Slow and steady.
That’s how Bahman Fakhimi is growing his Newport Beach-based chain of cosmetics stores, Planet Beauty Inc.
Fakhimi recently opened his 28th Planet Beauty at the Shoppes at Chino Hills. The store is his seventh since 2004.
He’s also signed leases to open stores in South Orange County and San Jose in the next couple of years.
Planet Beauty stores sell hair care, skin and makeup brands such as Culver City’s Smashbox Beauty Cosmetics Inc. and New York’s BlissWorld LLC.
Fakhimi describes himself as a model for financial conservatism, which he said should benefit his business during a time when credit is tight.
“If you’re not generating profit then you shouldn’t expand,” he said.
He has lines of credit but said he doesn’t borrow money to open stores. Stores are funded by cash from existing stores, Fakhimi said.
The next couple of years should be a great time to expand, he said.
“I’m getting lots of calls from brokers,” Fakhimi said.
He said he’s hoping to pick up a few stores next year.
There are good deals on leases in certain areas, such as the Inland Empire. Other areas, such as San Jose, still are pricey, Fakhimi said.
He’s negotiating renewals for an Irvine Spectrum Center store and his store in Newport Beach but isn’t expecting much of a break on his coastal stores, where business is better than the hard hit Riverside area.
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Smashbox display at Planet Beauty: chain plans two stores in next two years |
Fakhimi’s lease for a new store at the Valley Fair Mall in San Jose was more expensive than he would’ve liked, but the mall is in high demand, he said.
Overall, business is down 5% to 20% versus a year earlier, depending on location, he said.
Fakhimi has cut costs where he can, such as payroll and inventory. At the same time, he’s got to spend money to keep stores fresh with new displays. He also continues to stress customer service with his employees.
Planet Beauty competes with big chains such as Ulta Salon, Cosmetics & Fragrance Inc. of Illinois.
It’s also facing new competition from LVMH Mo & #235;t Hennessy Louis Vuitton SA’s Sephora USA Inc., which now is selling one of Plan-
et Beauty’s most popular products, Bare Escentuals.
Sephora has set up a store within a store for San Francisco-based Bare Escentuals Inc.
Planet Beauty used to be one of the only stores that carried their line of natural makeup.
Fakhimi’s working on formulating his own brand of hair care products, which then could be sold to other shops.
He’s about two months in on a nine-month process that includes coming up with the formula, designing the packaging and naming and marketing the product, according to Fakhimi.
Auto Woes
The financial crisis is taking a toll on Orange County auto dealers, which have had to scale back on payroll and cut costs where they can.
“You’re tightening your belt and working harder for every dime,” said Matt Gunderson, president of the Orange County Automobile Dealers Association in Costa Mesa.
Gunderson also heads Audi Mission Viejo and Infinity of Mission Viejo.
Loans are available for those with good credit,a score of 600 or higher, Gunderson said. People with “light” credit,say, a student,could have a tougher time.
Leases also are drying up.
“Now is the time to jump on a lease,” he said.
Dealers are hurting because people aren’t shopping for autos, Gunderson said.
“The consumer is a little hesitant to buy right now,” he said. “People are watching their 401ks dissolve. They are stretched on mortgage payments and have used up their home equity lines of credit.”
In Orange County, many don’t need a new auto, Gunderson said.
Dealers are doing what they can to ride it out: “Nobody wants to lay people off,” he said.
Gunderson’s dealership has moved people from full to part time.
Eventually, some dealers may close.
“We are over-dealered,” Gunderson said.
The silver lining: Now is a great time to drive a bargain on an auto, according to Gunderson.
The dealers association’s recent OC Auto Show fared well, considering the economic climate, Gunderson said. Attendance and revenue were down slightly from last year, he said, without giving specifics.
The number of people who test drove a new auto was up, according to Gunderson.
Auto dealers also doubled the money raised for Children’s Hospital of Orange County to more than $60,000 at the show, he said.
