Equity held: 100%
Salary: Mullen, $0; Schwindinger, $74,000
Last job held: Mullen -- administrative nurse in a family practice; Schwindinger -- administrator in a Central New Jersey municipal recreation department
FINANCIALS
Comic Attitudes' Income Projections
($ in Thousands) 1993 1994 1995
Number of stores 4 7 12
Gross sales $1,350 $2,649 $4,838
Expenses
Cost of goods sold $675 $1,324 $2,419
Payroll $312 $500 $705
Rent $146 $324 $651
Other overhead $160 $360 $700
Total $1,293 $2,508 $4,475
Pretax profit $57 $141 $363
Pretax margin 4.2% 5.3% 7.5%
WHAT THE EXPERTS SAY
Competitor
Buddy Saunders
Founder of Lone Star Comics, in Arlington, Tex., one of the largest and most successful multiple-store operations in the country
Schwindinger and Mullen have done some of the necessary homework, but I don't think they appreciate that what works very well at 2 stores fails at 4, and solutions at the 6-store level begin to break down at 10, and so on. Their strategy is too ambitious for their very limited resources. Without a massive infusion of both capital and personnel already experienced in retail expansion, the kind of growth Comic Attitudes envisions cannot be telescoped into their desired time frame.
And why would anyone fund them when they themselves have so little to bring to the table? Comic Attitudes has just established itself as a comic-book retailer and has no experience whatsoever with the challenges of chain-store operation and expansion.
On the other hand, I'm impressed with their mall sales per square foot. They have to be doing a lot of things right to be getting those sales numbers. A key element, I suspect, is a strong focus on customer service.
Their low profit margin is almost certainly a consequence of excess comic-book inventory. Comic Attitudes might do well to concentrate in the short term on less ambitious goals, beginning with bringing its profitability up from a pretty disappointing pretax margin of 3%. A 10% pretax margin is possible.
Observer
Melchior Thompson
Consultant to the comic-book industry for the past 10 years; Burlingame, Calif.
I am impressed by Schwindinger and Mullen's dedication, drive, and ambition, but I am very concerned that their ambitious growth plans require skills and experience they lack, and I believe potential investors will share that concern.
Their strategy of opening primarily in 1,000-square-foot mall locations doesn't seem to be well-thought-out. Well-chosen strip-center locations can rival regional mall sites in sales potential and carry far lower opening and operating costs. I don't see how they can generate the sales and profits they'll need for such aggressive growth with such high costs.
I also believe they underestimate the amount of effective competition they will encounter from existing competitors, many of whom have larger sales, higher profit levels, and more sophisticated administrative structures.
Customer
Gabriel Friedman
An 18-year-old freshman at New York University and a comic-book fan since the age of 10. In February Friedman visited the Menlo Park store incognito
I think the mall concept is a good one, because when I was a kid I used to have my dad drive me out to the comics stores, and they were always miles away from my house. And they were these dark, dank, dusty little places, where these really goofy guys hung out. Condescending people, not very helpful. My dad hated it. Putting comics stores in a mall is a good idea because the parents can drop off the kid and do whatever they want.
The Menlo Park store didn't have much of a back-issue selection. It had a lot of current issues and a wide selection of T-shirts -- but I never really liked those; they're kind of corny. They had a great selection of trade paperbacks and a nice selection of animated videos, which I liked. I thought that was cool, because I've always liked Japanese animation, and it's hard to come by. The store clerk was really helpful. I was questioning him, pretending I was a beginner. He was nice, and he wasn't trying to trick me into just buying stuff.
And the store was much brighter, much more mainstream. It looked like a music store; it would definitely interest people. There was a mix of customers in there: parents, over-30 dorks, and the usual Trekkies -- 40-year-olds who live in their parents' garages. It was pretty well integrated. So I think it was a pretty good store. Pretty cool.
I don't really think hard-core comics fans will be turned off by Comic Attitudes' stores as long as they've got the comics, as long as it's not a limited supply. And I don't think their supply is limited. I asked the clerk about a really hyped-up new comic, Spawn 8 or 9, and he had ordered a huge supply of it because he knows it's going to sell out fast, so that was cool, too.
Competitor
Steve Gursky
Proprietor of 6 Steve's Comic Relief stores in northern New Jersey and Pennsylvania (including a store three miles from Comic Attitudes' Menlo Park location), a chain projected to grow to 20 stores within five years
I think Mullen and Schwindinger's sales projections of $1.35 million after opening 2 more stores in 1993 are low. They did $800,000 this year, which means they're expecting their new stores to average only $200,000 apiece. Based on the types of stores they're doing and where they place them, I would think they should be able to do more, depending on the time of year.
Expanding to 25 stores by 1997 -- putting up another 21 stores in three years -- I think is ambitious, based on the setup they have and the systems currently available to all of us. Eventually becoming a 400-store chain? Well, heck. Sure does sound nice. I see that there's no date for that. I would think that even if they are successful, 400 stores nationally is at least a decade away. And the competition for doing that is going to be great.
