Tuesday, October 14, 2008

American Leather acquires John Charles Designs assets

DALLAS — Custom upholstery specialist American Leather is expanding its presence in fabric upholstery by acquiring the assets of California-based upholstery manufacturer John Charles Designs.

American Leather said it purchased the rights to John Charles' home furnishing designs, textile collection and marketing materials for an undisclosed sum.

John Charles Designs, a 31-year-old company known for its clean, contemporary designs and sumptuous fabric selection, was owned by the Genova family. Principals John Genova Sr., co-owner and founder, and Nancy Genova, co-owner and lead designer, and Vice President John Genova Jr. will be consultants to American Leather through 2009 to ensure a smooth transition.

John Charles Designs for American Leather will introduce 29 collections at next week's High Point Market in the American Leather showroom at Showplace, fifth floor.

The former John Charles Designs showroom in the PCH Building, 135 South Hamilton St. (of which the Genovas are part-owners) has been vacated.

Production of the John Charles line will shift to American Leather's 250,000-square-foot facility here, with shipments to begin in February.

American Leather CEO Bob Duncan said the acquisition will help the company "become an immediately recognizable player in fabric upholstery."

The new collection will include John Charles' bestselling designs offered in hundreds of fabric options, leather, Ultrasuede or COM. The collection will continue to expand into 2009.

"This represents the next step of our long-term strategy to expand into the fabric upholstery segment," Duncan said. "Between our hospitality division, and our residential and private label programs, fabric upholstery already represents approximately 30% of our volume."

American Leather's modern fabric-cutting system will allow it to handle matching and other techniques associated with fabric upholstery production, he said.

"This is a critical core competence that we have developed over the last five years," Duncan said, "We are excited to now expand this capability and become a full fabric upholstery resource."

Like American Leather's other products, the new fabric upholstery will ship in three weeks or less.

"This acquisition is a marriage of exceptional design with manufacturing excellence - allowing us to offer this one-of-a-kind collection to consumers with the speed, quality and reliability they have come to know with American Leather," said company President Bruce Birnbach.

John Genova Sr. said the transaction marks a turning point for both companies. He said it means John Charles Designs "can reach broader audiences with the speed-to-market that has been a key component of the American Leather brand."

While there is some customer overlap, Birnbach said, "The driving factor was not gaining distribution but to acquire a phenomenal-looking product with a great name well-known throughout the industry."

Birnbach said sales of the John Charles line will be handled by American Leather sales representatives and the new collection will be produced by a dedicated cell.

American Leather had started a fabric division called American Upholstery or AU in April 2004, but was phasing out that line before it acquired John Charles.

"It is hard enough to develop one brand, let alone two," Birnbach said. "We had begun consolidating AU into American Leather six months ago. This market is the culmination of the merging of the two lines."