RTG to buy Kirschman's
Will take over 5 New Orleans-area stores
By Thomas Russell -- Furniture Today, June 11, 2006
New Orleans — Rooms To Go is acquiring five stores from Kirschman's, a 92-year-old Top 100 chain based here.
Two of the stores are in New Orleans and the others are in Baton Rouge and Covington, La., and Gulfport, Miss.
The deal does not include four stores in Lafayette, Houma, Slidell and Gentilly, La., that closed after Hurricane Katrina hit last year.
A purchase price was not disclosed.
The Kirschman's stores were closed last week for inventory. Rooms To Go was expected to take control of the properties by the middle of this week. They will remain under the Kirschman's name for the next 60 to 90 days, during which RTG will sell off the remaining inventory.
After the sale, the stores will close for remodeling, then reopen as Rooms To Go starting in mid-September.
Last month RTG announced plans to open nine stores over the next two years on and near the Gulf Coast of Florida, Alabama, Mississippi and Louisiana. These five stores are part of that expansion plan, said CEO Jeff Seaman.
He said the deal makes sense because the company already has a 600,000-square-foot warehouse in Mobile, Ala., and has a store in Gulfport. He added that the Kirschman's stores are between 40,000 and 80,000 square feet, which fits well with RTG's retail footprint.
"I can say we are pretty excited about opening in New Orleans," Seaman said, calling Kirschman's President and CEO Arnold Kirschman a "savvy retailer" with stores in the right locations.
The deal is a milestone for the Kirschman family, which has sold furniture in the Big Easy for four generations.
Morris Kirschman, a grandfather of Arnold Kirschman, founded the business in 1914, peddling products door to door before opening his first store.
His son, Victor, joined the company in 1943 and added stores. Victor's son, Arnold, continued the expansion.
Kirschman's closed stores and temporarily moved its headquarters to Baton Rouge after Hurricane Katrina. But Michael Kirschman, the company's executive vice president, said the storm had little to do with its decision to sell to RTG.
"Obviously since the storm, business has been very good," he said. "We really weren't considering this."
Company representatives first met with Rooms To Go officials after the April market, he said.
"After considering it, negotiating and discussing it over the last 30 days, we felt this was a good deal for our employees and the New Orleans community," he said, adding that RTG's deep stock and fast deliveries are needed in the local marketplace. "They are a phenomenal organization that can support our employees and the entire community very well, so we felt it was a good time."
Arnold Kirschman in a statement that in the past few months, "many national companies" had looked into the New Orleans market.
"Naturally, their attention focused on us as the dominant local company," he said. "Rooms To Go recognized more than the others that this entire region is about to experience a tremendous growth spurt. They impressed us with their plans for operating in this community and convinced us that they would take the foundation that we've built to an even higher level."
Under the deal, Kirschman's will retain rights to the family name but can't use it for a furniture retail operation. The company also will retain a New Orleans warehouse. The family may use the facility later to support a new business other than furniture retail, such as furniture repairs or deliveries, Michael Kirschman said.
The Kirschman family also will retain three Ethan Allen stores in New Orleans, Pensacola, Fla. and Mobile, Ala.
"It's emotional from the standpoint of our customers and the relationships we have built and the employees who have been with us for so long," Michael Kirschman said. "That is why it was so important to have an organization with great integrity that will help the company grow."
Seffner, Fla. based Rooms To Go is the nation's largest furniture store chain with sales of $1.6 billion in 2005.
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