Sauder to buy Studio RTA
Deal should broaden company's product line, distribution
By Ray Allegrezza -- Furniture Today, May 19, 2003
Archbold, Ohio — Sauder Woodworking, the largest U.S. producer of ready-to-assemble furniture, has agreed to acquire Studio RTA, a California-based designer and importer of contemporary, mixed-media RTA.
Terms of the deal, expected to be finalized early next month, were not disclosed.
Sauder intends to keep the Studio RTA brand and operations intact, with all employees remaining in their current positions. Studio RTA's president and chief executive officer, Paul Reitzen, and Bob Hughes, executive vice president, will keep their posts as well.
Founded in 1985 primarily as a maker of drafting and art tables, Studio RTA is headquartered in Los Angeles, where it employs 110 people. The company specializes in product design and development in categories including home office, home entertainment and art and hobby furniture, sourced primarily from Taiwan and southern China through partner organizations.
In addition to its design group, Studio RTA's operations center includes accounting, sales and marketing, and customer support departments along with a modern 200,000-square-foot warehouse. Among the company's major customers are Office Max, Office Depot, Best Buy and The Brick.
Studio RTA says its success has hinged on its ability to bring out innovative, fashion-forward, affordable designs that anticipate changing marketplace trends in style, color and finish. The products, which use metal, glass, solid-wood laminates and rattan, typically retail from $49 to $499 and track well with Sauder's product pricing.
Studio RTA's sales grew from $40 million in 2001 to a projected range of $65 million to $70 million this year, a jump of more than 60%. When the acquisition is complete, the Sauder family of companies, which also includes Progressive Furniture, Archbold Container and Sauder Mfg., the nation's largest maker of church seating, is projected to reach about $750 million in sales.
In April 2001, Sauder entered the case goods business with the acquisition of Progressive, a maker of domestic and imported case goods based in Swanton, Ohio, a town near Sauder's home in Archbold. That acquisition helped set the stage for the purchase of Studio RTA, according to company President and CEO Kevin Sauder.
"Progressive helped us in a number of ways, including getting us more comfortable with imported products," he said. "In fact, I may have not moved forward with Studio RTA had I not had the Progressive deal under our belts. That made us much more comfortable buying and selling product that did not come from Archbold."
Sauder, with sales last year of nearly $700 million, has 4,200 employees and ranks as the sixth-largest furniture manufacturer for the U.S. market, according to Furniture/Today's Top 25 Manufacturers Survey.
Kevin Sauder said the acquisition "provides an excellent opportunity for sales growth in complementary product lines." He said the move also can open distribution in new retail channels for Sauder, such as arts supply dealers.
"Studio RTA has a whole group of arts and crafts reps that call on those types of stores," he said. "As a result of the acquisition, we will now have entrée into that channel. And ironically, we recently added a new line of craft carts."
Meanwhile, Sauder added that he believes Studio RTA can benefit from Sauder' longstanding relationships with the growing list of RTA superstores. "That channel can now broaden its product offerings by adding some of the mixed-media items that Studio RTA offers," he said.
He also said the acquisition will strengthen Sauder's global strategy of supplying dealers with world-class products made in the most cost-efficient way.
"Studio RTA is a well-respected and fast-growing brand with established sources in Asia for mixed-media parts for Sauder furniture, which will make us more competitive with contemporary and nontraditional furniture," he said. "This acquisition is one more step in our aggressive search to supplement our domestically produced RTA with imported materials that will give Sauder a world-class product offering, while leveraging our brand and distribution strength."
The company also believes Studio RTA's established Asian sources will position both companies for growth with the escalating number of retailers building stores outside North America.
"As more of our retail customers, including Wal-Mart and Office Depot, open stores offshore, it makes sense for Sauder to be able to supply them with furniture, either through contract manufacturing, Greenfield sites or other arrangements," Sauder said.
Studio RTA is equally upbeat about the acquisition.
"We are on a roll, with our first six months up 110% over the same period last year," Reitzen said. "There are all kinds of synergies and opportunities moving forward, but what this is really about is teamwork.
"We have a history of being able to anticipate market needs and responding quickly to them. I believe that with Sauder's support and backing, we can take Studio RTA to the next level and in the process help grow both businesses."
