• Los Angeles Times, Tuesday, January 13, 2009 11 AM

Raj Manufacturing, which makes swimwear, has added international accounts, launched an in-house luxury line and built 10,000 additional square feet of warehouse space while competitors cut back, David Pierson reports. So far, the gamble is paying off. Its popular, one-piece Animal Instinct's suit ($124 at retail) has tripled sales expectations despite the economic slump.

There is, of course, sizable risk, Pierson points out. Even companies that finance their own expansions, such as Raj, can quickly spiral into debt if they miss their sales projections. "The challenge is having contingent sources of cash," says Al Osborne, senior associate dean and management professor at the UCLA Anderson School of Management.

There is also the risk of overexpansion, as Starbucks will attest. But that's not stopping retailers Forever 21 and Kohl's, which recently bid $6.25 million to move into 46 Mervyns stores left vacant by the chain's Chapter 11 bankruptcy. Walt Disney is spending $1 billion to make over its California Adventure park. And pizza chain Shakey's is opening new locations for the first time in 15 years.

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