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DELAWARE, Ohio — American Freight Furniture & Mattress is about to get much bigger under its new owner.
Franchise Group, which completed its acquisition of the Top 100 company Feb. 14, is rebranding and converting another recent acquisition — Sears Outlet stores — to American Freight Appliance, Furniture, Mattress in a move that will bring American Freight’s store count to about 300 units from the current 172 stores.
In addition, Will Powell, who came to Franchise Group from the Sears Outlet side of the acquisition, has been named CEO of the umbrella American Freight operation. Previous CEO and American Freight founder Steve Belford is “stepping aside after 26 years” at the helm but will continue working with Powell and the owner as a strategic advisor, he said.
In October 2019, the former Sears Hometown and Outlet stores sold the Sears Hometown store side of the business to the current owner of Sears — Transformco. At the same time, it sold the Sears Outlet operations to publicly-held Liberty Tax, a Virginia Beach, Va.-based company that would go on to change its name to Franchise Group and broaden its business model to one focused on franchised and “franchisable” businesses.
Sears Outlet is a chain of 127 stores that generate the majority of sales from the appliance category — including deep value items, such as out-of-the-box merchandise and refurbished goods, as well as first-line goods, Powell told Furniture Today. The remainder comes from the furniture, mattresses, tools and lawn and garden segments, said Powell, who previously was CEO of the Outlet business and CEO of Sears Hometown and Outlet Stores prior the two-part transaction.
Now, under the rebranding, the Outlet stores will drop the smaller tools and lawn and garden categories to make room for a full assortment of American Freight’s promotional offering of furniture and mattresses and become a three-category store, Powell said. He declined to disclose key suppliers that will be moving into up by the Outlet locations.
Furniture Today has previously reported American Freight key vendors and brands include Albany, Peak Living (formerly American Furniture), Cramco, Corsicana, Crownmark, Delta, Elements International, North Carolina Upholstery, Simmons Beautyrest, Standard, Stylecraft and Worthington House.
He declined to disclose sales but said, “We expect exponential growth in the furniture and bedding categories given the strength of the American Freight brands.” Franchise Group will grand open the Sears Outlet stores as American Freight Appliance, Furniture, Mattress on April 23.
“We won’t have landed the entire assortment of furniture and mattresses yet, but we’ll have a good enough assortment to project the American Freight image,” he said, adding, “We hope everything will be fully landed by mid-July.”
Before this move, American Freight was No. 31 on Furniture Today’s most recent Top 100 with estimated 2018 furniture, bedding and accessory sales of $359 million at then 157 stores in 30 states. That was before an aggressive expansion plan kicked into gear last year.
Franchise Group announced its planned $450 million all-cash acquisition of American Freight from private equity owner The Jordan Group and senior management in December, noting its intent to franchise the business. (Powell said the company still intends to offer American Freight franchise opportunities to prospective buyers, but it’s too early to release details.) The American Freight purchase followed Franchise Group’s summer acquisition of both Sears Outlet and rent-to-own specialist Buddy’s Home Furnishings.
In a release announcing the completion of the American Freight deal, Franchise Group CEO and President Brian Kahn said the company has been “diligently planning for the combination of American Freight with our Sears Outlet business to create one strong national brand that combines unmatched cash-on-cash unit economics with stability throughout economic cycles. We expect to achieve significant economic and operational synergies over time.”
The merger and rebranding move create a roughly 300-store American Freight chain with surprisingly little overlap in market coverage, Powell said. While the two brands operate in several of the same markets, the store locations for the most part cover different territories within these markets so the merger essentially creates fill-in coverage under a single American Freight banner.
The Outlet and American Freight stores are a similar size, he said, averaging between 20,000 and 30,000 square feet. Combined, American Freight will soon operate in 40 states and Puerto Rico, and with the conversion its picking up some new territory, particularly in the West, where Sears Outlet operates stores in major metro markets in Nevada, California, Washington, Oregon and Idaho.
Former American Freight CEO Belford has been an industry veteran for nearly 40 years. That includes 26 years leading American Freight, a company he built from a $7,400 investment in 1994 to Top 100 status. Belfort has no formal business education but credits his brothers and an uncle who were also in the industry with guiding him on his furniture industry journey. He sold a majority stake to The Jordan Co. in Oct. 2014.
In an interview with Furniture Today, Belford said he couldn’t be happier with the direction American Freight is taking under Powell and Franchise Group’s leadership.
“It’s become so big, and we have such a great thing going here,” he said. “Everybody needs something to sit on, sleep on and eat on. American Freight is such a fantastic story, and with what they’re planning to do, it makes me feel good that people can actually own shares in it. This is exciting.”
