bridal business rewarding. “After all these years in the business, I still get a thrill out of seeing the look on a customer’s face when she puts on her wedding dress. There is nothing quite like it,” he noted in an article in Chain Store Age Executive.

Principal Competitors

Federated Department Stores, Inc.; The May Department Stores Company; Saks Incorporated.

Key Dates:

1950:: David’s Bridal begins as a small bridal salon in Fort Lauderdale, Florida.
1972:: Phil Youtie purchases the bridal salon in Fort Lauderdale, Florida.
1990:: The first David’s Bridal Wearhouse opens in Hallendale, Florida.
1995:: The company converts its bridal warehouses to bridal superstores.
1999:: The company goes public and launches an e-commerce site.