Furniture maker tops in futons
Loewenstein Furniture Group Inc., that had no expertise with futons before this past year, has turned into the country's biggest futon manufacturer nearly overnight.
After increasing $17.2 million from its initial public offering last October, Loewenstein has turned on a purchasing series that started with the purchase of 2 wheeled producers and continued this week with the purchase of important assets by a third. SIZE MATTERS; LUXURY MATTRESSES
The 27-year-old firm also has begun merger talks with Winston Furniture Co., an Alabama-based company that may expand its business to the outdoor furniture industry.
Loewenstein's recent movements seem to indicate a change in attention from that which traditionally has become the organization's larger branch, contract seats for the corporate marketplace, to the smaller one, ready-to-assemble furniture to the consumer industry.
However, George Campagna, the organization's principal financial officer, also insists that is not the situation.
"We're aggressively searching for acquisitions from contract seats, in addition to ready-to-assemble," he explained. "We do not purchase an acquisition solely for the purpose of purchasing one. We must receive the ideal fit."
Loewenstein Furniture reported net earnings of $1.8 million final year on revenue of $45.3 million. Almost 73% of the organization's earnings came from the own contract seats branch, making chairs, tables and sofas and other furniture for restaurants, offices, resorts and retail shops.
The majority of the pieces sell for about $150 to $550, chiefly through reduction stores, office superstores and mass merchandisers.
Loewenstein's ready-to-assemble products (called from the furniture industry since RTA) contain coffee tables, wall units and children's furniture. Most pieces market for under $25 at shops such as Wal-Mart and Rhodes.
Even though Loewenstein's RTA branch accounted for just 27% of its earnings this past year, the auto company is guaranteed to alter that amount dramatically upwards. http://futonszone.com/mattress-industrys-pain-mattress-topper-categorys-gain/
However, Campagna declined to state just how the shift will be.
"We do not trouble projections such as this," he explained. "All I could say is, that the futon sector will be a sizable portion of our complete picture"
Nancy K. Zambell, a researcher who follows the business for JW Charles Securities at Boca Raton, believes Loewenstein's RTA department could account for half of its earnings.
Manufacturing for your RTA branch is managed from state, in the factories of many companies Loewenstein obtained in the 1980s. Included in these are a Tennessee-based RTA maker Named Southern Wood Products, and 2 contract seats producers in North Carolina: Gregson Furniture Industries along with Excel Office and Contract.
Loewenstein first entered the auto industry past November with the purchase of Tennessee-based Shaffield Industries. The business paid $5.2 million and assumed $2.2 million in debt for Shaffield, making futons and other RTA Furniture.
"It was a natural for all of us to get in the futon marketplace," Campagna said. "By creating the RTA goods, we understand how to create a futon. And it opened a completely new place for us."
Back in February, three weeks following the Shaffield deal, Loewenstein obtained New West Industries Inc. of San Jose, Calif., in a stock trade valued at $7.5 million.
New West, together with annual earnings of $13 million, was subsequently the country's second-largest futon maker. Loewenstein, its owner, instantly became the biggest.
And that week Loewenstein enlarged its futon branch even farther: The organization paid $1.1 million to the resources of Mill Business Furniture Inc., another Tennessee-based maker of futonframes and mattresses.
"I'm fairly sure there'll be many more acquisitions," Zambell explained. "The prices so far are really smart bargains. These people today understand how to negotiate."
The organization's stock, listed on the Nasdaq under the symbol LOEW, traded at $9.50 on May 31. It's awakened and down because its IPO, trading as large as $13.75 as much as 6.625. At the start of 1994, it had been trading near its top.
Campagna stated Loewenstein's development as a significant auto manufacturer has motivated some mass retailers to market futons for the very first time. Many big chains are loath do business with small makers, he stated, since they're not convinced that big orders will be sent punctually.
"We've got the money to satisfy their stock demands, and we've got the reputation they need," Campagna said.
Futons, that can be cheap Oriental-style mattresses which convert from sofas for beds, traditionally are marketed in little specialty shops aiming at young buyers supplying initial houses. They generally sell for around $250.
Loewenstein has begun shipping its futons into Service Merchandise and shortly will start sending them to Wal-Mart and Sam's Club, Campagna said.
Thus far, the organization's 1994 sales appear promising. For its first quarter of the calendar year, Loewenstein reported record earnings of about $16.4 million -- 34 percent ahead of this past year. Regardless of the impact of expenditures regarding the purchase of New West Industries, the organization's net earnings for its first quarter was $1.2 million, 86% before 1993.
"This firm has an excellent plan about where it needs to proceed," explained Zambell, that believes Loewenstein's yearly earnings might grow as large as 83 million annually and $91 million in 1995.