DALLAS, Texas — Every employee, from factory worker to president, enters through the front lobby of the American Leather headquarters each morning, starting his or her workday with a striking visual reminder of the company’s current and future upholstery offerings.
Merchandised in showroom-worthy vignettes, the lobby area features a mix of upcoming introductions and current bestsellers, from a deconstructed prototype for a modern lift chair to the latest upholstery designs coming to market showrooms. According to company officials, the equal opportunity entrance is a high-impact space, but also a fitting backdrop for future growth strategies.
“A brand evolution is under way for American Leather, and our goal is to show our current and future customers how the company is transforming for a new era, from product to packaging to communication,” said Veronica Schnitzius, president. “We’re investing in the brand and our infrastructure and standing on the shoulders of a successful legacy that continues to grow.”
Product development and more
As part of the new strategy at American Leather, Schnitzius and the team are focused on telling a brand story that merges quality, product development, and lifestyle. In addition to the company’s new generation of Comfort Sleepers, the Comfort Relax group is a key offering for buyers, along with 10 new collections that provide a variety of styles, and the lift chair designed to look like contemporary seating.
“Yes, we are an upholstery resource, but we’re also a lifestyle brand,” Schnitzius said. “We looked at our line and asked ourselves what we needed to complete the room in a home, and we approached product development from that angle. Now, our expanded upholstery line answers that question.”
One of American Leather’s latest introductions is the Waverly chair, a stationary chair that showcases a sculptural, curvaceous silhouette and signature fabrics. A departure from some of the more commonly recognized American Leather aesthetics, Waverly merges comfort and form with modular capabilities that allow the piece to be adapted for a variety of interior spaces, another nod to the brand evolution.
“Throughout the line, we’ve elevated our fabrics, created smaller scale options and incorporated more natural wood finishes,” Schnitzius said. “We now have transitional to modern, and we feel the expansion of styles will appeal to both designers and retailers, allowing us to grow our customer base along with the product line.”
American Leather is one of four companies under the Artisant Lane parent company umbrella and is a sister company to Lee Industries, Brookline Furniture and BenchMade Modern. Originally purchased by Capital Partners (now Heartwood Partners) in 2012, American Leather was transitioned by founders Bob Duncan and Sanjay Chandra, who started the company in 1990 and remain investors today.
According to Artisant Lane CEO Brian Golden, the parent company name recognizes that each of the four brands carries a unique design ethos and bespoke product range.
“We are enthusiastic about our upcoming market introductions, both with American Leather and Lee,” he said. “For both brands, this will be one of the largest introductions over the past five years. At the fall market, we also will unveil our newly renovated American Leather showroom that coincides with the evolution of the AL brand.”
Golden added that American Leather emerged from the pandemic as a stronger company, noting that the flexibility of operating as a made-to-order business with U.S.-based production enabled American Leather to manage inventory levels as demand softened and avoid oversupply issues that other companies faced.
“If we look back at 2019, everything has changed,” Golden said. “Customers were sourcing product a certain way, and then all of a sudden all retail shut down. Everyone was wondering was there going to be any business, and then of course, there was an explosion of business. Our supply chain team did a terrific job anticipating our demand and ensuring we kept our lead times low but our inventories in check.”
The business strategies implemented by the team during the industry’s pandemic pivot allowed American Leather to start planning for future growth and expansion during a time when many manufacturers were struggling, according to Golden.
“We are in a very healthy cash position today,” he said. “In our facilities, we have been aggressively implementing processes and investing in technology which has helped our operations teams return to best-in-class lead times well ahead of the industry. In 2023, we spent more than $5 million in upgrading our facilities and have invested heavily in building our team, with many key new hires.”
The role of private equity in home furnishings
When asked about the strength of furniture manufacturers and the role of private equity ownership, Golden said that he is not convinced that the financial structure of a business dictates whether it is going to be successful or not.
“Over the course of my career, I’ve been fortunate to work with family-run entities, publicly traded companies and PE-backed organizations, and each company had its unique operational style, but these variances stemmed more from leadership style, strategic execution, and customer engagement than financial structuring,” he said. “The scale and complexity of the business certainly contributes to its operational nuances. Ultimately, you need to be differentiated or be the low-cost producer or you are going to struggle in the tough times.”
Golden said he believes private equity has a “definite role” in the home furnishings sector, noting that many “enduring brands have thrived” under the financial model. He noted that private equity is simply a means of financing that enables business owners to transition or exit their enterprises and that, in a “fragmented industry with many family-owned entities,” private equity offers liquidity and widens the market for business owners without a defined successor.
“There also seems to be a misconception as to how PE-backed firms operate,” he said. “At Artisant Lane, our businesses are operated day-to-day by people with deep furniture experience. Veronica Schnitzius started 21 years ago in an engineering role and worked her way through American Leather operations. Russell Towner is president of Lee and Brookline and has spent his career in the furniture industry, including roles as president of Baker Furniture and Thomas Alexander. Dan Campbell is the president of BenchMade Modern and started his career as an architect, before transitioning into the furniture industry, including 17 years with Holly Hunt.
“We have a very healthy relationship with our PE sponsor, but they don’t run the business,” continued Golden. “They do provide good counsel and a broad perspective that comes from being out of the day-to-day business and seeing trends across multiple industry sectors. As board members, they are involved in strategic investments in the business, budgeting, and will be involved in recruiting if it involves a member of the executive team.”
Looking ahead to 2024 and beyond
As the American Leather team continues its brand evolution journey and the home furnishings industry continues to define its new normal, Golden says the one certainty going into 2024 is that there will never be a return to pre-pandemic strategies.
“For now, it appears that we have returned to a more traditional seasonal demand curve, at pre-pandemic levels, but a significant realization is that companies have evolved during the pandemic, with some emerging more resilient than others,” he said. “And our customers have evolved, too. Our dealers went through the same roller-coaster ride as manufacturers and had to adapt their business models to capitalize on the market conditions. All of us are trying to understand the dynamics of our end users and how to help them through the buying journey.
“For me the biggest challenge and opportunity is to recognize this change, and to ensure that we are not running the same playbook as we did in 2019,” Golden concluded. “We need to develop better tools to tell our story and new ways to connect with customers. We need to continue to build a culture of flexibility and adaptability throughout our business and in our operations. And it is critical that our team has the tools they need to deliver an excellent customer experience.”