by Principals look to continue manufacturers’ legacy of building quality product while improving service
MEMPHIS, Tenn. — SouthWorth Capital Management’s investment in American Furniture Manufacturing and its subsidiaries represents an opportunity to grow the company from a position of strength, not weakness.
That was a key message from Jeff Presley, SouthWorth’s chairman and founder who spoke with Home News Now following the Jan. 19 announcement that the company was partnering with AFM and its leadership team on its path forward.
“The company has been brilliantly run,” Presley said. “They didn’t need me. The company was hugely successful.”
Still, he noted that SouthWorth believes “we can help support and grow this business. We made an investment in the management team, and if you look across the spectrum you have such incredibly talented people and not just from a management perspective, but the line people, everybody. … They are such a talented group of people.”
Having spoken with the company for the past two and a half years, Presley said the timing of the partnership coming to fruition is right as AFM will benefit from various assets in the SouthWorth portfolio.
These assets range from transportation and logistics services to advertising and marketing services the company can use as it continues to develop its product line across the stationary and motion upholstery segments offered by Peak Living and Delta Furniture Manufacturing. AFM’s other assets that are part of the deal are foam fabricator Independent Furniture Supply and fiber resource Southern Fibers.
Noting that there will be no noticeable change for AFM customers, other than improved service, Presley said that a key benefit will be the company’s ability to utilize SouthWorth’s extensive services.
“We just believe we will be able to help them use some of our tools that we have developed across the 94 other businesses we own,” he said. “That will help them grow faster and more efficiently.”
“If we can find ways to enhance the connection with their customer, whether it is improved logistics and shipping, or driving some costs out in terms of how packaging should be or putting together some advertising in association with some of the product we are developing for them and letting people lean on those resources, this is a great partnership,” he added.
With its logistics and transportation network in particular, SouthWorth will be able to provide AFM customers less-than-truckload shipping services it currently does not have, noted AFM President Chad Cunningham.
“AFM Holdings has been the strongest with bigger customers,” Cunningham said. “With the help of SouthWorth we are going to have more of a logistics arm, so our customers will be able to get smaller loads of furniture. These were great customers before, but you couldn’t do a truckload. We would struggle to get them deliveries. Now we are able to do that with less-than-truckload business. And there is a huge market for that.”
“So for us, the customer experience is only going to get better,” he added, noting that the net result is being able to deliver smaller shipments to those smaller customers. “There are just a lot of hurdles that we had in the past that weren’t easy for us to get over. … This puts us in a better position with our customers to be able to deliver a wide range of upholstery.”
He said this mix includes starting to midprice points in each line, with stationary sofas in the Peak Living line retailing from $499 to $699 and stationary sofas in the Delta line retailing from $399 to $599.
Partnering with SouthWorth, he added, also will help boost the business it does in bedding through the raw materials produced by Independent Furniture Supply.
“The bedding business for us is going to be a very exciting thing to watch over the next few years,” Cunningham added. “We have been playing in that area now for a few years, but it is really about to take off. We are excited for the opportunities for the bedding factories as well.”
Perhaps most importantly, he noted, AFM and SouthWorth share a similar culture as family-owned and -operated businesses that support their employees, customers and communities.
“We had been approached by other people to sell the company and we weren’t looking to sell the company,” Cunningham said, noting that it was extremely impressed with SouthWorth’s culture and level of professionalism.
“They are an incredible, family-run business that is community driven and charity driven,” he said. “They are just good people who have a bunch of companies. So by adding them to the team and being able to partner with them, we are just able to have the fuel to grow for future needs. I also think they fit our culture very well and have the same values.”
Presley agreed that the two company cultures will be a good fit, particularly as they face industry challenges and opportunities now and in the future.
“I don’t know of any industries that are simple,” he said. “Each of them brings their own set of challenges. What I do know is that if you face those challenges with people that you can count on and who have character that is unquestioned along with product that is good, then the challenge is not a matter of if, but when, we are successful.”
