Fortunoff, the famed furniture and jewelry seller, said Tuesday night it is selling a majority stake to two private investors, making it the latest in a long line of local retailers to give up its independence in an era of relentless competition, Newsday reports.
Trimaran Capital Partners and Kier Group, both based in Manhattan, will become Fortunoff’s partners, with Trimaran taking a larger stake, Louis Fortunoff, the company’s executive vice president, confirmed to the newspaper.
Fortunoff declined to discuss details of the deal, but a source close to the transaction reportedly said the buyers will pay about $250 million.
“This gives us the resources to become a regional and maybe national retailer,” Fortunoff told the newspaper.
The two sides of the Fortunoff family—the Fortunoffs and the Mayrocks, all descendants of founders Max and Clara Fortunoff—currently run the business and, until this deal, owned 100% of the company. When the sale is completed, the families are reportedly expected to still own as much as a quarter of the company. Fortunoff reportedly said that the family would retain “a meaningful interest” in the company.
Family leadership, if not ownership, was a central part of the discussions, Marshal Cohen, a close friend of the family and an analyst with Port Washington-based NPD Group, reportedly said.
“Their main thrust is they want it to remain a family project,” Cohen reporetdly. He added that Fortunoff had rejected suitors who were not prepared to respect the family’s desire to remain in control of day-to-day operations.
“There are going to be no immediate changes in the roles of the family members,” Louis Fortunoff reportedly said on Monday night. “You’ll see us in the stores as much as ever. We’re going to be no less hands-on.”
He also reportedly said that decision-making in the company will be a “collaborative process.”
He reportedly added, Trimaran has some ideas on where to make improvements.
Fortunoff did not deny that the investment could be a prelude to a possible public offering.
“It’s premature to discuss that,” he reportedly said. “We do think the Fortunoff name has viability in a much wider area than we’ve been in.”
“Department stores are a very long-term business. This is a slow, steady, stable growth that we’ve accomplished. It’s not like a Starbucks that you can put on every corner.”
The company boasts annual sales of more than $425 million and Fortunoff has said it is seeking more capital to finance its expansion plans. The company’s new generation of top executives, Louis Fortunoff and Isidore Mayrock, took over after Alan Fortunoff passed away in 2000.
They reportedly said they hope to open two new superstores in the next three years, and are looking at locations out of its New York-New Jersey base. Florida, Pennsylvania and Virginia have been reportedly mentioned as possible locations.
Fortunoff started with a single storefront in Brooklyn 82 years ago and grew to be a favorite destination for generations of Long Island and New York City shoppers. The shops—there are now four superstores, plus nine satellite stores offering selected categories of merchandise, including the Fifth Avenue jewelry store in Manhattan—won intense loyalty from customers, who came for the personal service and high-quality goods at discount prices.
Trimaran Capital Partners has made few forays into retail. In May, the firm invested $20 million into Urban Brands, the retail company that owns the Ashley Stewart chain of plus-sized clothing stores and Marianne, a chain of plus-sized stores in Puerto Rico.
But Trimaran’s primary investments are in utilities, health care, and media companies, including a stake in Village Voice Media, publisher of the New York City alternative weekly.
The Kier Group invests in lifestyle and luxury businesses, and has worked with Harry Winston, Things Remembered, and Fitz and Floyd.