Friday, February 06, 2009
One more thing: I'm starting to get seriously worried about DWR. Their 10-K annual report doesn't come out until next week, but I think it's a safe assumption that it'll be bleak. They were down to $5 million in cash and around $11 million on their credit line as of their last quarterly report, and that was before the full brunt of the economic crisis hit (only about two weeks of the post-collapse quarter were included in it). Earlier this week, their market cap dipped as low as $6 million -- and keep in mind that this is a chain with nearly 70 stores that had close to $200 million in 2007 annual revenue.
They did, however, release a semi-cryptic press announcement this week that they'd engaged an investment bank to seek out "strategic alternatives" for the company. These include "a possible sale, merger, strategic partnership or refinancing." I can't imagine who they could merge or partner with, unless it's one of the bigger manufacturers they carry; refinancing will be difficult in this climate, and that's putting it lightly; and anyone buying the company, even at a price on par with a single Fifth Avenue co-op, will have to put up with years of unavoidable, and unknowable, losses.
Bear in mind, however, that the problems afflicting DWR -- and, to be fair, the furniture industry as a whole -- aren't really relative to my own business. The difference between DWR's wares and mine, as I'm sure I've mentioned before, is their status as collectibles with bona fide resale value. A '50s- or '60s-vintage Egg chair will fetch roughly $6,000 to $9,000 at auction, or more like $12,000 to $15,000 if it's mint-condition original leather. As I've already stated, the market for 20th-century design classics remains solid, so these price levels are still being realized. A brand-new 2009 DWR Egg chair costs about the same as a vintage one at auction, but it'd be worthless at any halfway decent auction house because they flat-out don't deal in repros. You might see one on eBay, but it'll sell for a fraction of its original purchase price.
Anyway, DWR may be my primary competitor -- and even more so now that we're migrating into selling newly made, design-driven furniture -- but it would be a sad day for the world of design if they, God forbid, went under. While DWR has made plenty of mistakes (selling unauthorized repros, for one) and oftentimes strayed from their original philosophy of bringing design within reach of the average consumer -- the aforementioned $15,000 Egg chair being a perfect case in point, but the euro's rise vis-a-vis the dollar has played a large factor in all of this as well -- they indeed succeeded in making licensed mid-century classics readily available to mainstream buyers, and their newer original offerings have given Americans access to a level of moderately priced furniture design attainable through few other venues. The likes of Egg chairs won't disappear from America if DWR stops selling them, but you'll have to hunt one down through a Fritz Hansen dealer, a laborious process for the average consumer -- who might not even know who or what Fritz Hansen is. But all the new stuff exclusive to DWR? Adios.
They did, however, release a semi-cryptic press announcement this week that they'd engaged an investment bank to seek out "strategic alternatives" for the company. These include "a possible sale, merger, strategic partnership or refinancing." I can't imagine who they could merge or partner with, unless it's one of the bigger manufacturers they carry; refinancing will be difficult in this climate, and that's putting it lightly; and anyone buying the company, even at a price on par with a single Fifth Avenue co-op, will have to put up with years of unavoidable, and unknowable, losses.
Bear in mind, however, that the problems afflicting DWR -- and, to be fair, the furniture industry as a whole -- aren't really relative to my own business. The difference between DWR's wares and mine, as I'm sure I've mentioned before, is their status as collectibles with bona fide resale value. A '50s- or '60s-vintage Egg chair will fetch roughly $6,000 to $9,000 at auction, or more like $12,000 to $15,000 if it's mint-condition original leather. As I've already stated, the market for 20th-century design classics remains solid, so these price levels are still being realized. A brand-new 2009 DWR Egg chair costs about the same as a vintage one at auction, but it'd be worthless at any halfway decent auction house because they flat-out don't deal in repros. You might see one on eBay, but it'll sell for a fraction of its original purchase price.
Anyway, DWR may be my primary competitor -- and even more so now that we're migrating into selling newly made, design-driven furniture -- but it would be a sad day for the world of design if they, God forbid, went under. While DWR has made plenty of mistakes (selling unauthorized repros, for one) and oftentimes strayed from their original philosophy of bringing design within reach of the average consumer -- the aforementioned $15,000 Egg chair being a perfect case in point, but the euro's rise vis-a-vis the dollar has played a large factor in all of this as well -- they indeed succeeded in making licensed mid-century classics readily available to mainstream buyers, and their newer original offerings have given Americans access to a level of moderately priced furniture design attainable through few other venues. The likes of Egg chairs won't disappear from America if DWR stops selling them, but you'll have to hunt one down through a Fritz Hansen dealer, a laborious process for the average consumer -- who might not even know who or what Fritz Hansen is. But all the new stuff exclusive to DWR? Adios.
It's been a rough couple of weeks in kirkerland. My inherent klutziness struck again last weekend, when I tripped and landed torso-down on a concrete floor, breaking three ribs in the process. For the past week my mornings have consisted of waking up with a pain level that can be accurately described as debilitating, scarfing down two Vicoprofen (the ibuprofen version of Vicodin) and another 2-4 regular ibuprofen (on doctor's orders, that is), going back to bed for at least an hour until it all kicks in, and then fighting the side effects of the Vicoprofen -- scatterbrained thoughts and sleepiness, specifically -- the rest of the day. I consequently ended up taking pretty much the whole week off of work, but weekends are nearly always my shift (and a solo one at that), so I will have to suck it up tomorrow and Sunday and head in.
Things are progressing nicely in regards to the subjects discussed in my last blog, which I'm still not at much liberty to discuss. My landlord's on board with my subdivision project, and I'm about to ask my architect to get the ball rolling by developing a basic floorplan sketch. From there we'll need to secure an OK from the city on two fronts: building permits and approval for a slight deviation of the city code that dictates permitted uses of retail space in the 2nd St District. After that I need approval from a state organization I can't mention without giving my plan away. Then after *that* we can start building.
And speaking of building, La Condesa next door is, at long last, nearly finished, and it's looking quite spectacular (at least from the outside; while Stephani's gotten an interior tour, I haven't as of yet, at least not since last fall when the project was far less complete). We've already seen an increase in foot traffic at the gallery now that the temporary fence La Condesa put up during construction, which blocked about 75% of it most days and 100% of it on a few of them, has been dismantled. I'm considering the idea of keeping the gallery open later at night, now that we have such an inevitably high-profile neighbor and a probable significant increase in evening foot traffic. I'm definitely leaving more lights on at night, so passers-by can get a better view of our wares.
Things are progressing nicely in regards to the subjects discussed in my last blog, which I'm still not at much liberty to discuss. My landlord's on board with my subdivision project, and I'm about to ask my architect to get the ball rolling by developing a basic floorplan sketch. From there we'll need to secure an OK from the city on two fronts: building permits and approval for a slight deviation of the city code that dictates permitted uses of retail space in the 2nd St District. After that I need approval from a state organization I can't mention without giving my plan away. Then after *that* we can start building.
And speaking of building, La Condesa next door is, at long last, nearly finished, and it's looking quite spectacular (at least from the outside; while Stephani's gotten an interior tour, I haven't as of yet, at least not since last fall when the project was far less complete). We've already seen an increase in foot traffic at the gallery now that the temporary fence La Condesa put up during construction, which blocked about 75% of it most days and 100% of it on a few of them, has been dismantled. I'm considering the idea of keeping the gallery open later at night, now that we have such an inevitably high-profile neighbor and a probable significant increase in evening foot traffic. I'm definitely leaving more lights on at night, so passers-by can get a better view of our wares.