The Fall of Bombay

Bob Nourse, 1993's Entrepreneur of the Year, says he retook the reins of the Bombay Co. because he saw trouble ahead. But is he really tearing it down for the thrill of trying to build it again?

In October 1994 Robert Nourse and his wife, Aagje, walked into a New Orleans outlet of the Bombay Co., the specialty-furniture retailer. The company was holding its annual "scratch and dent" sale, intended to clear slightly damaged furniture from its stores in order to accommodate fresh merchandise for the holiday season.

The event was in full swing, and as testament to Bombay's retailing clout, sales were so brisk that many of the floor samples had already been sold, leaving the space half empty. It was a scene that should have heartened Bob Nourse, who was more than just another browsing customer. He was the president and chief executive officer of the $300-million chain.

But as Nourse strode across the meagerly stocked floor -- passing Queen Anne desks, trompe l'oeil mirrors, and antebellum tilt-top tables -- his fury built, until he suddenly turned and yelled to no one in particular, "What the hell is going on here?"

Startled shoppers froze as the towering Nourse, six feet six inches tall, then confronted a stock boy -- wearing a baseball cap -- who was assembling a piece of furniture. According to people who were there, Nourse snatched the cap off the employee's head and shoved it in his chest, while snarling, "This isn't a goddamn baseball diamond." He then walked over to the store manager, who happened to be on the phone, attempting to hire an employee. "Get off the goddamn phone," Nourse yelled at him.

Some customers, horrified by the outburst, subsequently vowed never to shop at Bombay again, after embarrassed store employees explained to them who Nourse was. One, a lawyer, offered to represent the stock boy should he choose to take legal action against the company. Notes a former store manager: "If that had been a customer, we would have called security and thrown him out. If an employee had done that, we would have fired him on the spot."

In the case of Bob Nourse, that was not exactly an option. Nourse was Bombay, and what he saw that day -- the half-empty store, the sloppily dressed worker -- only confirmed his growing belief that the company was suffering without his sure instincts to guide it. In early 1991, Nourse had ceded daily operations to a professional manager who had successfully put Bombay on a strong growth path. In that time, sales had risen from $140 million to $317 million, while the chain had doubled its retail square footage to more than 1 million square feet. But subtler signs beneath those robust numbers convinced Nourse that rapid growth was taking a heavy toll.

Profitability, Nourse says, was declining, employee turnover was rising, and the company had been slow to introduce new products. Having spent 15 years growing Bombay from one location in a Toronto mall to 450 stores all over North America, Nourse believed that no one understood the business as well as he did. He saw no other choice but to step in and remake Bombay -- to save it from being consumed by its own success.

But as he demonstrated in New Orleans -- an incident he declines to talk about -- Bob Nourse can act impulsively when he doesn't like what he sees. Having taken it upon himself in the last year to rebuild his company, Nourse has also presided over its partial dismemberment. He summarily closed a 58-store division, taking a huge write-down. He has fired, demoted, or driven away numerous top managers. And thus far, Bombay's bleak numbers -- most months, there have been sharp declines in same-store sales since Nourse reassumed daily control -- serve only to raise questions about his motives.

Still, Nourse insists that he knows best.

"People say, 'Why didn't you just leave a good thing alone?' " he says. "But, my God, I'd be remiss if I just sat back. My job is to look out, see the warning signs, and do something about them."

Two years ago Bob Nourse, serene and confident, appeared on the cover of Inc. as its 1993 Entrepreneur of the Year. At the time, Nourse headed up a company very much intact. In the fiscal year ending July 3, 1994, revenues for the specialty retailer of home furnishings totaled $317 million, up from $112 million in 1990, while operating-income earnings increased even faster, rising from $5.8 million to $22.9 million.

But when Nourse walked into that New Orleans store that day in October 1994, he saw only chaos, and he would soon have the numbers to back up his impulse to return to daily operations. Bombay was about to report a break-even quarter ending September 30, after four years of unbroken earnings gains. By October inventory had ballooned to $15 million above normal levels. By year's end, the company's stock would lose two-thirds of its value.

Bombay, it seemed obvious, needed new direction. Or did it?

A case can be made -- and is, vehemently -- that Bombay was neither faltering nor lacking for leadership to cope with its growth pains. Many employees, past and present, credit former executive vice-president Michael Glazer, whom Nourse hired to run the company day to day, with being a sure force behind the company's meteoric growth. They say that whatever slowdown Bombay experienced resulted from Nourse's having stepped in and choked off a thriving business. To make their case, those advocates step back and look at a different set of numbers.

Michael Glazer arrived at Bombay in September 1990, two months after the close of fiscal year 1990. In the fiscal year ending July 3, 1994, Bombay reported net sales that were up 184% from fiscal year 1990. Over the same period, however, operating income rose faster -- by 290% -- while Bombay's total retail square footage grew by 162%. In sum, Glazer had wrung more sales, and even more earnings, out of relatively less space. From April 1991 to December 1994 Bombay's same-store sales rose nearly every month. In fact, for 18 straight months during that streak they rose by more than 10%. Says a former Bombay executive: "Michael was very tactical; he was always thinking. Bob Nourse had a great concept, but it was Michael Glazer who turned Bombay into a real business."