BHFC demise called blow to industry
By Clint Engel and Gary Evans -- Furniture Today, August 2, 2004
Lancaster, Pa. — Several key suppliers of Breuners Home Furnishings Corp. last week lamented the upscale retailer's impending liquidation, not only in light of their own unsecured claims but as a blow to the industry.
Dave Carpenter, director of financial services for La-Z-Boy's Greensboro, N.C., office, said he was concerned that BHFC's $323 million in annual volume "might not be quickly replaced at retail."
He estimated that La-Z-Boy companies, including Lea, American Drew, Hammary and Clayton Marcus, are owed about $1.3 million, but declined to disclose how much in annual sales La-Z-Boy's companies were doing with BHFC chains.
Lynn Chipperfield, senior vice president at Furniture Brands International, called BHFC's slide "further evidence of the transition taking place both on the manufacturing and retail sides of the industry. Well-managed companies with good strategic plans are going to continue to emerge the winners as the industry continues to consolidate at retail."
Furniture Brands did business with BHFC through its Broyhill and Lane divisions until about four weeks ago, when it stopped shipping, said Chipperfield.
He said FBI's 2003 sales to BHFC were about $42 million, or less than 2% of the company's total sales.
He said he hadn't talked to Broyhill and Lane executives about their distribution plans in BHFC markets, "but I'm confident we'll be able to make that business up. This validates ... our commitment to secure greater control over the distribution of our products through a dedicated retail space and single-branded stores."
Furniture Brands, by far the largest unsecured BHFC creditor, said the bankruptcy would result in a nine to 10 cents per share charge to second-quarter earnings.
J.B. Davis, president and CEO of upholstery maker Klaussner, ninth on the list of creditors with a claim of $613,610, said he has been friends with BHFC executives for years.
"We're sorry to lose the business," Davis said in a statement. "We're losing a great customer but, more importantly, we've got a lot of good friends who are going to be out of work."
The loss of the retailer will shrink an already tight high-end market, said Bob Maricich, president and CEO of Century, owed $380,069.
"Obviously it's a big disappointment," he said. "The upper end is probably under-represented at retail anyway," and he wondered if there was enough of "a retail base to absorb the upper end."
"It just goes to show that you cannot operate with the margins of a furniture retailer or a furniture manufacturer with extraordinary amounts of debt," Maricich added.
"On an operating basis, it really wasn't a bad business. But to be in debt to that extent, even in good times, is very tenuous," he said. "In tougher times, it's not something you can successfully sustain."
He said the loss of BHFC could create some opportunities for manufacturers with dedicated stores.
"But for someone like us that has chosen to align with strong upper-end retailers in local markets, that makes it a tougher situation," Maricich said.
