retail | Apr 22, 2020 |
One Kings Lane’s new owner is collecting distressed home furnishing brands
Boh staff
By Staff

Last week, in a conference call with investors, Bed Bath & Beyond CEO Mark Tritton announced that the megaretailer had sold One Kings Lane, but he declined to disclose a buyer and a price. Today, one of those mysteries has been solved. The online retailer of high-end home goods is now owned by CSC Generation, a Merrillville, Indiana-based technology platform and holding company that has snapped up brands like Z Gallerie and DirectBuy out of bankruptcy in recent years.

CSC Generation was founded as a joint venture between entrepreneur Justin Yoshimura and Chinese private equity firm China Science & Merchants Investment Management Group in 2016. (The company has since raised new rounds of capital from the likes of Altos Ventures and Panasonic; China Science now has a minority stake.) The company has become the home for several beleaguered home furnishings properties; in addition to DirectBuy, Z Gallerie and now One Kings Lane, CSC owns the intellectual property of the department store Bon-Ton.

The company’s mission statement is a lofty one: “Saving retail by leveraging our proprietary tech and operating expertise,” reads the CSC Generation homepage. “Since our founding in 2016, we’ve kept several historic brands from liquidating, saving over 800 jobs in the process.” In its timeline, it notes that it acquired DirectBuy out of bankruptcy in 2017 “to build [the company’s] home goods platform with the thesis of acquiring Z Gallerie, Pier 1 and Kirkland’s.”

Though the company has not yet purchased Pier 1 or Kirkland’s, both have been openly struggling for years. In February, Pier 1 filed for bankruptcy; earlier this month, Bloomberg reported that the company had received a bid from CSC Generation that would shutter more than 800 of its 900-plus stores. The retailer’s bankruptcy process is currently on pause due to the coronavirus.

After two years under the new ownership, DirectBuy in turn acquired home goods retailer Z Gallerie for $20.3 million through a bankruptcy auction in July 2019. According to HFN, the company announced that it would continue operating at least 32 of Z Gallerie’s retail locations. In addition to the brand’s existing retail business, DirectBuy reportedly saw an opportunity to promote its own products and services in the retailer’s network of stores.

The bankruptcy documents for both DirectBuy and Z Gallerie show companies with devoted followings that failed to sufficiently invest in e-commerce. But by January 2020, Yoshimura reported that the company was once again on an upswing, with more than $250 million in revenue—up from $137 million in 2017. Much of the growth was attributed to the Z Gallerie acquisition, which exceeded the store’s expansion goals much more quickly and effectively than the company’s original plans to buy up smaller independent operators.

“We realized, in terms of recognizable brands, that DirectBuy, from a consumer brand perspective, doesn’t have the brand awareness that a Z Gallerie has,” Yoshimura told Furniture Today in January. “We’ve tested different things, and we’re much better off offering DirectBuy services at Z Gallerie instead of having DirectBuy with other [retail brands] in it.”

Yoshimura was clearly already eyeing the acquisition of One Kings Lane in January too. Though he declined to name the retailer, he hinted at another purchase—one with fewer stores than Z Gallerie, but a much larger digital business. “Pretty soon we will actually be one of the largest furniture and home furnishings companies based on digital sales,” he said at the time.

One Kings Lane, founded in 2009 by Susan Feldman and Alison Pincus as a flash sale site, has grown over the years into a full-fledged furniture and home accessories company with a mix of proprietary collections, collaborations and one-of-a-kind finds. Its approach has been to blend product from the world of high-end design (companies like Aero Studios, Visual Comfort, Aerin and Bunny Williams Home all sell through the site) with a distinctly editorial approach to merchandising. In recent years, the company had been taking steps to bulk up its physical retail presence, including the opening last year of a 3,500-square-foot showroom in Boston and a Manhattan store in SoHo in 2018.

In 2014, One Kings Lane raised funds on a valuation of $1 billion. Two years later, however, Bed Bath & Beyond acquired the company in a cash deal for an amount the retailer described as “non material.”

One Kings Lane confirmed that the sale to CSC Generation was finalized last week. “We are excited about this major step in driving the next phase of growth for our brand and look forward to keeping in touch with relevant updates in the coming weeks,” the company said in a statement.

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