TAMPA, Fla. — Ashley Home's acquisition of direct-to-consumer mattress specialist Resident Home creates a $2 billion bedding business that leverages the manufacturing and supply chain capabilities of one of the world's largest furniture and mattress manufacturing operations.
“We are very impressed with the Resident Home team. Their co-CEOs are best in class at what they do,” Ashley CEO Todd Wanek told Furniture Today in an exclusive interview. “Essentially, Ashley is a supply chain company. We just invested millions of dollars in a mattress manufacturing facility in Mississippi. We are vertically integrated, which includes our own foam injection operations. Also includes construction.
“Resident's ability to develop superior mattresses will complement our capabilities in supply chain and distribution. This is a great example of how two plus two equals four.”
Mr. Wanek and Resident co-CEO Eric Hutchinson told Furniture Today that the two companies have little overlap in their customer bases and that the combination will result in additive sales. Wanek said Ashley's 2022 bedding sales were about $1.1 billion, while Hutchinson expected Resident's 2023 bedding sales to be in the $900 million range.
Mr. Wanek said the “overwhelming majority” of Ashley's business is done through brick-and-mortar retail stores. Conversely, his 80% of Resident's business is direct-to-consumer, and only 20% of his business is delivered through retail stores.
“We've been focused on omnichannel execution since our inception and were one of the first companies (as a direct-to-consumer mattress company) to start retail,” Hutchinson said. “We believe we need to be in front of consumers, wherever they shop. The convergence of direct-to-consumer and retail allows us to continue to grow year after year. .Retail sales continue to grow at a very fast pace.”
Ashley has built the furniture and mattress business to industry-leading levels through manufacturing efficiencies and the ability to serve retailers through a GMROI distribution model. This model, supported by a trucking fleet of the nation's largest manufacturers, allows retailers to order smaller quantities of a myriad of furniture and bedding products for reduced inventory and more frequent delivery.
This distribution capability and Ashley's manufacturing efficiencies are expected to support Resident's marketing and product development to accelerate growth in the increasingly competitive mattress space.
Over the past four years, Ashley has returned an increasing percentage of its mattress manufacturing operations to the United States in response to the imposition of major anti-dumping duties by the U.S. Department of Commerce; most notably, Ashley previously Vietnam was focused on manufacturing. Last week, similar tariffs were imposed on a wide range of mattress exporting countries, further boosting the push for land-based mattress production.
After the transaction is completed
Following the closing of the acquisition on March 6, Ashley will leverage its experience and expertise to strengthen Resident's domestic manufacturing operations in Jeffersonville, Indiana.
Wanek and Hutchinson both indicated that Resident would retain its existing management and staff and continue to operate as an independent entity. Resident employs approximately 560 people at its corporate headquarters, manufacturing facilities and international call centers. Ashly currently employs over 30,000 people worldwide.
Hutchinson stressed that it's “business as usual” for Resident's customers, who will continue to place orders, receive items and be billed as normal through the company's systems and personnel.
The acquisition marks a departure from Ashley's historical organic growth model. The company acquired the Berkline/Benchcraft product line out of bankruptcy in 2011 for $6.07 million, but this was more of a brand acquisition than an ongoing business acquisition.
Ron Wanek, Ashley's chairman and founder, said the move does not signal a change in strategic focus, but cited the cultural fit between the two companies.
“We are excited about this acquisition,” he told Furniture Today. “Resident has a great culture and many of the same characteristics that have helped propel Ashley forward. I think Ashley’s main mission has always been to grow organically, but we have a strong desire to change that. I don't think anything like that will happen soon.”
“We're always looking at every opportunity that presents itself in the market,” added Todd Wanek. “It's a great fit. The two organizations work well together.”
Hutchinson agreed, saying, “We've had a number of opportunities to sell businesses, but this is an opportunity to leverage the strengths of both companies to create something special.”
