Article Excerpt:
TWST: What is Liquidation World?Mr. Searby: Before we get going, I must caution readers that some of what we discuss may include forward-looking statements about future events or situations. Such forward-looking statements are subject to a variety of risks as we have outlined in the MD&A section of our quarterly and annual reports available on our Web page and may cause significant differences in outcomes. Liquidation World is a retail company that has just over 100 outlets, mostly in Canada, but there are also 17 in the Pacific Northwestern United States. We sell merchandise to the public that is sourced from opportunistic situations, including closeouts, cancelled orders, insurance claims, packaging changes, end of runs, and other surplus situations. We distribute that inventory throughout our outlets, and our bargain-hunting customers shop us frequently. The company was started 20 years ago by a gentleman, Dale Gillespie, with the concept to bring this opportunity merchandise together under one roof rather than the traditional approach through one-off liquidations and going out of business sales that were conducted out of defunct retailers' locations. It is a model that has worked well. We find there is consistently a supply of inventory that is unwanted for one reason or another; it includes premium products, brand names, and first quality goods, but there is a little more produced that is over and above current demand. Or perhaps there were packaging changes such as moving from 12-ounce to 10-ounce containers. There are all sorts of different reasons for the deal, but some inventory ends up being unwanted at one level or another.
TWST: What's the competitive landscape like? There seems to be a demand
for this type of distribution of product. It would seem that that also
creates a lot of new entrants or perhaps other companies that want to
grow and expand such as yours.
Mr. Searby: That is right. There are a lot of small companies that are
doing what we are doing with one or two or five locations, but we find
that with our network of 100 outlets, we are able to deal with
inventories that are much larger than most of the other players in the
market can manage, and accordingly it puts us in that advantageous
position of being a one-stop shop for many of the manufacturers that
find themselves with surplus inventory. Brand owners like working with
us because we do not advertise brand names, so the product will
disappear underneath the radar screen of others in the marketplace and
not conflict with their current marketing channels.
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