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Domain Home Files Chapter 11
January 19, 2008

Domain Home, started by Judy George in 1985, was one of the top 100 furniture retailers in the U.S., filed for Chapter 11 bankruptcy on Friday.  What went wrong to the The upscale 27-store retailer?  My guess, DEBT!
 


Domain Home was acquired from UK firm Aga Foodservice Group by George (10%), Synergy Enterprises LLC (majority stake) and Golden Acquisition LLC, a private equity firm that will focus on investing in, acquiring and growing strong retail and consumer brands. The firm is owned by a major hedge fund. Aga Foodservice Group retained a 15% interest.

The acquirers were filled with great promise for the business.  George’s words were echoed by her partners, when she said

“This partnership with Synergy represents an excellent opportunity for us to refocus on our core business and our mission of becoming the retail destination of choice for discriminating consumers who appreciate a designer touch.

As we have already seen, the upscale home furnishings category continues to be a niche market with enormous potential, and we have a range of initiatives under way to further capture our share of this market, as well as expand into new markets we are not currently serving.”

When you step out on the end of the limb where even little birdies can't stand, you have subjected yourself to the whim of a stiff breeze. I am surprised that these great minds with all their experience didn't see that.

We have seen the same thing in our business by our move to larger quarters.  Our floor space doubled as we increased rent 50%.  The whole move has increased our “nut”.   It can get real scary fast, if you miscalculate.

These are not times to be heavily in debt.  With recession looming, the housing market down in many areas and unemployment rising, debt needs to be paid down FAST.  That should be our first priority to get through some tough times ahead.  Unfortunately, for many, that advice is coming too late.

Thoughts?  Email them to me at landfair3554@comcast.net

Posted by Mike Landfair on January 19, 2008 | Comments (0)