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Ashley, Resident CEOs reveal strategy behind mega deal

Ashley, Resident CEOs reveal strategy behind mega dealTAMPA, Fla. — Ashley Home’s acquisition of D2C mattress specialist Resident Home creates a combined $2 billion bedding business that will leverage the manufacturing and supply chain capabilities of one of largest furniture and mattress manufacturing operations in world.  

Todd Wanek - 2024
Todd Wanek

“We’ve been 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. “At its core, Ashley is a supply chain company. We just invested millions in our mattress manufacturing facilities in Mississippi. We are vertically integrated, and that includes building our own foam pouring operations.

“Resident’s capability to develop great mattresses will complement our capabilities in supply chain and distribution. This is a great example of two plus two equals four.” 

Wanek and Resident co-CEO Eric Hutchinson told Furniture Today that the two companies have little overlap in customer base, enabling the combination to be additive in terms of combined sales. Ashley had 2022 bedding sales of approximately $1.1 billion, according to Wanek, while Hutchinson pegged Resident’s 2023 bedding sales in the $900 million range. 

The “overwhelming majority” of Ashley’s business is through brick-and-mortar retail stores, according to Wanek. Conversely, 80% of Resident’s business is direct-to-consumer with only 20% coming through retail stores.  

Eric Hutchinson

“We’ve been committed to an omnichannel execution since our founding, and we were among the first (D2C mattress companies) to begin going through retail,” Hutchinson said. “We believe you must be in front of the consumer wherever they shop, and our blend of direct-to-consumer and retail will allow us to continue to grow each year. Retail sales continue to grow at a very fast clip.” 

For its part Ashley has built its furniture and mattress business to industry-leading levels through its manufacturing efficiencies and its ability to serve retailers through its GMROI distribution model. This model, supported by one of the largest manufacturer trucking fleets in the country, enables retailers to carry less inventory and order smaller quantities of myriad furniture and bedding products for more frequent delivery.  

That distribution capability coupled with Ashley’s manufacturing efficiencies are expected to support Resident’s marketing and product development to deliver accelerated growth in an increasingly competitive mattress sector.  

Over the past four years, Ashley has brought an increasing proportion of its mattress manufacturing operations back to the U.S. in response to the U.S. Department of Commerce imposition of large-scale antidumping duties, most notably on Vietnam where Ashley previously focused its mattress manufacturing. Last week, comparable duties were placed on a wide range of mattress exporting countries, further strengthening the impetus to onshore mattress production.  

After the deal is closed

Following the close of the acquisition March 6, Ashley will look to utilize its experience and expertise to strengthen Resident’s domestic manufacturing operations in Jeffersonville, Ind.  

Both Wanek and Hutchinson indicated that Resident would continue to operate as a standalone entity, retaining its existing management and staffing. Resident employs about 560 employees at its headquarters, manufacturing facility and overseas call center. Ashely currently employs more than 30,000 people worldwide.  

Hutchinson stressed that it would be “business as usual” for Resident’s customers, who will continue to place orders, receive goods and invoice as usual through its systems and personnel.  

The acquisition represents a departure from Ashley’s historic organic growth model. While the company acquired the Berkline/Benchcraft line for $6.07 million out of bankruptcy in 2011, that was a brand buy rather than an acquisition of an ongoing business.  

Ron Wanek, Ashley chairman and founder, cited the cultural fit between the two companies while noting that this latest move did not signal a strategic shift of focus.

Ron Wanek, 2024
Ron Wanek

“I’m excited about this acquisition,” he told Furniture Today. “Resident has an outstanding culture and many of the same characteristics that have helped propel Ashley. I think Ashley’s main mission has always been to grow organically, and I don’t see anything on the horizon that would change that.” 

“We’re always looking at every opportunity that comes up in the market,” added Todd Wanek. “This one is just a good fit; the two organizations fit well together.”  

Hutchinson echoed that, noting, “We’ve had a number of opportunities to sell the business in the past, but this is an opportunity to leverage the best of both companies to create something special.” 

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