Furniture company gets new name, leadership
The new owner of Furniture Brands Inc. wasted no time getting started on giving the company a fresh start.
On Monday KPS Capital Partners announced the formation of a new company, Heritage Home Group, to take the place of the Furniture Brands name; the resignation of CEO Ralph Scozzafava; and the appointment of a new CEO and board of directors.
“This is the beginning of a new era for Heritage Home Group and its brands,” Raquel Vargas Palmer, a partner of KPS, said in a prepared statement. “The company has a new owner, a new CEO, a new board of directors and a new strategic direction. ... We strongly believe in the fundamental value of this business and the significant growth potential that can be unlocked through focused investment in our brands.”
No immediate changes are expected at the company's operations in Caldwell County, said Davy Whittington, a company vice president in Lenoir.
The new president and CEO of Heritage Home is Ira Glazer, an executive who KPS said in a press release has three decades of successful turnaround experience.
Glazer, 61, previously worked with KPS as CEO of Wire Rope Corp. of America, a producer of high carbon wire and wire rope products for the mining, oil and gas, construction and steel industries. KPS bought WRCA out of bankruptcy in 2003 and hired Glazer to lead its turnaround. Glazer remained in that job until this past April.
When he became CEO of WRCA, the company had about $100 million in annual sales, and by the time he left that had grown to about $1 billion in annual sales, the Kansas City Business Journal reported. Renamed WireCo WorldGroup in 2007, it now has about 5,000 employees worldwide and is on the Kansas City Business Journal’s list of fastest-growing companies, with average revenue growth of 26 percent a year over the past three years.
Monday’s changes follow the pattern KPS has established since its founding in 1998. KPS partner Michael Psaros told the ABF Journal, a magazine that focuses on the turnaround and finance industry, in 2010 that when KPS invests in a company it will bring in, without exception, a new management team. “We would never invest our capital behind a management team that has caused a train wreck.”
Workers and furniture industry analysts had been sharply critical of Furniture Brands’ management during its years-long period of cutting jobs and losing money. Among the most pointed was Budd Bugatch, an analyst at Raymond James in St. Petersburg, Fla., who has pointed out among other things that the company’s executives received a bonus that coincided with the termination of about 1,400 employees, and that the company filed what Bugatch called distorted fourth-quarter sales last year to meet targets needed for bonuses to executives.
Furniture Brands, based in St. Louis, was the largest U.S. furniture manufacturer in the early 2000s and as recently as 2006 reported $2.3 billion in shipments, ranking second domestically, primarily from divisions based in North Carolina — Broyhill, Thomasville and HDM Furniture Industries. But it now represents only 3 percent of the household furniture manufacturing industry, an industry populated by a large number of small companies.
The company has seen eight years of revenue declines, culminating in its filing for bankruptcy protection in September. In the past 12 years Furniture Brands eliminated at least 8,860 jobs in North Carolina in pursuit of lower labor costs in Asia.