Gold sees more growth for spun-off producer
By Gary Evans -- Furniture Today, April 13, 2003
Taylorsville, N.C. — After more than doubling its volume in three years, The Mitchell Gold Company here is poised for another growth burst, this time backed by a new partner.
That's the view of President Mitchell Gold who, with partner Bob Williams, joined with Wafra Investment Partners to buy the company back from The Rowe Companies, the upholstery maker's owner since 1999.
The sale was for $46 million, $14 million more that Rowe paid, and everyone seemed happy after the deal was announced at the April market.
Rowe, which closed out its latest quarter with meager earnings, will get a cash transfusion that Chairman and Chief Executive Officer Gerald Birnbach said would "enhance our balance sheet and improve our financial ability to support and grow our core operations," including Storehouse, its 60-store chain. Under terms of the deal, Rowe will honor its last payment of $12.8 million due April 20.
Gold described it as "a win-win transaction for all parties concerned. I've got a great big smile on my face."
When Mitchell Gold was sold to Rowe, it was doing about $30 million in annual sales. Last year, according to Gold, the company had sales of over $70 million, up 13% from the year before. Projected growth this year is 8%.
"Our new situation will put us on our own cash-flow footing, and our ability to grow or not grow will be based purely on our own financials and not on being part of a bigger company," Gold said. How other Wafra companies perform "will have nothing to do with us," he said.
Gold said he talked with some 10 equity investors before settling on Wafra, a New York-based company with 30 partners, including Travelpro Luggage and Riviera Trading, a sunglass company. Wafra has capital in excess of $250 million from institutional investors. Mitchell Gold is Wafra's first home furnishings company.
Gold said Wafra has a history of not intruding on partner companies. "If we make our numbers and do well, they'll leave us alone, just like Rowe left us alone," he said. "Jerry (Birnbach) was a real prince. He totally did not bother us at all but he was always there as a source of support."
Wafra executives "were in sync with our growth plan," Gold said. "A lot of people we spoke to immediately talked to us in terms of making acquisitions or opening our own stores or entering new categories. But I just want to be the very best at what we do. I feel that if we do that we can take the company to over $100 million in the next few years.
"We can do that by servicing the people we sell to right now who have done extremely well."
Mitchell Gold sells to lifestyle retailers Pottery Barn, Crate & Barrel and Restoration Hardware, plus a "cadre of fine independent specialty retailers," Gold said. "Last year, our growth was not that we added some great new retailer who gave us all of this business, or that we added a category. It was because all our retailers for the most part did better with our stuff. That's the kind of business I enjoy."
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