Possible Sale for Design Within Reach

Furniture Merchant Design Within Reach announced Feb. 2 it has hired investment banking firm Thomas Weisel Partners to help it review strategic alternatives. The firm will provide advice related to an unsolicited offer recently received by Design Within Reach.

Founded in 1998, San Francisco-based Design Within Reach includes its catalog, a Website, 68 retail Studios and two DWR: Tools for Living stores in the U.S. and Canada. Stuart Rose, managing director with investment firm Tully & Holland, notes that Design Within Reach sells modern furniture and some classic designs at expensive prices.

“While the market has been growing, it is not large,” Rose says. “Several competitors also entered the field [such as West Elm, CB2], and while different, they’re not as sophisticated and probably reach a larger audience. The housing crisis was just the nail in the coffin.”

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Possible Sale for Design Within Reach

Furniture merchant Design Within Reach announced Feb. 2 it has hired investment banking firm Thomas Weisel Partners to help it review strategic alternatives. The firm will provide advice related to an unsolicited offer recently received by Design Within Reach.

“We have decided to evaluate alternatives that will best serve the interest of all of our shareholders given our depressed share price,” Design Within Reach CEO Ray Brunner said in a statement. “The Board has appointed a committee of independent directors to work with TWP to allow our management team to focus on day-to-day operations.”

The committee will review and consider possible alternatives, including a possible sale, merger, strategic partnership or refinancing. Officials for Design Within Reach say they currently have no commitments or agreements regarding any particular transaction and the review may not result in any transaction.

Founded in 1998, San Francisco-based Design Within Reach specializes in modern designs for the home. In addition to its catalog and Website, the company operates 68 retail Studios and two DWR: Tools for Living stores in the U.S. and Canada. The company’s fourth quarter financial results won’t be released until next month, but its third quarter numbers were unimpressive: Third-quarter direct sales fell nearly 27%, to $8.7 million, compared to $11.8 million for the same period last year.

For the 13-week period ended Sept. 27, net sales decreased 13.7%, to $42.3 million, down from $49.0 million a year ago. Design Within Reach’s net loss for the third quarter was $5.6 million, compared to net income of $2.4 million in the same period last year.

Lee Helman, managing director with investment bank Financo, says the key reasons Design Within Reach finds itself in this predicament are price points, the housing slump and rapid over-expansion.

Stuart Rose, managing director with investment firm Tully & Holland, contends that the company was hurting before the real estate crash, “but that was another deep blow.” Design Within Reach sells modern furniture and some classic designs at expensive prices, he notes.

“There is a limited market of those interested in this approach, and while the market has been growing, it is not large,” Rose adds. “Several competitors also entered the field (such as West Elm, CB2) and while different, they’re not as sophisticated and probably reach a larger audience. The housing crisis was just the nail in the coffin.”

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