by Brand has long contributed to the success of the retailer’s sales growth as furniture is the biggest-ticket item on the floor
COLUMBUS, Ohio — The latest speculation from Bloomberg regarding a potential bankruptcy filing at Big Lots leaves a burning question for the furniture industry: What will this mean for the venerable Broyhill brand , which the retailer purchased following the Heritage Home bankruptcy announced in July 2018 — moving forward?
Since then, the retailer has made the Broyhill brand even more consumer facing, not only with furniture and bedding, but also almost everything else you can imagine in household items ranging from outdoor umbrellas to pillows, rugs, hand towels, blankets and throws, candles, wall art, mirrors and more.
Say what you will about the idea of all these categories falling under the legendary Broyhill moniker. But the fact is, the strategy has introduced the Broyhill name to many more consumers and households than may have been previously imagined. And all without the consumer having to spend a lot of extra money for a sofa or sectional. (Editor’s note: Ironically, in our household, we have more Broyhill towels, washcloths and accent rugs than any other branded product, including furniture.)
But furniture, thanks in large part to the retailer’s wisdom in purchasing the Broyhill name, has been by far the largest single category in terms of revenues, representing 29% of sales in its first quarter. As we’ve reported previously, the category is followed by consumables (health, beauty and cosmetics, plastics, paper and cleaning supplies) at 17% of sales; seasonal at 16% of sales; soft home (linens including rugs, bedding, pillows, towels and other home textiles) at 15% of sales; and food at 14% of sales. Hard home (including small appliances, tabletop, food preparation, stationery, home maintenance, home organization and toys) is at 9% of sales.
The question about the future of the Broyhill brand comes in light of the impact the Conn’s bankruptcy has had on Badcock, with all stores in both companies slated to close. The irony is that Conn’s said that an overall 9.6% increase in retail revenues for its quarter ended Jan. 31 was primarily driven by Badcock revenues of $60.3 million, which was offset by a decrease in Conn’s same-store sales of 14.4%. So much for a retailer with a long history in the furniture industry being brought down through no obvious fault of its own.
It’s also safe to say that the Broyhill brand has contributed to the success of Big Lots not only following the acquisition of the brand, but during many years prior when it occupied a major part of its furniture selection.
What’s unknown at this point is what shape a Big Lots bankruptcy would take, either as a Chapter 11 reorganization or a Chapter 7 liquidation. Sources don’t necessarily believe the company would liquidate all its assets as in the case of Conn’s. But even in a liquidation, they believe the Broyhill name would be part of an asset purchase sale that could have it continuing under new ownership.
“The Broyhill brand almost seems to have done the best of the survivors,” said Jerry Epperson, a managing partner in Richmond, Virginia-based Mann, Armistead & Epperson. Epperson was of course referring to the major brands that fell by the wayside as part of the Heritage Home bankruptcy including Henredon and Drexel Heritage. “You have all these guys that were so important in their day. … You just can’t imagine a world without the Broyhill brand.”
That said, in a winding down of operations, the bankruptcy court would have to liquidate all assets, which Epperson said would likely result in a quick sale of the key assets “and Broyhill would probably be one of the biggest.”
Tim Stump, of Charlotte, North Carolina-based merger and acquisition specialist Stump and Co., said the first questions to consider are whether it would file and reorganize and still be in business or “are they going to file Chapter 7 and liquidate and go out of business.”
“That is the first fork in the road,” he said adding that he believes that Big Lots would reorganize versus liquidate given the size of the company — with “the debts restructured and the company continuing on in new form.”
But he said if the retailer were forced to liquidate it would be like other liquidations such as Mitchell Gold in which various assets were sold.
“They would sell off their inventory and close everything and then hire somebody to sell their intellectual property including the name Big Lots, including the name Broyhill,” he noted. “Somebody would try to pick that up and resurrect it.”
He said the same thing occurred when Heritage Home went bankrupt in that “somebody saw the value of the brand and they picked it up and resurrected it. And from everything I’ve read, it is doing well.”
He also agreed that the recognition of the brand has been extended in the marketplace through the other categories outside furniture.
“It shows the consumer knows the name and is trusting the name and that is good news.”
Epperson also believes the brand has grown in importance and will continue even in a liquidation of various assets depending on what type of bankruptcy might occur.
“It’s going to find a home,” Epperson added. “It’s just too big to be forgotten.”
