Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 8, 1990 TAG: 9007070048
SECTION: BUSINESS PAGE: E1 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Long
Fighting for a share of the cyclical furniture industry was tough enough. Having to do it under the thumbs of diverse owners spread from Connecticut to Florida has made doing business even more difficult.
For example, in 1987 Singer Furniture planned to expand into the ready-to-assemble furniture business by buying another company. But the venture never happened because Singer's corporate parent refused to put up the capital.
Such restraints were removed this spring when managers and other investors bought the company, said Dennis Ammons, the new Singer president.
Since the buyout in May, Singer has been controlled by people who have spent their working lives in the furniture industry. The company has shed restrictions imposed by owners who looked only at the division's contributions to the bottom line.
Each of the parent corporations controlled the capital and "we were robbed" when they invested in their high-tech operations instead of furniture, he said last week.
In the last five years, the furniture company has been owned by Singer Co., SSMC Inc., Semi-Tech Microelectronics (Far East) Ltd., and Bilzerian Partners Ltd. Partnership I. The most recent owner was a company controlled by Paul Bilzerian, a corporate raider recently convicted of securities fraud.
"Now, we don't have the barriers to grow and acquire that we had in the past," Ammons said. "The only barrier today is financial feasibility."
What the new owners - nearly 20 managers-investors - plan to do with Singer is "to take it to a larger company, always doing what we do best."
The new Singer, Ammons said, has "improved working conditions and management relations . . . I want to operate it like a family. We can do that and still be aggressive in the marketplace."
On his agenda, Ammons said, is acquisition of another company, possibly one with a line of upholstered furniture, to complement Singer's current plants that make bedroom and dining room case goods.
"We want to get rid of the stigma" of the distant owners and concentrate on meeting customers' needs for furniture. Customers, not corporate directors, "are first in our minds."
In the last year that Bilzerian owned the company, uncertainties about Singer's future and who might buy it cut into business.
Ammons does not criticize Bilzerian's operating style. He said the corporate raider "has been very straight . . . He has not thrown us a curve."
But the announcement last year that the company was for sale made buyers leery of setting up long-term furniture purchase programs. Last year's sales dropped to $125 million from $133 million in 1988 and profits were down, according to estimates by Furniture Today, an industry newspaper. As a privately held company, Singer no longer makes its financial results public.
As a result of the declines, the company started programs to improve its costs, products and quality.
One of Singer's eight plants, a small dining room furniture operation at Lenoir, N.C., was closed.
In Roanoke, close to 150 of about 650 production and office workers were laid off this spring because "demand was down to a point where their jobs were no longer justified," Ammons said. He wants to recall them when sales are up again.
Gaining greater market penetration, at a time when furniture sales are slow, is the first challenge of the new owners.
Ammons admitted that the retail furniture business is flat. Currently, some of Singer's dining room pieces are selling at a better rate than bedroom furniture.
In general, however, home furnishings companies are not getting their share of consumers' discretionary spending, he added.
There are several possible explanations for the industry's doldrums. One is the maturing of the baby boom generation. This group, aged 35 to 50 has "a tremendous amount of buying power," but "we haven't convinced them that they should buy furniture, Ammons said. "They're still buying BMWs and stereos."
Also, shoppers are more cautious, he said, and they're concerned about tighter credit. Most furniture is purchased on credit. And furniture sales to resort condominiums, one small part of Singer's business, are off because construction of those units has slowed.
In summary, the industry's business "is terrible," said Jerry Epperson, furniture analyst for Wheat, First Securities in Richmond.
Yet, "Singer has been through a lot of transition, a lot of managers. Sometimes it's easier to start when business is tough."
Kay Norwood, who follows furniture company stocks for Interstate Securities in Charlotte, N.C., said the industry "appears to be dead in the water.
"The economy is very soft and people normally don't buy furniture when it is," she said.
Ammons believes Singer's sales have bottomed out and started upward. But he said he reads Austin Kiplinger's newsletter, which forecasts slight growth in home furnishings business through the end of the year but less growth next year.
That outlook is for "relatively flat, sluggish" sales until 1992.
What this means, Ammons said, is that "we manufacturers have to capture a bigger share. Instead of expecting the market to grow, we have to capture a larger share."
The current slump is especially noticeable because it follows boom times of the 1970s. That's when "everybody (in the furniture industry) could sell anything and a lot of people became wealthy and complacent. In the 1980s, the lazy and non-aggressive were weeded out."
Sears, Roebuck & Co. is Singer's largest account, amounting to less than half of its sales. Julian Fonferko, bedroom furniture buyer for Sears in Chicago, said, "What's going on for Singer is very positive. We have a very strong relationship, past and future."
Ammons, however, said Singer's potential for sales growth is with furniture retail chains such as Heilig-Meyers of Richmond; Haverty Furniture Cos. in Atlanta; Levitz Furniture Corp., based at Pottstown, Pa.; Reliable Stores Inc., Columbia, Md.; Nebraska Furniture Mart in Omaha and Finger Furniture Co., Houston.
James Riddle, marketing executive vice president for the 310-store Heilig-Meyers chain, said, "We've had Singer on our floor for years and years . . . We feel good about what's going on there."
Ben Badcock of W.S. Badcock Corp., a Mulberry, Fla., retailer and distributor, said Singer has "a lot of new designs . . . They listen to retailers and that's important."
Singer will do all right with sales to middle-of-the-road chain stores, said Sam Saks of Reliable Stores. The company has a niche - ornate-looking furniture with a flamboyancy, not plain, for the customer who wants a jazzy look in the house, he added.
The company's new manager-owners say they have the financial means to re-establish its reputation with customers and grow. Although he would not disclose terms of the buyout, Ammons said his group was able to acquire the operation "with much less debt because of the support of three major partners" who have not been identified.
Unlike other recent buyouts, this debt "was not leveraged at levels that would strip all profits and take us out of the picture." Payments on the debt are well within the profit structure budgeted for the operation, Ammons said.
Another member of the team is Edwin E. Lunsford, who Ammons called "a master scheduler." As the company's director of production planning, Lunsford must schedule factory work up to 10 months ahead.
A 43-year man at Singer, Lunsford said the biggest task ahead for the company is "to prove to dealers that we are a constant, viable supplier. They should know that but with all the name changes, it makes them wonder."
What Singer supplies are bedroom suites, groups that consist of a dresser, mirror, chest and headboard, that sell at wholesale for $400 to $700. Its dining room groups sell to retailers for $500 up to $1,300 wholesale. Retail prices usually are about double the wholesale costs.
The company's operating headquarters was moved from Atlanta to Roanoke a few years ago. The owners talked of taking it to High Point, "in the middle of furniture social life," but Ammons said, "I think we can get along just fine in Roanoke. It's home."
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