Execs lead Leath deal
Phillips remains CEO of Top 100 chain
By Clint Engel -- Furniture Today, July 31, 2006
Atlanta — Leath Furniture's top managers have joined with SB Capital Group and three executives of Planned Furniture Promotions to acquire the Top 100 chain from owner Mack Robinson.
The retailer said it will continue to operate all 20 of its Leath stores in five Midwestern states, and all seven Modernage stores in Florida. Ron Phillips will remain CEO.
And with new financing, Leath is expecting to jumpstart the growth of a 102-year-old business that has essentially been stalled for years.
Phillips joined with Barbara Snow, chief financial officer, and Jolene Takemura, vice president of merchandising, to lead the buyout, backed by the financial partners. As part of the transaction, the company will enter into a working capital agreement with CIT Group/Business Credit.
The purchase price, ownership stakes and other financial details weren't disclosed.
SB Capital Group is an affiliate of Schottenstein Stores, owner of Columbus, Ohio-based Top 100 company American Signature, which operates American Signature, Value City Furniture and Rooms Today stores.
The Planned Furniture Promotions executives involved in the deal are vice presidents Roy Hester, Burt Homonoff and Mark Bannon. PFP is affiliated with Gene Rosenberg Associates, and Rosenberg is the co-founder of Connecticut-based Top 100 store Bob's Discount Furniture, in which he still holds a stake. Rosenberg, however, is not an investor in Leath.
Leath/Modernage ranked 66th on Furniture/Today's latest listing of Top 100 U.S. furniture stores with estimated 2005 sales of $106.8 million, up 3.4% from the previous year.
For the past five years, the company stayed mostly in the middle of the Top 100 pack, although its ranking has gradually slipped as its sales results didn't kept pace with the combined performance of other large furniture stores.
"We are grateful to Mack Robinson for his tutelage during his 16 years as owner of the company," said Phillips. "Looking forward, we are excited with our new partnership and fully expect this venture to introduce new ideas and energy into the company. It is our expectation that with the availability of our new working capital line and the help of our partners, we will enter a new era of growth."
He wouldn't disclose the size of the financing package nor say how it compares to the capital Leath had to work with previously, but said, "I will say the working capital line put in place is more than adequate to grow the company.
"We really haven't been in a growth (mode) for a long time, and I think this gives us the opportunity to do that," Phillips said, although he wouldn't elaborate on expansion plans.
Scott Bernstein, principal and chief operating officer of SB Capital Group, said the deal "fits squarely within our strategy of acquiring retailers with growth potential. Through our successful history of buying businesses and intellectual property, we know how to rebuild a company's assets."
Hester of PFP called the investment "an exciting opportunity."
"I think synergies that exist within the three organization can help to maximize the performance of Leath/Modernage," he said. "You've got a (Leath) management team that's been there for years. SB Capital is involved in many aspects of the furniture industry as are the PFP executives."
One benefit of the cooperation could be improved relations with key vendors, he added.
Bannon said the PFP investors won't be involved in the daily operations of Leath. "We have a lot of respect for Ron Phillips and we're really excited about the future of the company," he said.
| Acknowledgements | ||
| News Editor Jay McIntosh contributed to this story. | ||
