| Type | Public (NYSE: FBN) |
|---|---|
| Industry | Home Furnishings |
| Headquarters | St. Louis, Missouri |
| Key people | Ralph P. Scozzafava, Chairman & CEO |
| Products | Furniture Home Accessories |
| Revenue | $1.743 billion (2008) |
| Website | Furniturebrands.com |
Furniture Brands International, Inc. is a St. Louis, Missouri-based holding company in the home furnishing industry. Some of the brands it owns in the furniture industry include Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Hickory Chair, Pearson, Laneventure, and Maitland-Smith.
The company began in 1911 as International Shoe Company with the merger of Roberts, Johnson & Rand Shoe Company and Peters Shoe Company. In 1966 the company changed its name to Interco as the result of diversification, and once the company exited the shoe business, adopted its current name.
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At age 16 in the 1870s, Henry W. Peters went to work for Claflin, Allen & Company, at a time when St. Louis, Missouri had wholesale distributors of shoes rather than manufacturers. As Peters moved up in the company, the city's production of shoes increased from a half-million in 1883 to nine times that, and Claflin, Allen & Company was one of the largest shoe makers. Peters became president and then left in 1891 to form his own company, Peters Shoe Company, with help from relatives. Peters Shoe Company started with $200,000 in capital and almost doubled in size in its first decade, requiring a move from 7th Street and Washington Avenue to a larger building at 11th Street and Washington. Isaac S. Taylor designed the eight-story headquarters built in 1901 at 13th Street and Washington, which was named to the National Register of Historic Places in 1984.[1]
Brothers Jack and Oscar Johnson, and their cousin Frank C. Rand, moved from Mississippi to Memphis, Tennessee in 1892 and started the Johnson, Carruthers & Rand Shoe Company. Henry O. Rand, father of Frank, and John C. Roberts were financial backers. In 1898, the Johnsons sold their company and moved to St. Louis to start Roberts, Johnson & Rand Shoe Company. Frank Rand, a graduate of Vanderbilt University, became a stock clerk and advanced to become vice-president.[2] A headquarters building went up at 15th Street and Washington in 1909.[1]
By 1905, St. Louis had moved from ninth to third in the country in shoe production. Peters Shoe Company had continued significant growth, and its products sold all over the United States and even in Mexico and Europe. The two largest shoe companies in the city, Roberts, Johnson & Rand and Peters Shoe Company, merged in 1911 to form International Shoe Company, but each company kept its own identity. Peters Shoe remained in its own building, with Weatherbird Shoes on display, until 1930, when the company moved into what had become the International Shoe Building. Washington Avenue became known as "Shoe Street U.S.A." because it "claimed more shoe trade than any other street in the world".[1]
Jackson Johnson became president of International Shoe Company, succeeded in 1915 by his brother Oscar, who died in 1916. Frank Rand took over as president. Jackson Johnson remained chairman until he died in 1929. The company became known for quality shoes at low to moderate prices. World War I resulted in significant demand for military footwear.[2]
International Shoe Company incorporated in Delaware March 16, 1921.[3] At the time the company had 32 factories in Missouri, Illinois and Kentucky and had just bought a tannery business, Kistler, Lesh & Co. Also that year, the company bought W.H. McElwaine Company of Boston, with about 5000 workers and numerous operations in New Hampshire. The company was doing well but was unionized, while International Shoe was not. A recession caused McElwaine to propose wage cuts, which caused United Shoe Workers to call for a strike. The sale, intended as a solution to this problem, resulted in a Federal Trade Commission challenge under the Clayton Antitrust Act. The Supreme Court ruled in 1930 that the merger could take place. Without a union, workers had to grudgingly accept the inevitable layoffs and wage reductions which kept the company profitable.
Frank Rand led International Shoe through a time of major growth and through the difficulties created by the Great Depression. With Jackson Johnson's death, Rand moved into the chairman's slot and served in that position until his death in 1949. William H. Moulton, who joined Roberts, Johnson & Rand in 1908, took over as president, serving until his 1939 retirement. International Shoe not only endured the Depression but thrived, due to lower prices increasing demand for shoes, and the lack of labor trouble. Eventually, most International Shoe plants organized because the New Deal outlawed the company's strategies to prevent unionization. The National Labor Relations Board had to act to allow workers in Hannibal, Missouri to organize. Byron Gray, an employee since 1909, became president in 1939.
World War II gave International Shoe a major opportunity, as it was the only shoe company large enough to bid for all the business of the U.S. Army. The company had 30,000 employees and became by far the U.S. government's largest supplier of footwear during the war, despite opposition by labor unions. Consumer demand also increased, and in 1944 International Shoe once again reached its 1929 production levels.
By 1950, International Shoe had the capability to make 70 million pairs of shoes a year; its businesses also included tanneries, rubber heels, cement, containers, and material for shoe linings. Rand's death the previous year began a change in the company's outlook as the Rand family influence began to decrease. Frank Rand's sons Edgar E. Rand and Henry H. Rand both served as president, but the company began a period of diversification due to the influence of Maurice R. Chambers even before he became president in 1962. Major acquisitions included high-end shoe maker Florsheim in 1952, Canada's largest shoe maker Savage Shoes, Ltd. in 1954, and Caribe Shoe Corporation of Puerto Rico in 1958. That last deal led to the closing of a plant in Chester, Illinois that had operated since 1916 and was making 5000 shoes a day. A retail division began in 1959, and International Shoe began buying companies in other countries and even in businesses other than shoes.[2]
International Shoe Company became Interco Inc. on March 1, 1966.[3] The new name reflected the company strategy of buying businesses in many different areas.Interco had three major divisions—apparel, footwear and retailing. From 1964 to 1978, the company bought 20 other manufacturers or retailers as well as Central Hardware. Under Chambers plants started closing and some shoes were imported from such places at Italy. Overall, by the mid-1970s, 44 percent of shoes in the U.S. came from other countries. But Chambers' strategies kept Interco sucsessful, reaching a billion dollars with consistent growth in sales and earnings. Chambers moved to the chairman's job in 1976, with William H. Edwards Jr. taking over as president, but continuing Chambers' policies.
In 1980, Interco added furniture as a major division.[2] That year the company bought Ethan Allen Inc. for $150 million.[4] Interco also took over Broyhill Furniture Industries, a North Carolina company that was the world's largest privately owned furniture maker. In 1987, under new president Harvey Saleigman, Interco bought Lane Company of Altavista, Virginia, which increased furniture and home furnishings to about one-third of Interco's total sales.
Also under Saligman, Interco bought Converse in 1986. Footwear and furniture were the company's most profitable areas, and the goal was to sell other businesses. Unfortunately, due to the costs of buying Converse and Lane, Interco itself appeared by this time to be a takeover target, more profitable as a group of separate companies to be sold than as a single unit. In 1988, Steven M. Rales and his brother Mitchell led a group that offered $2.47 billion, but that bid ran into trouble when the SEC charged Drexel Burnham Lambert with insider trading, making financing of the bid more difficult. Interco took on debt to discourage other offers, and the Rales group eventually backed off. But Interco could not make enough money by selling its unprofitable operations;[2] For example, selling Ethan Allen brought in $388 million rather than the expected $550 million. The company's debt had jumped from $300 million in 1988 to $2.6 billion in 1989, and operations were not producing enough income to cover the payments. On July 31, 1990, an agreement with creditors to extend loan maturities to 1997 was intended to avoid bankruptcy.[5]
In 1989, Richard Loynd, Converse's chairman and the leader of his company's buyout effort, became Interco president. Interco filed for Chapter 11 in January 1991 and sold all of its operations except Broyhill, Lane, Converse and Florsheim. Apollo Investment Fund, Ltd., led by Drexel Burnham Lambert's Leon Black, took a controlling interest in the reorganized Interco, which emerged from bankruptcy in August 1992. In 1994, Interco exited the shoe business, selling Converse and Florsheim.[2]
Armstrong World Industries sold Thomasville Furniture Industries to Interco in November 1995 in a $331 million deal. Interco had over $1 billion in revenues at the time.[6]
Interco became Furniture Brands International on March 1, 1996.[3] That same year, Mickey Holliman of the Action Industries subsidiary succeeded Loynd as president. Holliman had made his company into the leader in the motion furniture segment. His strategy of focusing on furniture proved successful, and by 1999 Furniture Brands International had fifteen straight quarters of increased earnings. Thomasville Furniture, the third manufacturer, and a deal with retailer Haverty's to devote significant space to Furniture Brands, contributed to the the company's positive outlook.
Despite a decline in the industry as a whole, Furniture Brands continued to be successful and expanded into retail.[2]