loves a bargain,"
Forbes, November 17, 1986
By David Henry
CALL IT FACTORY SURPLUS, close-outs, liquidated merchandise, even junk:
Nearly every day Sol Shenk accepts 100 truckloads of it at his Columbus,
Shenk (sounds like crank), founder and chairman of Consolidated Stores
Corp., is a knee-slapping, stooped-over 74-year-old kid who knows that
those trucks are packed with bargains. There are 6 million Rubikıs Cube
puzzles, for example. Theyıd been dead in the market two years when Shenk
found CBSı toy company trying to unload them.
"They used to sell for $8," Shenk recalled. "We said if we could sell
them for 49 cents, it would be a hell of a deal." Shenk took the cubes
from CBS at about 8 cents apiece. "In about a year we got rid of practically
all of them," Shenk smiles.
Shenk gets rid of the stuff through Consolidatedıs Big Lots and Odd Lots
stores. (No relation to Revcoıs troubled Odd-Lots division in the East.)
Two years ago he had 45 stores. Now there are 189, with 2 opening each
week, mostly on well-traveled roads around small towns in rural Ohio,
Indiana and West Virginia. Which means that Sol Shenk is presiding over
the countryıs biggest and fastest-growing chain of its type.
Dollar General Corp. of Scottsville, Ky., with 1,300 stores in 23 states,
also thrives on cut-rate appeal and low-rent locations. But Dollar General
handles more soft goods and far less merchandise from manufacturersı closeouts.
Sol Shenkıs business is 80% hard goods, a ceaselessly shifting mix that
embraces items like $18 West Bend crock pots; $1.49 Gillette deodorant;
$3.99 14-piece Ram Screwdriver sets; $1.99 Cannon towels; and 29-cent
extra-long telephone cords.
Says one Columbus
shopper: "There's almost nothing you can count on finding there except
some gem that you could probably live without but have to have at that
this year are headed to $390 million, up from $74 million two years ago.
Profits should top $20 million, compared with $4.3 million two years ago.
Same-store sales (a key figure, since it's easier to increase sales by
opening new stores instead of tightly managing those you have) are growing
at an enviable 13% a year. K mart, no slouch in the same store sales growth
department, has been hitting 8%.
The competition? Virtually
nonexistent in the Midwest, though others have tried to make the formula
work in other parts of the country. It's harder than it looks. Revco's
153-store chain in nine eastern states has lost money for two years. Why?
Revco doesnıt have the relationships to get enough good closeouts. Irwin
Jacob's COMB (Close-Out Merchandise Buyers) Co. recently took a $4.5 million
charge against earnings to close half its 41 retail stores scattered around
the plains states. COMB knows how to buy and has done well peddling higher-end
closeouts by directmail. But it stocked it stores with too many relatively
expensive appliances and consumer electronics that were too dear for the
Only on the West Coast
has a successful rival burgeoned: Los Angeles-based Pic 'N' Save, with
97 stores and nearly $300 million a year in sales, has been printing money
for decades producing pretax margins of 30% (outrageous for retail,
where 10% is extraordinary), profits greater than 30% of equity, and steadily
increasing same-store sales.
Most of the time,
Shenk gets his goods from manufacturers, frequently of well-known brands
for whom overruns, product failures and packaging changes are part of
business. Occasionally, though, he canıt resist a bargain, even if it
means venturing outside his stores. In 1982 he and two other liquidators
bought 2,800 De Lorean cars, parceled them out to dealers around the country
and sold them all in 18 months. He bought them so cheap, in fact, that
the court-appointed receiver for De Lorean Motor Co. is suing to recover
some of the profits.
Sol Shenk says he has hated to pay full price for anything since he was
a kid in Columbus. Even today, his office furniture, phone systems, store
fixtures and store leases are all purchased at distress prices. Shenk
even picked his executive vice president, Sol Norflus, and 100 of his
retail managers out of the wreckage of a regional discount chain. "I came
cheap," says Norflus, stretching the truth for the sake of hyperbole.
His salary today is $362,000. Norflus brought Shenk retail skills. Shenk
had never been much good at anything besides buying low and wholesaling.
After failing as a manufacturer of auto parts, Shenk started a company
in 1967 to buy and wholesale closeout car parts. That was okay until he
tried opening retail stores to sell the parts. It was a dumb move: How
many people browse for bargain shock absorbers and mufflers?
It was Shenk's son,
Charles, now Consolidated's president, who noticed that people were shopping
the stores for household closeouts rather than for auto parts. Now Sol
is on a roll. "We'll be a billion dollars [in sales] in three more years,"
he boasts. That would mean 500 stores. Which also means that the genuinely
hard part is still to come: not only opening, but also supplying, all
those stores with smart buys. Notice that Pic 'N' Save is expanding, too,
but adding only a dozen or so stores a year.
jeopardizes Shenk's relationships with manufacturers. They don't want
their closeout items sold down the block from their first-line merchandise
if they can help it. Says one: "The wider they get into distribution,
the more problems and conflicts it could cause us with our good retailers."
But now here's a bargain for you: Sol and Charles Shenk own 6.6 million
shares of company stock. They got it at a very nice price: 66 cents apiece.
The stock, which went public in June 1985, now sells around 15. If that
is a bargain for the Shenks, it's less of one for the public.
"Sol A. Shenk, 83,
Merchandiser Who Built a 700-Store Empire,"
The New York Times, September 1, 1994
By JOHN HOLUSHA
Sol A. Shenk, who built a single surplus outlet in Columbus, Ohio, into
the Consolidated Stores Corporation, an empire with more than 700 stores
and annual sales of $1.1 billion, died yesterday in Columbus, his hometown.
He was 83.
The cause of death
was a heart attack, said Brady Churches, the company's president.
Mr. Shenk was best known for his purchase of the remains of DeLorean Motors,
the automobile company founded by the former General Motors executive
John Z. DeLorean.
When DeLorean Motors filed for bankruptcy in 1982, Mr. Shenk bought the
remaining stocks of the exotic-looking cars with the stainless steel exterior
and as many spare parts as he could find.
"We bought about 2,500 cars and 150 trailer loads of parts and sold every
one of the cars," Mr. Churches said. "We sold about half of them to car
dealers and retailed the other half."
The DeLorean was not Mr. Shenk's only encounter with a car with upward-opening
doors known as "gull wings." In the mid-1970's he bought what remained
of the company that manufactured the Bricklin sports car and apparently
did something that neither Mr. DeLorean nor Malcolm Bricklin had been
able to do: make money by selling parts to car owners.
Mr. Churches said
the company that would become Consolidated Stores was founded in 1967
by Mr. Shenk, who bought odd lots of merchandise from production overruns,
bankruptcies and overstock and sold it through the store in Columbus.
As the business grew, he bought and sold vans, jeeps, office equipment,
Veg-o-Matics and stocks of car parts, adding stores along the way.
Today the company,
based in Columbus, operates stores with names like Odd Lots, Big Lots,
All for $1 and It's a Deal.
Mr. Shenk tried to start a cable television home-shopping network in the
Columbus area in 1988, but lack of response caused it to fold after a
few months. "We had to sink a lot of money into it or get out, and he
decided not to be in the television business," Mr. Churches said. "He
was a little ahead of his time."
Mr. Shenk retired
as chairman of Consolidated in 1989 but retained the title chairman emeritus.
"He still came and visited," Mr. Churches said. "He had a caretaker attitude
toward the company."
Mr. Shenk is survived by his wife of 56 years, Florence; his sons, Charles,
Richard and William; his sister, Sarah Greene of Great Neck, L.I., and
DeLorean Sale Cleared,"
The New York Times, November 17, 1982
DETROIT, Nov. 16A Federal bankruptcy judge here cleared the way today
for an Ohio auto parts company to purchase the United States assets of
the DeLorean Motor Company for $1.5 million, plus assumption of about
$9 million in debt.
The sale, which yields DeLoreanıs secured creditors about 3 cents on each
$1 in debt, gives Consolidated International Inc. of Columbus, Ohio, ownership
of 649 cars with an estimated retail value of $17.5 million; spare parts
worth another $1.2 million, and sole United States distribution rights.
DeLorean Motor filed
for protection from its creditors on Oct. 25, six days after John Z. DeLorean,
its founder, was arrested in Los Angeles on Federal drug charges. The
British arm of the company was ordered liquidated by the British Government
on Oct. 19.
In his decision to
allow the sale, Judge George Woods said the case was complex but a timely
decision was required. "The DeLoreans could almost fall into the
category of a perishable item," he said.
Attorneys for Consolidated, which is headed by a 70-year-old investor,
Sol. A. Shenk, disclosed in court that the company had also purchased
1,090 cars from the British receivers and would sell them in this country.
Mr. Shenk has also made an $80 million offer to lease the DeLorean factory
in Northern Ireland, to resume operations there at a reduced rate.