Cold weather warms hearts inside Sunny's

Winter reversing slide at Sunny's

Turnaround: That long-awaited event appears nearer with the help of increased sales of weather gear.

February 10, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

This winter has had more than its share of cold, miserable, snowy days.

Just the kind of weather to bring a smile to John Sullivan.

Sullivan took over nearly a year ago as president and chief executive officer of Sunny's Great Outdoors Inc., which had run into some rough weather itself.

The Elkridge-based camping and outdoor store was drowning in debt and hadn't made a profit in seven years. The future looked dire for the regional chain, which began 56 years ago as an outlet for surplus military gear.

But aided by the cold this winter and last, which moved people to buy new weather gear, Sullivan has helped reverse the slide at Sunny's.

Sullivan, who was brought in from sportswear manufacturer Fila Inc., anticipates a 10 percent increase in sales at comparable stores for the fiscal year that ends in July. He also expects a profit of $627,000, up from a loss of $389,644 in the last fiscal year.

The past seven years have been tumultuous for the company, a widely recognized retail name in the region. An overly ambitious expansion plan developed in 1997 that aimed to double the company instead landed it in bankruptcy. Sunny's emerged from Chapter 11 protection within 13 months and is now looking to post its first annual profit.

Formerly named Sunny's Surplus, the chain store got its start selling military peacoats and Army fatigues left over from World War II.

Founder Morris Weinman named the company after the nickname of its first manager and opened the first store downtown at Baltimore and Eutaw streets. The store expanded to camping equipment in 1974 as military surplus became less popular - ironically, in part, because the end of the Vietnam War eroded sales to anti-war demonstrators who favored surplus Army jackets and the like.

The chain grew steadily through the 1980s and 1990s. In 1997, John D. Reir, who had run Family Dollar Stores, bought a 15 percent stake in Sunny's and took over as chief executive officer. He had grand plans to expand to 60 stores from 26 and introduced a prototype "big box" concept.

With the initial public offering market minting instant millionaires in the technology sector, he planned to take the chain public within five years and to change the store's name to "Sunny's, the Affordable Outdoor Store." Sunny's also expanded into sporting goods.

But the chain opened more stores than it could handle and lost its distinctiveness.

"They weren't focused on their core business," said Susan Anderson, vice president at H&R Retail, a commercial real estate brokerage in Baltimore. "They tried to grow too big too fast. They thought they were going to be supersized when everyone thought bigger was better. But bigger wasn't for everybody."

After Reir left in 1999, Stephen A. Blake, who had run Sunny's in the early 1990s, was brought back to rescue the operation. Under Blake, Sunny's filed for Chapter 11 bankruptcy protection to reorganize.

He closed eight stores and refocused on military surplus, camping gear and work clothes. Blake also brokered an agreement with creditors to emerge from bankruptcy, but was unable to make the chain profitable.

When Sullivan arrived last March, he noticed several problems. The company was paying thousands of dollars for an expensive colorful circular that didn't have a wide audience. Merchandise was placed on sale even when it sold well at regular prices. Sunny's warehouse and many stores were too large for a company of its size, he found.

Sullivan began leasing out 4,000 square feet of the company's 38,000-square-foot warehouse in Elkridge and is working to renegotiate leases at super- sized stores. He improved the inventory process to better determine what sells well. He hired a publicist to better market the company, and stepped up advertising in daily newspapers and on radio.

"He's given the company a shot in the arm and helped reinvigorate it," said Mark Millman, president of Owings Mills-based Millman Search Group, an executive search firm that helped find Sullivan.

He also strengthened key areas. The Boy Scouts of America, for example, have long had a contract with Sunny's for uniforms, badges and other equipment, but customers complained that Sunny's didn't keep up its stock. Sullivan dipped into the company's line of credit to beef up the inventory and sales have risen as a result.

"It's a great partnership," said Red Blom, camp director for the Baltimore Area Council of the Boy Scouts of America on Wyman Park Drive in North Baltimore. "When you don't have to drive all the way to the city to our headquarters when you can go right to the mall, that makes volunteers happy."

Work clothes were also traditionally a top seller at Sunny's, but it wasn't aggressively targeting that customer either. Sullivan hired a business-to-business sales manager, Dan Meisner, to identify companies that could buy uniforms in bulk.

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