DENNIS SEID: Troubling news hits close to home

Dennis Seid

Dennis Seid

The future is uncertain for Furniture Brands International, the conglomerate that owns furniture companies Lane, Broyhill, Thomasville, Drexel Heritage, Maitland-Smith, Pearson, Henredon, Hickory Chair and Laneventure.

The St. Louis-based company hasn’t made money since 2006, and its sales since then have dropped by more than half. Once the largest furniture manufacturer and retailer in the country, it has slipped to third.

Its most recent financial performance was brutal: nearly a $41 million second-quarter loss, available cash of less than $10 million, debt of nearly $120 million.

Its market capitalization – the value of its stock determined by multiplying the number of shares by its trading price – is around $5 million.

When an industry analyst said the company’s bankruptcy filing was imminent, its future got clouded further.

Last week, Furniture Brands hired restructuring advisers and attorneys. The company has said it is looking at reducing costs, selling assets and other options. Filing for Chapter 11 bankruptcy protection could be one of them. That would allow it to restructure its debt, giving it time to temporarily hold off its long list of creditors.

Lane’s fate is tied to its parent company. And Lane has deep roots in Northeast Mississippi. Action Industries was founded in 1970 in Tupelo by Bo Bland and Mickey Holliman. The fast-growing motion furniture company caught the eye of Virginia-based Lane two years later, and later Action became Lane. Even today, people often call the company Action/Lane. Interco, which had a diverse portfolio including furniture and shoe companies, bought Lane in the mid-1980s.

Incidentally, Interco filed for Chapter 11 in 1991. It became Furniture Brands five years later.

Today, Lane has some 1,300 workers in Northeast Mississippi. Understandably, they and their families are worried. And as their friends, neighbors and fellow Northeast Mississippians, we should worry with and for them.

Will somebody come in and save the day?

Rumors are swirling that Chinese investor Shan Huei Kuo is making a play for some of Furniture Brands’ holdings, after having sold a significant portion of his stock. He held 12.8 percent of the company’s stock a month ago, but his stake now is less than 10 percent.

Perhaps a private equity firm might come in as well. Five years ago, Sun Capital Partners put three members on Furniture Brands’ board and had offered to buy the company. The deal was rejected.

Sun currently has furniture company Lexington Home Brands and mattress foam maker Sleep Innovations among its vast portfolio.

Perhaps Furniture Brands can revive itself. Whatever the case may be, we all have a stake in its future.

Contact Dennis Seid at (662) 678-1578 or dennis.seid@journalinc.com