The furniture business is tied to real estate in more ways than you might think.
The five brothers who own Matter Brothers Furniture have benefited from the housing recovery in Florida, of course. People have been buying homes and furnishing them, boosting the Fort Myers-based company's revenues by nearly 13% in 2012 to $35 million.
But Matter Brothers has owned the commercial buildings and the land on which its stores operate, and the brothers say that was a key to surviving the economic bust of recent years.
John Matter, 50, the company's president, is fond of saying he runs a real estate company that sells furniture. “We own all of our properties,” he says. “The only time we expand is when we find real estate.”
In that vein, the Matters are scouting potential sites for a new store in Sarasota that will open next year. “We know it's a very vibrant market,” says Tom Matter, who notes that high commercial real estate values kept the company out of Sarasota in the past. “We prefer to buy a good location, but we couldn't find a good value,” he says.
With four Matter Brothers stores and six Florida Leather Gallery stores throughout the region from Tampa to Naples, Sarasota remains the missing piece in the Matter Brothers territory. “We're focused on the west coast of Florida,” he says.
Still, the brothers remain cautious about future expansion, the housing collapse fresh in their minds. “We're very careful about any expenditure today,” says Tom Matter. “Everybody remembers 2006.”
Surviving the downturn
The region's furniture retailers suffered through the real estate collapse and many of them closed their doors. Matter Brothers shared in the pain as sales fell 50% in that period, but the brothers kept their doors open because they didn't have the crippling lease expenses that burdened rivals.
Even without the building-lease expense, the Matter brothers scrutinized every cost during the downturn, from coffee to lawn service. Like many others, its staff shrank, too. And the company consolidated distribution centers in Fort Myers, closing the one in Tampa. “We did it early,” says John Matter.
When it came down to it, the Matter brothers could drive the delivery trucks themselves if they had to. When their father started the business in Fort Myers in 1977 after moving from Indiana, the five brothers — David, Gary, John, Tom and Stewart — worked in the family store after school. “We'd deliver whatever they sold in the morning,” says John Matter, whose father retired in 1990.
In those days, U.S. 41 in Fort Myers was a two-lane road. The company grew with the residential development, following the rooftops in Naples and further up the coast in Pinellas Park and Tarpon Springs.
In addition, the Matter brothers operate a mattress-production company, which they acquired in Pinellas Park in 1984. Mattresses are usually the first purchase a customer makes when furnishing a new home, and Matter Brothers sells 1,500 mattress sets a year. “We manufacture all of our own bedding,” says John Matter. “We don't have the factory markup.”
The mattresses it sells cost from $599 to $4,995, and Matter Brothers makes custom beds for recreational vehicles and boats. The company made a 10-foot custom round bed for one customer.
Each brother operates a separate part of the business, and the brothers meet weekly for meetings in Fort Myers. For example, David Matter oversees the mattress operation. “We're not on top of each other every day,” says John Matter.
The brothers banter like any siblings, but they don't pull rank on each other. “We're a close-knit group,” says Tom Matter. John Matter is president because he was the first one to get involved in their father's furniture business after school. “I pulled the short straw,” he chuckles.
“Titles don't mean anything.”
With commercial real estate values still depressed, the Matter brothers say there's an opportunity to open the first new Matter Brothers store in 25 years in Sarasota.
Location is key, they say. “We won't go into markets that may be good 10 years from now,” says Tom Matter.
But the Matter Brothers are taking their time, and they don't expect to open the Sarasota store until 2014. “We're all a little more cautious and smart about what we do,” says John Matter.
For one thing, the Matter Brothers stores are much larger than the smaller Florida Leather Gallery stores they operate. The Matter Brothers stores range in size from 30,000 to 50,000 square feet and the Florida Leather Gallery stores range from 8,000 to 10,000 square feet.
Still, the Matter brothers believe the residential real estate recovery is well under way, and there's pent-up consumer demand for new furniture to warrant a new store. “A lot of them are buying complete housefuls,” says John Matter.
Matter says the company's stores target the “upper-middle” segment of the market. A sofa might cost about $1,000 at Matter Brothers, for example.
They're focused on West Florida and don't have plans for other regions of the state. “We're a coastal company,” says Tom Matter.
In addition, the Matters are focused on growing their commercial business, furnishing large buildings such as hotels and condominiums. For example, the tourism recovery is allowing hotel owners to renovate properties. “A lot of that stuff is overdue to be replaced,” says Tom Matter.
The statewide recovery in residential real estate is benefitting Gulf Coast furniture retailers across the price spectrum.
“We are seeing more multi-room purchases,” says Rooms to Go CEO Jeffrey Seaman, whose Seffner-based company posted $1.61 billion in revenues in 2012, up 7.3% from the previous year.
While the average transaction remained about the same, Seaman says much of the growth came from new customers at its 150 stores. “Most of that is Florida coming back,” he says.
Seaman says Rooms to Go has added distribution space to its warehouse operations in Lakeland and plans to expand stores in Orlando and Southeast Florida. “Our sales growth this year will be greater in Florida,” he forecasts.
Sales this year are running 25% ahead of last year at Clive Daniel Home in Naples, says Daniel Lubner, president and CEO of the upscale furniture retailer. Clive Daniel posted revenues of $24 million in 2012, its first full year of operations.
Clive Daniel Home is scouting sites for future expansion on both coasts of Florida. “We're doing due diligence on two different locations right now,” says Lubner. “It's fun to see where the market is going again.”
The growth isn't limited to residential real estate. “The hospitality business is absolutely exploding,” says Lubner, whose company, Lubner Group, offers design and furniture to resorts, hotels, timeshares and clubs. For example, Allied Capital & Development of South Florida recently selected Lubner Group to furnish the 179-room Wyndham Grand Hotel to be built next year in Jupiter.
While Lubner says the hospitality business represented only about 5% of total sales last year, he expects that to grow significantly as hotels and clubs compete for customers after putting off renovations during the downturn. “It's created a domino effect,” he says.