Merger mania in RTA furniture: Bush's acquisition of Case/Casard positions firm for better penetration of upscale markets - ready to assemble furniture; Bush Industries Inc., Case/Casard Corp

Discount Store News, Sept 17, 1990 by Mary Ellen Kelly

Merger Mania in RTA Furniture

The proposed acquisition of Case/Casard by Bush Industries could signal the long-awaited acceptance of ready-to-assemble furniture as an upscale - and economical - alternative to case goods. Conversely, the purchase could lead to greater distribution of promotional case goods to discount stores through Casard's furniture networks.

The combined volume of the two companies will form one of the RTA furniture industry's largest suppliers, second only to Sauder.

Independently, both Bush and Case/Casard have made inroads into select segments of the traditional furniture market (Sears, Levitz and Bloomingdales); combined, the vendors could topple the barriers that have kept RTA confined to promotional alcoves. Their combined market penetration, if driven home with consumer advertising, could score more points for RTA's acceptance in mainstream America. At the same time, Bush's acquisition of Casard will also enable Bush to try its hand at case goods.

Bush's channels of distribution are strongest among electronics stores and office supply superstores, and is only one of two vendors selected to supply Sears (the other being Sauder). Casard, on the other hand, has been among the few RTA vendors to supply high-end department stores. The majority of the product that has made its way to department stores were case good pieces.

Paul Saperstein, president and ceo of Casard Furniture Manufacturing Co. - the corporate name of what is commonly referred to as Case/Casard - said he believes Bush wants to "be in all areas of the furniture business." Case was not up for sale when Bush approached executives regarding the purchase. Nonetheless, Saperstein is, "excited about challenges and opportunities" of a Bush and Casard team.

Saperstein acknowledged that there is an overlap in distribution between the two manufacturers in terms of retail outlets, but that the companies usually do not compete for floor space but instead sell different furniture pieces to the same retailer. Where duplication of product exists, one will discontinue production.

Casard's focus during the past two years had been on RTA, until the last furniture market in High Point, when the company introduced a dozen case good pieces including home office furniture, gun cabinet, entertainment center and other storage items priced from $180 to $260. During the time of the market (last April), the firm reported ". . . customers and our sales force are asking for case goods."

Bush's attempts to woo the case goods furniture retailer prompted the supplier to institute its "Furniture on the Move" merchandising program earlier this year. By integrating POP with modular display grids, the company estimated the program could boost dollars per square foot from $250 to $800, resulting in 8.5 turns to 10 turns per year.

There is reason to question, however, whether Bush is biting off more of the financial market than it can chew.

Pretax earnings for the first half of the year were $1 million compared with $2.9 million during the same period a year ago. Sales during the period slipped to $49.5 million, down 3.6 percent from $51.4 million during the first half of last year. Bush execs declined to discuss their decision to buy Casard until the definitive deal is signed by both firms.

The deal is the second of what could be a number of mergers during the next year or two as the RTA industry consolidates. Earlier this year, RTA vendor Charleswood was bought by Dorel Industries, a Canadian lifestyle and juvenile furniture manufacturer. Fournier purchased Easy Plan earlier this year as well, making it one of Canada's largest RTA suppliers.

Jeff Segel, vice president sales and marketing at Dorel, said he believes there "absolutely will be some other acquisitions, especially if there continues to be attrition or consolidation of retailers . . . Business is rough, there is no question about it."

Bush is a publicly held $100 million company based in Jamestown, N.Y., operating a 400,000-square-foot plant and two other plants plus a DC in Ashtabula, Ohio.

Case/Casard is based in High Point, N.C., and operates manufacturing facilities in Greensboro and Mebane, N.C. While the privately held vendor would not release its sales volume, it is estimated to be less than half that of Bush.

PHOTO : Dorel's purchase of Charleswood early this year signaled the start of the long-awaited consolidation among RTA manufacturers.

PHOTO : Overlap between Bush and Case/Casard products, may require one of the manufacturers to eliminate some items from their merchandise mix.