05 May 2010

"Business doctor" to resuscitate Living Edge

Herman Miller calls in "business doctor" to resuscitate struggling designer furniture dealer Living Edge.

Herman Miller has called in a "business doctor" to resuscitate struggling designer furniture dealer Living Edge, which it acquired this week for $5 million.

Dan King, a senior member of Herman Miller's US team, will oversee Living Edge's existing leadership staff in a bid to overhaul the ailing business after it was placed into receivership last month.

Around 45 of the 75 staff have been retained, with the emphasis on customer facing and order fulfilment staff.

While the acquisition of Living Edge was made in almost record speed, an expansion into the Australian market has long been on the boards at Herman Miller. Vice President of Herman Miller Asia Pacific, Jeremy Hocking, told indesignlive.com that the design firm started a trading entity in Australia nine months ago.

"We have been thinking about increasing our presence in Australia for some time now," Hocking said. "Projects that were deferred are starting to be released and, economically, Australia is doing better than many other countries.

“This is a significant year for us in terms of product launches and, while we regret the circumstances behind the acquisition of Living Edge, it is important for us to secure our channel.”

Ultimately, Living Edge could be returned to an independent distribution channel, once what Hocking calls the "stabilise and turnaround phase" is complete. "For the moment, the business is a subsidiary of Herman Miller Australia, but we are setting it on a path to growth so that it can become independent in due course. Herman Miller does not generally own its dealers and believes in independent distribution."

"Our focus first is on winning back customer confidence. Specifiers can rely upon products being delivered," he said.

The Living Edge portfolio will undergo an "in-depth review" that could include some additions. As to whether the collection will see any losses, Hocking said that it will ultimately come down to discussions with individual suppliers.

Peter Stronach, Principal at Allen Jack + Cottier, said that the bailout was a "happy outcome" for the design industry. "Without Living Edge, we wouldn't be able to specify Herman Miller in Australia. And if we were to lose the presence of Herman Miller it would be an enormous tragedy. They are one of the greatest designers."

Stronach, whose Twilight Series yacht was sponsored by Living Edge and is currently owed $10,000 in lost support, blamed the company's decline on its quick expansion into regional areas.

Herman Miller has confirmed that Sydney and Melbourne branches will remain open but it is yet to verify the status of the regional showrooms in Perth, Darwin, Canberra, Brisbane and Adelaide.

Joint Receiver and Manager Keith Crawford, of McGrathNicol, said: “Both parties worked constructively to conclude this sale as quickly as possible to best preserve business value and to minimise interruption for customers and other stakeholders”.

Herman Miller reported revenue in excess of $1.6 billion in the fiscal year 2009 and trades on the NASDAQ Global Select Market under the symbol MLHR.