Playthings Q&A: Jerry Welch
By Dave Gerardi -- Gifts and Dec, 1/29/2002 12:46:00 PM
Jerry Welch began 2001 as CEO of The Right Start Inc., a California-based chain carrying developmental and educational products for infants and preschoolers. Twelve months and two major acquisitions later, he's CEO of FAO Inc., a specialty retailing giant with 279 stores in three separate operating divisions, The Right Start, Zany Brainy and FAO Schwarz.
While gearing up for New York Toy Fair, Welch spoke with PLAYTHINGS about the acquisitions and the state of the industry.
As of the first week of January, the same execs were in place at FAO. Is that still the case? What's the plan going forward?
Most of the operating and merchandising executives at Zany and FAO have stayed on with us. What we've done is we're operating these as separate retail divisions, but we've combined and consolidated all the back office structures, all the warehousing and distribution functions. For the most part, we let go the people who dealt with the infrastructure.
Will there be a centralized buying system or will Right Start, Zany and FAO buy separately?
We'll keep the merchandising separate. However, they will coordinate all their activities with vendors so that we're not at cross-purposes. For the most part, (vendors) will probably be meeting with them in a combined setting.
How was your fourth quarter?
We're very pleased with how the fourth quarter came in. Our sales were good. Our expenses were good; our gross margins were very good. What we were trying to do is to finish the year in good shape. This was the year of putting these companies together. We look at February 1 as when the rubber meets the road.
Many smaller specialty retailers have stayed away from most licensed products. How do these SKUs fit in with the Zany, Right Start and FAO mix?
Licensed products are a very important part of what FAO does. With FAO's expertise, they'll help us somewhat. At the end of the day, we'll have some of it (in Zany/Right Start), but it'll never be a large portion of what we do. Given that the video game segment of the industry is very strong and rapidly growing, what role will they play in your stores?
The majority of the games deal with aggressive matter, if you will. We don't sell any of the violent games, which precludes us from selling the majority of those out there. Ours is very much a targeted niche effort.
For the rest of this interview, see the 'Q & A' page of Playthings magazine's February 2002 issue.
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