British kitchen source buys Domain for $25M
By Clint Engel -- Furniture Today, March 24, 2002
NORWOOD , Mass. — NORWOOD , Mass. — Domain Home Fashions was acquired last week by Aga Foodservice Group, a British consumer and commercial kitchen products company, in a move that will lead to larger Domain stores selling a mix of both companies' products in the Northeast and eventually other markets.
Aga paid $25 million in cash for the fashion-forward Top 100 company. It also entered into agreements with Domain's four key executives, who will receive a total of $4 million in April 2005 if they stay with the company, according to Aga.
The executives are Judy George, the chain's founder, chairman and chief executive officer; James McCullagh, president and chief operating officer; Laura Katz, vice president of merchandising and marketing; and William Rauch, vice president and chief financial officer.
"The combined company will be the first specialty retailing chain in the U.S. to offer upscale consumers a total approach to the home, combining Domain's exclusive home furnishings for the living room, bedroom and dining room and (Aga's) premium brands in kitchen, tiles, paints, flooring and more," the 25-store Domain said in a news release.
Aga is Britain's top supplier of cooking and food preparation equipment and is known for its stoves. It also owns Elgin & Hall, which makes luxury fireplace surrounds, and Fired Earth, a British retailer of products including tiles, fabrics, paints, flooring, rugs and bathroom fixtures.
Aga's CEO, William McGrath, said the acquisition gives Aga a platform for its consumer products and a "fast and cost-effective way of obtaining a significant presence in the U.S. market."
The move will result in larger stores for Domain, although their format and how soon they'll open have yet to be worked out. Domain's stores in Massachusetts, New York, New Jersey, Connecticut, Maryland, Virginia and Pennsylvania average about 6,000 square feet.
"My mission is to build a whole new store concept that incorporates the best of what Aga has with Domain," George said. She will go to England soon to work on the plans.
She said Domain will look to roll out Aga products in existing stores where it makes senses and where there is space. The retailer also is looking at what George called "Siamese stores" — putting Aga stores right beside Domain stores — and superstores of 10,000 to 15,000 square feet to incorporate all products.
The first superstore will be tested in the Boston market, and George said she is committed to opening it within a year.
"They're very excited about the retail division," she said. "They want to move as fast as I can move."
George said Domain will continue with its own ongoing expansion plans. The chain opened its 25th store this year in Columbia, Md., and will open units in the Fair Oaks Mall in McLean, Va., in about a month and in Princeton, N.J., in about 60 days. A store in Chester, N.J., will open late this fall or early next spring, she said.
Stephen Rennie, Aga's chief operating officer, said that while Domain will focus on opening the new concept stores in the Northeast markets it knows best, the company also is eyeing the Midwest and West Coast.
"I would be surprised if by the end of this year we haven't moved out of the areas where Domain is currently strong," he said. Whether that means a store in Chicago — where Domain has been considering expansion for years — or another market, Rennie couldn't say. He did say that one possible new market is Seattle, where Aga has contacts.
He said Aga has the cash it needs to grow by 10 to 20 stores, but "the speed at which we can develop will really be based on finding the right locations."
Domain earned $3.3 million before taxes on sales of $62 million for its fiscal year ended June 30, according to Aga. The sales are flat with Furniture/Today's estimates for Domain's 2000 calendar year sales, but George said sales for calendar 2001 grew to about $68 million.
She projects sales of $70 million to $75 million this year in furniture, bedding and accessories, which excludes any contribution from Aga products.
George founded Domain in 1986. The retailer is known for its designs and its exclusive line of European-inspired home furnishings for affluent East Coast consumers.
It has been backed by a group of six venture capital firms, five of which have been with the company from the beginning. The investors were Charles Bank (formerly Harvard Management), Bessemer Venture Partners, J.P. Morgan Venture (formerly Chemical Venture Partners), Bain Capital, The Travelers Cos., and more recently Robertson Stephens & Co.
"Having been in it for the long haul, all I can say is (the investors) were very happy (about the sale)," George said, noting that many venture capital firms are in and out of an investment within four or five years.
She said Domain's investors got a healthy return, although she declined to disclose how much.
And while upscale U.S. furniture stores don't usually sell stoves, paint and cookware, both Aga and Domain say they've found a perfect match in each other.
"This is a fantastic opportunity to change the retail landscape and offer consumers a way to create their dreams about home and hearth, and be able to do it with exclusive, premium products all found at one store," George said.
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