Fairmont to buy Guildcraft
Expects to close deal early September
By Thomas Russell -- Furniture Today, August 4, 2008
Buena Park, Calif. — Fairmont Designs said it has agreed to acquire upholstery manufacturer Guildcraft of California as part of a strategy to further develop the living room component of its residential and hospitality furniture business.
Officials did not reveal a purchase price or other terms of the deal, which is expected to close by early September.
The companies, which said they have combined revenues of $120 million to $130 million, will retain their identities and focus on their core strengths.
With roughly $70 million in annual volume, Fairmont's residential division will focus on its strengths in case goods and other wood furniture, company officials said.
Guildcraft, which has revenues of more than $40 million, will continue to focus on upholstery, most of which is produced at its plant in Rancho Dominguez, Calif.
Guildcraft's upholstery will be merchandised and developed alongside Fairmont's collections, which include occasional and home entertainment furniture.
Buena Park-based Fairmont once had an upholstery plant in Pico Rivera, Calif. It closed that facility and opened an upholstery plant in Dongguan, China, in 2006, which it continues to operate.
Fairmont had been looking to purchase a U.S. upholstery specialist in hopes of expanding further into the category. CEO Jason Liu approached Guildcraft about 30 days ago, said Fairmont Chairman George Tsai.
"It's a natural living room platform for Fairmont Design," Tsai said, adding that Guildcraft has a good reputation and strong distribution, particularly in the West but also in some East Coast states.
With higher fuel prices and other rising costs from China, he said Guildcraft's U.S. manufacturing is a plus.
"With certain styles of upholstery, you just can't get everything out of China," Tsai said.
"In terms of upholstery, made in the USA is coming back."
Guildcraft sells a range of styles and fabrics. Sofas start at $499 retail and top out at $1,699 with sectionals going as high as $2,499.
Tsai said Guildcraft will retain its name but will run under the Fairmont umbrella, alongside its residential and contract divisions.
After the purchase, the companies will decide how to further consolidate their product lines and accounts.
At this early stage, Tsai sees Guildcraft phasing out the small portion of case goods in its line and allowing Fairmont to focus on that part of the business.
He sees Guildcraft, in turn, expanding Fairmont's residential upholstery business in the United States.
Tsai said that Guildcraft's existing sourcing relationships in China also will allow it to develop and sell a line of exposed wood frames in China, including sales to Fairmont's own network of 120 stores there.
Guildcraft also may produce upholstery for Fairmont's hospitality division, Tsai said.
Fairmont will retain Guildcraft principals Larry Quilling and Arthur Fink, who are partners in the business.
Quilling said he also is looking to retain other key executives at Guildcraft, including Director of Merchandising Mark Bragg and National Sales Manager Bobby Papazian.
Talkback
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I am still waiting on my ottman and a replaced couch, due to the material ripping and falling...
Karen Grefsrud - 2008-11-15 16:48:14
