industry insider | Aug 10, 2020 |
Kravet acquires Donghia in bankruptcy sale

Five months after Donghia abruptly shut down operations and declared bankruptcy, the storied brand is entering a new chapter, with a new owner. On Friday last week, Kravet Inc. was the winning bidder in the Chapter 7 auction of Donghia Inc.—a sale that includes the Donghia brand name, the company’s intellectual and digital property, and its designs, archives and inventory. The deal is expected to close by the end of the week.

“The Donghia brand is distinctive and enduring,” said Cary Kravet, president of Kravet Inc., in a statement. “It stands for the inherent beauty in clean lines and the appreciation for impeccable quality in materials and construction. The Donghia aesthetic and brand market position are fully complementary to our current brands and aesthetic positioning. The look and attitude is wholly additive for us.”

Kravet, which was founded in 1918, has periodically acquired heritage textiles brands throughout its recent history, including Lee Jofa in 1995, GP&J Baker in 2001, and Brunschwig & Fils in 2011. In a conversation with Business of Home, Cary Kravet explained that the Donghia aesthetic and position in the marketplace complement the company’s existing family of flagship brands. “We can leverage our existing showrooms, sales network, marketing talents, product development skills, industry knowledge, relationships, supply chain, warehousing and systems—we can integrate it very well, and yet it gives us something very different in product mix and relevance to the market,” he says. “It’s also a brand that we can become passionate about.”

According to Kravet, the hurdles to bringing a reimagined Donghia line to market are less about logistics and more about brand and product development. “Believe it or not, [the integration] is the easy part,” he says. “The hard part is the softer side—understanding what the brand is and where it should go. That takes a lot of thought, communication, research and understanding.” As a result, the relaunch will take time; Kravet says that the company’s first Donghia collection will likely focus on the brand’s most iconic patterns and pieces—a release that can be folded into existing showrooms while a more robust revamp is developed.

The Donghia brand, founded in 1968, was the brainchild and namesake of legendary designer Angelo Donghia. The company—which grew to include furniture and textiles, as well as a mini empire of multiline showrooms—continued after his death in 1985. In 2005, it was purchased by a consortium of companies led by Italian textile company Rubelli, which saw the brand as a clear path to showroom distribution throughout the United States.

Over time, the departure of many of the brands represented in the showroom took a toll on the bottom line; by late 2019, rumors were rampant that the company was struggling, and it was an open secret that it was being shopped around to potential buyers. After abruptly closing all nine of its showrooms and firing most of its staff in March, Donghia filed for Chapter 7 bankruptcy. (While a Chapter 11 bankruptcy focuses on reorganization, and therefore on continuity of some business operations throughout the proceedings, a Chapter 7 liquidates assets in order to pay as many creditors as possible.) According to documents filed in Connecticut District Court in April, the company estimated that it owed between $10 million and $50 million to more than 1,000 creditors, including design centers where it had operated showrooms and a long list of top interior designers. At the time of filing, Donghia valued its assets at between $1 million and $10 million.

Donghia produced fabric, wallcovering, floor covering, furniture, lighting and accessories—all product lines Kravet ultimately plans to develop and relaunch. The company also acquired Donghia’s archive, including some of its late founder’s sketches and original furniture prototypes, all of which will be folded into Kravet’s deep archive at its headquarters in Bethpage, New York, and which will inform the work of the product development team.

“We’ve been in this business for over a hundred years, and we really believe in this industry,” says Kravet. “There’s no real short-term advantage in this [acquisition]—it’s a long term strategy. This is part of our belief in the strength of this industry.”

Homepage photo: Pieces from the 2018–2019 Donghia furniture and lighting collections

Want to stay informed? Sign up for our newsletter, which recaps the week’s stories, and get in-depth industry news and analysis each quarter by subscribing to our print magazine. Join BOH Insider for discounts, workshops and access to special events such as the Future of Home conference.