HOM buying Gabberts
Will expand brand across upper Midwest
By Clint Engel -- Furniture Today, August 31, 2008
MINNEAPOLIS — HOM Furniture was set to buy Gabberts Design Studio & Fine Furnishings here late last week, with plans to eventually expand the upscale brand across the upper Midwest.
The purchase price for the business — which includes a leased Bloomington, Minn., warehouse, 63,000-square-foot flagship store and small Gabberts Odds & Ends store in the Galleria Mall in Edina, Minn. — was not disclosed. The deal between the companies — both based in the Twin Cities area — was expected to close Aug. 29.
Gabberts Chairman and CEO Jim Gabbert will leave the company.
Combined, HOM and Gabberts would have projected retail sales of more than $200 million in 2008 and more than 1,000 employees, the retailers said in a release. HOM had estimated sales of $184.7 million at 11 stores in 2007, according to Furniture/Today's Top 100 ranking.
Gabberts “is the most premier, high-end brand in furniture and design in the upper Midwest,” said HOM President and CEO Rod Johansen about the deal.
HOM expects to cut duplicated staff positions. It projects that Gabberts' workforce of 110 will be reduced by about 10%, but that the intention is “to retain as many current employees as possible,” Johansen added.
He said it will be “business as usual, vendors as usual” at Gabberts as HOM wraps its arms around the acquisition.
HOM approached Gabberts several times over the past five years about a possible sale, and the Gabberts board agreed that now was the right time, said Jim Gabbert, who is the son of Gabberts founder Don Gabbert.
A longtime Top 100 company, Gabberts has struggled in recent years, falling off the ranking in 2007. In 2006, it shut down its remaining operations in the Dallas-Fort Worth market, where it once operated three stores. In 2007, it completed a multimillion project to reposition and redesign its remaining store in Minneapolis to better appeal to today's upscale consumers. Among other changes, it scaled down the showroom from 90,000 square feet to 63,000 square feet.
It also brought in a new management team, including President Rebecca Miller and CEO Mike Knight. Gabberts had stepped back from day-to-day operations but returned early this year as CEO, while Knight continued to advise the retailer.
“It became pretty clear to me that the best way for the brand to survive was to find a larger, stronger partner,” said Gabberts.
At its peak in 2000 with four stores, Gabberts did an estimated $115.5 million in furniture, bedding and accessories sales. The last time Gabberts appeared on the Top 100 was in 2006, when Furniture/Today estimated sales the year before of $69 million at three stores.
He said the dramatic changes in the industry over the past decade make it “very difficult to sustain a single-store, independent retail operation even in a great economy with great people doing great work.”
“While it's been a difficult decision, we're pleased Gabberts will continue to be independently owned and operated by a Minnesota-based, family-built brand. We can't think of a better organization to carry on (our) legacy.”
HOM, now with 13 mostly mid-priced stores in Minnesota, South Dakota, North Dakota, Iowa and Wisconsin, was ready to expand into the high-end segment, Johansen said. “Rather than build a brand, we acquired the best high-end retail brand in the upper Midwest. We plan to honor and leverage 62 years of Gabberts brand heritage and an award-winning interior design team to markets currently underserved at the premium level.”
Johansen said it was too early to give a timetable for Gabberts' expansion but noted that in many of the markets HOM already serves outside of the Twin Cities, HOM is often considered the upper-end store even though it tops out at middle-upper price points. “So we think there might be some opportunity there.”
He said there is very little product overlap between the two retailers. One area where he sees opportunity to improve Gabberts is area rugs. Also, under new ownership, Gabberts will reintroduce a sleep center to the main store — something that was dropped in the recent redesign.
Jim Gabbert will continue to stay involved with the furniture industry through Reshare — a management system that enables suppliers to sell online directly to end-users without circumventing their retailer partners.
“I have so many friends in the industry, just walking away would be impossible,” he said. But Gabbert added that owning and running a big home furnishings business has been a “24/7, 365 job.”
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