Hollander Seeks New Era of Growth
July 6, 2009,
When Jeff Hollander and Chris Baker first met for breakfast at New York's Essex House on Central Park South one Sunday morning late last January, both executives say they felt an immediate affinity about working together.
"We've got a great foundation, but quite frankly, after my father [Leo] passed away, and even while he was sick, I got to a point where I was 'farming' and not 'hunting' anymore," said Hollander in a joint interview with Baker near the company's headquarters here. "We were doing well but we needed to get out and continue to revolutionize some of the businesses we were in."
By any yardstick, this is a seminal moment for Hollander Home Fashions. Fifty-six years after its founding and now in its third generation of family ownership and management, and like everyone else, dealing with the throes of a recession and shrinking retail universe, Jeff Hollander is acutely aware that he must find new ways to re-ignite the company's growth. The developing strategy to accomplish that will involve both organic growth and acquisitions, in or out of the home textiles category.
The company is currently considering a venture into outdoor furniture and is also laying out plans to become more aggressive in natural fills for its utility bedding business, among others.
"I recognized that I needed someone to come in and be more aggressive," Hollander said. "I felt we needed someone at the top who was a little more of a hunter. I could see what we wanted, but I was farming a little too much."
It's a tricky proposition. Hollander had sales last year of about $254 million, according to HTT estimates, down nearly 14% from 2007. While that hit was less than many other larger companies in the industry experienced during the downturn, Hollander also was still recovering from the sudden death in 2005 of Leo Hollander, thrusting the younger Hollander onto center stage. Throughout, however, the company has maintained its reputation for sharp operational management and logistics, as well as its laser-like focus on product development and management.
Hollander was a family company, and Baker would become the first outsider to step into the role of ceo — a position that was portrayed as being autonomous.
"Once I understood the company a little bit better, the financial wherewithal that it had, the management team that's in place, it really made it feel like there was a lot of potential," Baker said "Its recent success had been good, but there was a lot of potential and there would be very few constraints in place given how Jeff described the ceo's role. From a personal standpoint, Jeff was someone I could relate to."
Baker was closely familiar with Hollander, having competed against the company since the 1980s, and he was already familiar with many on the management staff. Jeff Hollander planned to transition to executive chairman, which would allow him to spend more time in other pursuits, such as a highly active private equity company in which he's a partner. From Hollander's perspective, Baker brought a broad industry background that spanned Pillowtex and WestPoint in a swath of disciplines: as a CPA in finance and auditing, global sourcing, manufacturing, sales and marketing.
"What I love is that in my other businesses, it all ends up coming back to Hollander," he said.
Hollander's other businesses mostly center around Laser Partners, his private equity firm, located just a few doors away from Hollander's offices here. It's one of the places Jeff Hollander goes to get out of the way or simply bear down on other projects.
Laser has interests in 11 businesses, in which it holds a majority stake in eight. They range from a popcorn firm, to a couple of recycling companies, to grandparents.com, a social networking and support Internet site. There's also a consulting arm, one of whose clients is a Fortune 100 firm.
The eight general partners are also consultants for HHF.
"I like being well-rounded," Hollander said. "I don't see myself as ever getting to less than half my time at Hollander, but I enjoy working with those portfolio companies as well."
The developing structure is intended to give Baker day-to-day autonomy to run Hollander, and it's a system both men have agreed has exceeded their expectations.
Job one for Baker? "What are our opportunities, and let's aggressively pursue maximizing our opportunities in product innovation and packaging," Baker said. "We want to expand our market share across the board, particularly in natural products. I do think it would enhance the value we bring, which would manifest itself in higher margins or make it less about price. But quite frankly the logic behind it is about adding choice and obtaining market share, rather than trying to protect a price or a margin."
The underlying strategy involves exploiting businesses that leverage Hollander's strengths in assembling, finishing and distributing products "that make sense."
"Let's be realistic, what's the difference if you're filling a comforter, a pillow or a furniture cushion? It's still a filled product, and we understand [that business]," Hollander said.
The company is currently looking at the potential for outdoor furniture cushions and has already expanded the scope of its Laura Ashley license to that category.
There's nothing imminent on the buy-side, but Hollander is currently working on lining up the financing it would need to fuel those purchases.
"We're not buying Springs or WestPoint, but we want to do things at are manageable and make sense," Hollander said "There are a lot of companies that are very vulnerable because they don't have strong foundations and they don't have good financing. And vulnerable competition isn't good because they do things that aren't good for business."
It's worth it if the company can add value, save some jobs and cut SG&A, Hollander said.
"I have a philosophy that every company is the world is 18–24 months away from functional bankruptcy if they don't change because if they don't change, the rest of the world is going to pass them up" he said. "And I never want to be in that position. I want to stay hungry to make sure we don't have to worry about our future."