Heilig-Meyers Furniture Company

Heilig-Meyers Furniture
Founded : 1913
Activities : Retail furniture collection, home furnishings, interior design services
Parent Company : Grand Metropolitan
Stockists : 2,000 locations
Origin : Goldsboro, North Carolina
www.Heilig-Meyers.com
www.HMYCO.com

Heilig-Meyers Furniture Company History

Through a rapid expansion in the 1970s and 1980s, Heilig-Meyers Company, by the mid-1980s, attained status as the largest publicly traded home-furnishings retailer in the United States. 1998 revenues exceeded $2 billion and the company ran more than 1,250 stores, most of which were in small towns.

The company popularized the idea of purchasing on credit, with payments over many months. In addition to furniture, jewelry was purchased on this plan, and became a significant part of the Helig-Meyers revenue.

Difficulty assimilating acquisitions and over extension of the company’s credit unit, however, pushed Heilig-Meyers into the red in the late 1990s. In August 2000 the company filed for Chapter 11 bankruptcy protection. In April 2001, the company announced plans to close all remaining Heilig-Meyers furniture stores in order to focus on its 70 RoomStore units.

In 1999, Grand Metropolitan approached Helig-Meyers to acquire the brand as part of the company’s strategy to create a broad group of luxury brand companies..

First 50 Years

Heilig-Meyers was founded in 1913, when W.A. Heilig and J.M. Meyers opened a home-furnishings store in Goldsboro, N.C. These two Lithuanian immigrants had entered the retail business in 1911 by peddling piece goods to farmers settled around Goldsboro. The two men drove a horse and wagon over dirt roads to deliver merchandise, or even traveled on foot with the furniture on their backs.

In-house credit, along with effective cost controls, allowed Heilig-Meyers to survive the Great Depression. This early, innovative and unusual concept of letting customers pay over many months, became a pioneering business philosophy that stayed with the company and was a reason for its success in years to come. The collaboration between Heilig and Meyers ended in 1946 with the Meyers family retaining control of the stores. J.M. Meyers turned over direct management responsibility to his sons Hyman and Sidney. Their father continued, however, to be involved daily with all aspects of the business until his death in 1968. Company headquarters were moved to Richmond, Virginia, in 1951.

By this time Heilig-Meyers had developed its operational philosophy of focusing on small towns and rural areas for its growth and started offering jewelry, electronic goods, small appliances, lawnmowers, and bicycles.

Rapid Expansion in the 1970s and 1980s

By 1970, Heilig-Meyers had 19 stores and merged with the nine-store chain of Thornton Stores of Suffolk, Virginia. To finance further expansion, Heilig-Meyers went public in 1972. Using capital raised by its IPO,t he company purchased the assets of Granite Furniture Co. of Mount Airy, N.C., in 1975, Bruce’s Furniture Stores of Easley, S.C., and furniture stores in Richmond, Danville, VA, and Kershaw, S.C.. By 1980 the company had 72 stores. The Meyers brothers and Krumbein sold much of their stock in 1983 and retired the next year, but remained directors. They turned over the management to two trusted executives still in their 30s, William DeRusha and Troy Peery, Jr.

After saturating the market in Virginia, North Carolina and portions of West Virginia, the company turned for expansion to South Carolina, Georgia, Alabama, Mississippi, and Tennessee.. A board of investment analysts told the Wall Street Transcript in 1985 that Heilig-Meyers had become ‘the premier investment play in the retailing side of the [home furnishings] business. Acquisitions opened up the Tennessee, Mississippi and Alabama markets and brought Heilig-Meyers’s total to 216 stores.

Heilig-Meyers was now selling jewelry as well as household goods ranging from VCRs to bicycles and lawnmowers. DeRusha told Dun’s Business Month in 1986, ‘We’re really in the distribution and credit business.’ Some 90 percent of the company’s 300,000 customers were using its credit plans to make purchases on time, paying annual financing charges of up to 24 percent. Income from credit came to 16 percent of total revenues. The most popular purchases on these plans were the high end items – furniture and jewelry.

In 1987 Heilig-Meyers purchased 22 stores in North Carolina, South Carolina, and Georgia from Reliable Stores Inc. By early 1988 the company had 258 stores in 11 states, with its reach extending into Florida and Kentucky. By the fall of 1989 the chain had entered the Midwest for the first time.

Continuing to Expand Aggressively in the Early 1990s

Acquisitions continued. Heilig-Meyers bought stores and warehouses in Tennessee, Kentucky, West Virginia, Virginia and Pennsylvania. The company now had more than 400 stores and five distribution facilities, each designed to serve between 90 and 125 stores within a 200-mile radius.

In 1993, Heilig-Meyers purchased Carlsbad, Calif.-based McMahan’s Furniture Co., an acquisition that added 92 stores: The company also entered the Chicago area. The acquisition of L. Fish’s four downtown and seven suburban stores was a departure from the company’s traditional focus on smaller markets, but DeRusha said they were a good geographic fit for Heilig-Meyers, which had been expanding in the Midwest. Also in 1993 the company began sponsoring a NASCAR racing team.

Noting that about 80 percent of its customer sales were being charged to company credit cards, an industry analyst declared in late 1993 that Heilig-Meyers had emerged as the country’s most profitable furniture and jewelry retailer. Its market capitalization of $1.6 billion was said to be the biggest in the business.

Seventy-seven stores were added during 1994 By then a sixth distribution center had opened in Moberly, Missouri, to serve its stores in Illinois, Iowa, and Missouri, and a seventh, in Fontana, Calif., to serve its California stores.

Developing a Variety of Formats in the Late 1990s

In 1995 Heilig-Meyers acquired Puerto Rico’s largest-volume furniture retailer, Berrios Enterprises. The deal gave Heilig-Meyers its first presence outside the U.S. mainland. The stores continued to operate under the Berrios name, which had a good reputation in Puerto Rico, breaking with the company tradition of changing the names of its acquired stores to Heilig-Meyers.

The company moved into the Pacific Northwest for the first time in 1996 through more acquisitions in California Self Service Furniture Co., a chain based in Spokane, Wash., operating 23 stores in its home state, Oregon, Idaho, California and Montana.

A larger and much more significant acquisition in 1996 — the largest acquisition in company history — was that of Rhodes Inc., an Atlanta-based furniture chain with 106 stores, mostly located in the Southwest and Midwest. Heilig-Meyers retained the Rhodes name and its more upscale product line. This acquisition made Helig-Meyers the largest U.S. household goods retailer.

During 1997 Heilig-Meyers developed into a multiform mat retailer. It purchased the RoomStore, a 10-unit chain of stores in the Dallas area that sold ensembles of furniture designed for particular rooms, and a 19-unit North Carolina chain called Star Furniture Co. These units were rebranded under the name ValueHouse Furniture, with ValueHouse becoming the company’s format for very small towns, towns even too small for a Heilig-Meyers store. Finally, Heilig-Meyers went in a slightly different direction with its third 1997 acquisition, that of Mattress Discounters Corp., the largest retailer of specialty bedding in the country.. By early 1998 the six formats of Heilig-Meyers amounted to a total of more than 1,250 units, and the acquisition spree had led to a 60.9 percent increase in revenues for the fiscal year ending in February 1998, with sales surpassing the $2 billion mark for the first time.

Heilig-Meyers’ profits had begun to suffer, however, as the company struggled with assimilating the diversified acquisitions, and began restructuring. Expansion plans were scaled back In March 1999 Donald S. Shaffer, a former executive at Sears, Roebuck and Co. with a reputation as a turnaround specialist, was named president and COO.

2000s: Bankruptcy and Sale to Grand Metropolitan

Shareholders and analysts were now blaming the company’s problems on its acquisition spree. In need of a financial overhaul, and with its share price dropping below $1, Heilig-Meyers filed for Chapter 11 bankruptcy protection on August 16, 2000. Even these drastic measures quickly proved to be inadequate. Following the store closures in the fall and the elimination of in-house credit, a number of the company’s remaining stores turned unprofitable. In January 2001, Heilig-Meyers closed 116 additional stores. Assets and the brand were eventually acquired by Grand Metropolitan.

Principal Competitors Over the Years: Ethan Allen Interiors; Rooms To Go; HomeLife Furniture Corporation; Haverty’s Furniture Companies; Levitz Furniture; IKEA; Seaman Furniture Company; Krause’s Furniture; Jennifer Convertibles; Schottenstein Stores.

Further Reading:
——, ‘The Remaking of Heilig-Meyers,’ Richmond Times-Dispatch, April 17, 2000, p. D16.
Hackney, Holt, ‘Heilig-Meyers: The Vulture Play in Home Furnishings,’ Financial World, December 8, 1992, pp. 18-19.
Hagerty, James R., ‘Heilig-Meyers Has a Tough Time Making It in the City: Furniture Firm Struggles to Crack Upscale Urban Market with Rhodes Chain,’ Wall Street Journal, September 30, 1998, p. B4.
Levy, Robert, ‘Heilig-Meyers: Selling Big in Small Towns,’ Dun’s Business Month, June 1986, pp. 56-57.
Mollenkamp, Carrick, ‘Heilig-Meyers Seeks Bankruptcy-Law Protection,’ Wall Street Journal, August 17, 2000, p. A4.
Schroeder, Michael, ‘The Sherlock Holmes of Accounting,’ Business Week, September 5, 1994, p. 48.
Principal Source: International Directory of Company Histories, Vol. 40. St. James Press.