Furniture Brands likely No. 1 manufacturer
By Jay McIntosh -- Furniture Today, December 9, 2001
ST. LOUIS — ST. LOUIS — Three more well-known names and a second big dedicated-store network will add manufacturing, marketing and distribution muscle to Furniture Brands International.
Mickey Holliman, chairman and chief executive officer, said the addition of Drexel Heritage, Henredon and Maitland-Smith will broaden the company's offerings.
"With Broyhill, Lane and Thomasville, Furniture Brands already has a strong position in the middle and upper-middle price points," he said. "The acquisition of Henredon, Drexel Heritage and Maitland-Smith will give us an industry-leading presence in the premium category as well, and will establish us as the industry's only full-line, whole-home resource in all middle and upper price categories."
Pending regulatory approval, Furniture Brands will pay $175 million in cash and $100 million in stock for the companies. FBI will remain financially strong, Holliman said, with the debt to book capitalization ratio remaining under 40%.
FBI is likely to regain the top spot among U.S. furniture manufacturers from La-Z-Boy. Sales of Furniture Brands plus the new companies this year would come to about $2.3 billion, compared with La-Z-Boy's $2.1 billion.
Drexel Heritage, Henredon and Maitland-Smith had sales of $425 million and operating earnings of $35 million in the 12 months ended Sept. 30, Holliman said. In calendar 2000, a better year for the industry, sales were $475 million and operating income was $56 million, he said.
The deal will bring together two of the largest dealer-owned store networks in Thomasville Home Furnishings, with sales of about $468 million in 2000, and Drexel Heritage, with sales of about $316 million last year. Together, the two would be about the same size as the La-Z-Boy network. Ethan Allen at $1.2 billion last year was the only larger single-brand chain.
Holliman said the newly acquired companies would run as a stand-alone entity, for now called HDM Furniture Inds.
Henredon and Drexel have U.S. plants and import about 10% of their furniture or components, while Maitland-Smith is all imports and owns a plant in Indonesia and one in the Philippines.
Furniture Brands has closed 12 domestic plants in the past year as it increased imports, but Holliman doesn't think the added U.S. plants will lead to overcapacity.
He said that "in the near term," high-end case goods like those of Henredon and Drexel are best made domestically. "If this changes, we can change," he said.
Holliman also said FBI might make further acquisitions. "The brand story in furniture is not limited to case goods and upholstery," he said. "There are other product segments that have high visibility in terms of brand awareness and also meet our acquisition criteria."
Furniture Brands International
CEO: Mickey Holliman
Companies: Lane, Broyhill, Thomasville (medium to upper-medium priced furniture); acquiring Henredon, Drexel Heritage (upper-medium to high-end furniture) and Maitland-Smith (high-end accessories and furniture). Thomasville and Drexel Heritage have large, dealer-owned store networks.
Sales: Including companies to be acquired, estimated at $2.3 billion this year.
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