What's the Robb & Stucky brand worth?
By one measure: $470,000.
That's what a group of investors led by Taiwanese entrepreneur Samuel Kuo paid at auction for the Robb & Stucky name while the upscale furniture retailer was in bankruptcy liquidation last year. Kuo's group outbid three others, including one led by the Lubner family that once controlled the chain.
It's perhaps a fair price in today's economy, but the price was a harsh verdict for the 97-year-old Fort Myers-based furniture retailer that hit $274 million in revenues at the peak of the real estate boom in 2006. A bankruptcy judge ordered the liquidation of the company last year after sales fell 49% from the peak and sought protection from creditors.
Kuo installed Steve Lush as president, a 51-year-old veteran of the furniture industry. “We felt the brand was too important to simply let it die,” Lush says. “We can restore the brand.”
Lush acknowledges that Robb & Stucky was damaged by the bankruptcy liquidation and subsequent “everything-must-go” sales. What's more, the brand suffered from the boom-time image of being overpriced, elitist and slow to react to customer demand for more casual furniture.
But Lush says these are temporary setbacks that can be fixed. Robb & Stucky was a pioneer in furniture retailing, displaying products in such a way that consumers would buy rooms of furniture instead of single pieces. Together with top-notch customer service, Robb & Stucky posted sales that were often double or triple its competitors' on a sales-per-square-foot basis.
“People knew exactly what that brand stood for,” Lush says. “I've been a big admirer.”
Lush is the fourth generation in his family in the furniture business. His family owned Lush Brothers in Pennsylvania for nearly a century until it sold the business in the early 1990s.
Lush then worked his way up the corporate ladder at La-Z-Boy and Thomasville in the Northeast and later was executive vice president with Hendricks Furniture Group in the Southeast. Most recently, he joined Universal Furniture, part of Samson Holdings, a residential furniture company publicly traded on the Hong Kong stock market.
Lush says he jumped at the chance to rebuild Robb & Stucky because of how it revolutionized retail presentation. Instead of displaying furniture by manufacturer or type (all the sofas together, for example), Robb & Stucky arranged various pieces by style and sold entire rooms or homes full of furniture. “They made it easy and fun,” Lush says.
Samson, founded and chaired by Kuo, 54, is one of the top three furniture manufacturers in Asia and among the top 10 furniture wholesalers in the U.S. The company posted revenues of $207 million in the first six months of 2011.
Besides Universal, Samson's other brand names include Craftmaster Furniture, Legacy Classic Furniture, and Pennsylvania House. It also has licensing agreements with Better Homes & Gardens and Paula Deen.
“These are really high-quality people who have a great reputation in the industry,” says Mitchell Gold, whose North Carolina-based furniture company, Mitchell Gold + Bob Williams, posted $100 million in revenues last year. Gold's firm recently announced plans to sell its goods in the Robb & Stucky store in Fort Myers.
Lush says Kuo's investment in Robb & Stucky is personal and not part of Samson Holding. Kuo has a similarly held retail company in Asia with 42 furniture stores, Lush notes.
That's important because Lush says Robb & Stucky buys from a wide range of mostly U.S.-based manufacturers, not Samson-owned companies. What's more, Samson Holding's furniture brands target middle-market customers while Robb & Stucky sells high-end furnishings. “You would think that it's a vertical play, but it isn't,” says Lush. “He doesn't want to compete with his customers.”
Lush declined to divulge how much money Kuo and partners are investing in rebuilding Robb & Stucky, which has since be named Robb & Stucky International. But besides buying the name, they also purchased the building that housed the Fort Myers store for $6.5 million and a 2.3-acre site near the intersection of U.S. 41 and Fifth Avenue in Naples for $3.8 million where they plan to build a 60,000-square foot store.
Besides Naples, Lush says the company is looking at other second-home markets such as Sarasota and similar cities on the east coast of the state. Each market has room for two or three stores, though Lush declines to cite specific targets or exact locations. “We're trying to cluster the stores,” he says. “We're looking at slow, sustained growth in South Florida.”
The new Robb & Stucky stores will measure 60,000 square feet, slightly larger than the size of a football field but 25% smaller than some of the larger stores Robb & Stucky once operated. “You get to a point where it's overkill,” Lush says.
Restoring the brand
Fortunately, the liquidation of Robb & Stucky occurred over a short period of months at the end of last year's tourism season. By then, many “snowbird” residents had returned to their primary homes in northern states.
When seasonal residents returned this month, Robb & Stucky's Fort Myers store had reopened. Many customers today don't even realize the company has changed hands, Lush says.
But the brand has suffered in other ways. Robb & Stucky became associated with the excessive spending of the real estate boom with the perception of overpriced merchandise. Over the years, it has earned unflattering nicknames such as “Rob and Stickup” that tarnished its reputation.
Inside the cavernous stores, Robb & Stucky's furniture was dominated by the formal Tuscan style of furniture that was popular during the boom, with large imposing pieces made of dark wood. Critics say Robb & Stucky was slow to adjust to the rapidly changing tastes and budgets of consumers during the recession, when buyers turned to less-expensive and more casual furnishings.
With proper marketing, Lush says Robb & Stucky can readjust its image with lower prices without losing its appeal as a luxury brand. For example, sofas start at $1,000 today compared with $2,000 during the boom, styles are more casual and less formal and the staff is not overbearing. “Great design doesn't have to be expensive,” says Lush.
The showroom in the new Robb & Stucky store is more airy, the furniture features livelier colors and there's more room to circulate. It has adjusted its product mix too. For example, the company doubled the size of its mattress area because customers tend to replace those more often than other pieces of furniture in their homes. Lush says he hopes mattresses will draw customers into the store more often and they may be persuaded to buy other furniture, too.
Reflecting new trends, Robb & Stucky turned its front entrance into a mini boutique with furniture from Mitchell Gold + Bob Williams, a North Carolina-based upscale-casual manufacturer that supplies trendy stores such as Pottery Barn and Restoration Hardware with classic designs. For example, Gold says fabric sofas cost $1,500 to $2,800.
Keeping prices low is a surprisingly robust group of competitors. The Lubner family that once controlled Robb & Stucky recently opened Clive Daniel Home in Naples and furniture entrepreneur Larry Norris opened three furniture stores called Norris Home Furnishings in the Fort Myers-Naples area. “You need good competition,” says Lush.