New ownership breathes new life into Napa
Home Accents Today Staff -- Home Accents Today, November 24, 2011
AFTER A TUMULTUOUS summer that included a product recall, a bankruptcy protection filing and a court-supervised auction of company assets, Napa Home & Garden has landed on its feet.
It started in July when the U.S. Consumer Product Safety Commission, in cooperation with Napa, recalled approximately 460,000 units of Pourable Napafire and Firegel Gel Fuel bottles and jugs due to reports of gel-related burns. Napa CEO Jerry Cunningham filed for Chapter 11 bankruptcy protection soon thereafter, spurring the U.S. Bankruptcy Court for the Northern District of Georgia to schedule an auction for the sale of Napa's assets to the highest bidder. Tower Three Partners, a private equity firm that owns Teters Floral Products, proved the high bidder and purchased Napa's assets through Teters in early August.
That whole process took just two months because of Cunningham's decision to put Napa through a 363 Chapter 11 proceeding - the same procedure that General Motors used when it sold its assets two years ago.
"We were in and out of court in 60 days," Cunningham said. "That was the choice I made - to find a way to consummate the sale. I thought this was the way to stay in business, and fortunately, it worked out."
According to Cunningham, Tower Three pursued Napa to diversify Teters, a 57-yearold permanent floral and decorative accessories provider that specializes in the mass market. Cunningham said Napa's specialty channel-distribution proficiency and product development expertise, as well as the company's strong brand identity were some of the primary factors that drew Tower Three's interest.
Although Napa is now a division of Teters Floral, founders Jerry and KC Cunningham will continue directing operations, and the company will still take orders and ship from the Napa facility in Duluth, Ga. Napa will also continue operating showrooms in Atlanta, Denver, High Point and Los Angeles, with additional plans to expand its space in Dallas and relocate its Las Vegas showroom. Napa's independent sales rep staff of more than 75 will remain intact.
"As a result of the sale, we have downsized somewhat, but all the key ingredients are still there," Cunningham said. "Down the road, there could be some consolidations or synergies, but at this point, everything is still here."
Now that it has become a division of Teters Floral, Napa is already realizing new opportunities.
One of Cunningham's new responsibilities is working closely with Creative Connection, a brand first launched by Teters two years ago to specifically target the specialty channel. Cunningham is being called upon to manage most of the distribution for Creative Connection and sees the interplay between the Teters, Creative Connection and Napa brands as a "good, better, best" strategy, with the intention to position Napa as the higher-end brand, while Creative Connection remains more floral-oriented.
Creative Connection - whose product development team is headed by the recently hired Robert Jones - will assist Napa in developing high-end floral and seasonal products, which will help Napa reach a broader market, Cunningham said.
Randy Ouzts, a garden accessories designer whose work is licensed by Napa, affirmed Cunningham's vision of the new product avenues the company will be able to explore.
"(Tower Three) sounds like a strong company," Ouzts said. "They can open doors in other areas that haven't been opened before - I think that's a big plus for Napa. I've just learned working with different places and people, (the product) has to look good and you have to be able to afford it. I think you're going to see (Napa) branch into some things that they become comfortable with, but they'll never go away from their style."
Cunningham also expects Napa's inventory to improve as a result of having the financial backing of a private equity firm with deep pockets.
"One of the things that Tower Three brings to us that will make Napa a stronger company is that we have always struggled with our fill rate," Cunningham said. "We are growing rapidly, and we never have had as much capital as we wanted for inventory, but we now have a very strong financial background, so we expect to improve our fill rate."
Although Napa's ownership has changed hands, Cunningham essentially describes the company as a bigger, better version of what it was before the sale.
"The message is that as a result of now being owned by a very strong private equity firm, we have greater operational and financial and product development resources than we had before, and we are going to be a stronger and better Napa than we were in the past," Cunningham said. "We are the same company we were before, but with more resources."