Utah Furniture Dealer Enlists Aid of Turnaround Fi

Salt Lake City, UT, Dec. 13--Jim Taggart figured well-known Utah retailer Granite Furniture Co. was facing major problems when he got a call from Roger Richards, the grandson of its founder. After all, companies call Taggart, president of corporate turnaround firm Renaissance Management Partners LLC, when they are in bad shape and don't know what to do, according to the Salt Lake Tribune. "But this was worse than I ever dreamed," he said. In fact, a severe cash flow problem had led to creditor disgruntlement that eventually could have led the 93-year-old company to bankruptcy. Within a week, Taggart was devising ways to increase cash flow and get suppliers paid. By June, he had been appointed chief restructuring officer and was spearheading the sale of some of the company's assets to raise cash as well as working to reduce employment to 180, down from 270 workers. By August, he was interim chief executive. By November, he was preparing to close the company's Orem store, one of four Granite operates. "The company had been going downhill for some time," said Taggart, who lives in Cody, WY, but works nationwide. "I'm not sure they realized how bad the situation really was." Granite was founded in 1910 by a group of Utah businesspeople. W.B. Richards, who worked as a contractor on the construction of Granite's original store, wanted to get into the furniture business and bought out the company's partners in 1920. Roger Richards, grandson of W.B. Richards, said he realized several years ago the company was underperforming its competitors, but after the terrorist attacks of Sept. 11, 2001, and the subsequent nationwide economic downturn, the company took a deeper turn for the worse. He said family members couldn't agree on what to do--if anything--until they called Taggart and asked him for help. For the most part, they have agreed to let him initiate some of the painful decisions that had to be made, such as the layoffs and the closure of the Orem store. The pain also hits close to home: Roger Richard's father, John Richards Sr., resigned Aug. 1. "Change is hard," Roger Richards said. "A lot of businesses see what has to be done but the decisions are so hard they shy away from them. But at some point, you need to stand up and say, 'This is what needs to be done.'" Taggart believes Granite's problems were centered on its business strategy. For years, it has tried to follow the highly successful business model of RC Willey, the 800-pound gorilla of furniture and electronics retailing in Utah. RC Willey built an empire on extending credit terms to people who buy its merchandise. RC Willey, which like Granite is a longtime Utah company, was acquired in 1995 by Berkshire Hathaway, a company run by legendary investor Warren Buffet, giving it resources no other competitors could match. But Bill Child, who led RC Willey for a number of years before the purchase, said even before he turned his company over to Buffet, he had been relentlessly focused on remaining competitive and adapting to industry changes. "Granite hasn't changed [over time], that's been one of its problems," Child said. "If you don't change and improve over time, you'll be left behind. It's a very competitive business." Granite was in the business of providing credit as well until Taggart decided that was one money-losing aspect of the business. Rather than reorganize Granite's credit underwriting department, he did away with it. The company still offers customers financing, but like other national furniture and electronics retailers, it offers that financing through third parties. Ron Hilton, vice president of marketing for Furniture Warehouse in Salt Lake City, said underwriting customer credit purchases is tricky. For that reason, the company has never tried to underwrite its own financing.

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