Design Within Reach, the retailer known for seducing American homeowners into an (expensive) love affair with European design, has attracted a new admirer. Herman Miller, the furniture manufacturer famous for designs like its iconic Eames chairs, announced last Thursday that it had acquired the once-troubled retailer for $154 million in cash and will be launching a new consumer business unit headed by Design Within Reach’s current leadership.
In announcing the move, Herman Miller CEO Brian Walker took pains to erase the history of pirated designs and management missteps that has haunted Design Within Reach. “We are acquiring a complete consumer-focused infrastructure and an experienced and committed leadership team and workforce that truly values Herman Miller’s design legacy,” Walker said in a statement. Back in 2009, Fast Company reported that at least a dozen Design Within Reach products, from lamps to sofas, were "unauthorized reproductions of a foreign design,". A spate of trademark infringement lawsuits ensued.
For Walker, expanding into the home furniture market via Design Within Reach’s footprint and ecommerce platform represents an opportunity to counteract Herman Miller's lackluster office furniture sales, which have mirrored the sluggish growth of the economy overall.
“The addition of DWR is a transformational step forward in realizing our strategy for diversified growth and establishing Herman Miller as a premier lifestyle brand,” he said.
For Design Within Reach, the deal offers a moment of redemption. Founded in 1998, the company grew rapidly in its early years as mid-20th century design came into fashion and buyers snapped up items like Arco floor lamps ($2,995) and round Saarinen dining tables (up to $8,383). When founder Rob Forbes took the company public in 2004, shares were trading at a valuation of $211 million on opening day--a rose-tinted 70 times its 2003 net earnings. But by 2009, overstretched and battling lawsuits amid an economic recession, Design Within Reach collapsed: The company delisted from Nasdaq and sold itself to hedge fund Glenhill Capital Management for $15 million, granting the firm a 92% stake.
Since then, the retailer has steadily brought itself back to life. It closed more than half of its stores, leaving just 38 locations, and shed its reputation as a copycat by settling suits and dropping contentious products. By last year it was profitable once again, with revenues of $218 million.
The acquisition comes amid widespread consolidation within the furniture industry. Earlier this summer Fab, the online retailer still grasping at a business model equal to its outsize ambitions, acquired the furniture company One Nordic. Back in February, the U.S. furniture company Haworth bought a $270 million majority stake in furniture group Poltrona Frau, which owns brands such as Alias and Cappellini. And last fall, Vitra acquired Artek. The mergers provide much-needed economies of scale in a traditionally low-margin industry that is struggling to think and operate globally.
[Image: Eames LCW via Flickr / Geraint Morgan]