The Business For nearly a century, this family-owned business has served the interior-fashion needs of the well-heeled (mostly summer) residents of Down East Maine. The store, open year-round, derives 70% of revenues from the in-house manufacture of custom window treatments and from furniture reupholstery. Sales of carpeting, wallpaper, shades, and blinds make up the balance. There's a staff of five employees and a seasonal part-time seamstress. The owner, a great-grandson of the founder, is selling in order to pursue a different business in Hawaii.
Financial Summary 1993 1994 1995Gross revenues $605,400 $696,500 $760,000Recast earnings before $202,400 $255,300 $278,900depreciation, interest, taxes, and owner compensation
Outlook Like Home Depot, this business is poised to capitalize on the "cocooning" phenomenon of the 1990s, which dictates that staying in is in. Americans bought $13 billion worth of draperies, curtains, upholstery, and flooring in 1994, up $1 billion from 1993. This business's revenues have doubled since it moved to an expanded, higher-traffic location, in 1987 -- and that's without the benefit of a brochure or direct-mail program. Currently 70% of sales come from repeat customers; a new owner could expand that base with the addition of a commissioned salesperson and promotional options like mailers, or by offering interior-decorating classes.
Price Rationale The price includes $50,000 of working capital and approximately $50,000 worth of fabric samples, furniture, fixtures, and equipment (including a networked order-tracking system and two company vans). That leaves $550,000 worth of intangibles -- such as a 90-year successful track record, a solid reputation with 1,200 clients and 100 fabric houses, historical gross earnings that are right in line with industry averages, and at least 10 years of lease protection. Experts say the price looks more than reasonable, given that earnings multiples of five are not uncommon. What's more, the owner is willing to finance up to $550,000 over seven years.
Pros A seasonal clientele of blue bloods who'd rather be caught dead than drab. As one local put it, "Honey, we've got the Rockefellers, we've got the Astors. There's a stretch of 100 homes in Northeast Harbor worth $5 million each." These people can't afford not to redecorate.
Cons These people can afford to bring their own interior decorators with them, and to buy furnishings in New York City, London, or Provence. -- Alessandra Bianchi* * *
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Frank Beane, Country Business Inc., at 207-236-4663. n