by When no column idea tickles the little gray cells, my pro move is to hit the research databases and shake a few trees to see what falls out. I vary my search terms and then start jumping into rabbit holes. When there’s no wind, start rowing, right?
So, rather than a tightly themed bi-weekly column with a side order of apt metaphors, this week’s dish is a bit of a charcuterie board, a varietal spread of bite-sized news briefs. So, grab a toothpick and dig in.
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My first stop on the database safari not surprisingly included Conn’s, Badcock and the Franchise Group. This turned up the update that Chandra Holt, for 14 months the CEO at Conn’s, has resurfaced. The amazingly clubby business network that connects B. Riley, the Franchise Group, Badcock and Authentic Brands has taken care of its own once again: Holt has been named CEO of Bed Bath & Beyond.
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Readers might recall that after filing Chapter 11, Bed Bath & Beyond turned to B. Riley Retail Solutions to liquidate and start shutting down stores. B. Riley Securities, a subsidiary of B. Riley Financial, was sole bookrunner on an underwritten public offering of Bed Bath & Beyond convertible preferred stock and warrants about a year ago.
Before joining Conn’s, Holt had senior management positions at Walmart and Target.
Golden parachutes
Speaking of Conn’s (and of being taken care of), according to an 8-K SEC filing last month, Conn’s and its CEO, Norman Miller, have agreed to a compensation package for Miller that includes provisions for severance. According to the filing, Miller’s base salary is set at $1 million in a package that includes an annual bonus, long-term incentives in the form of restricted stock, performance-based incentives also in restricted stock, and professional fees, among other benefits.
A similar compensation package for Miller was worth more than $10.2 million for fiscal 2018, according to SEC filings.
Under the terms of the new severance agreement, if Miller is terminated for any reason, Conn’s will pay him earned but unpaid base salary, annual incentive plan bonus not yet paid, accrued but unpaid vacation and unused sick days, and reimbursement of any unpaid business expenses. If Miller is terminated other than for cause as defined in the agreement, or as a result of his death or disability, or should he resign for good reason as defined in agreement, he will be entitled to 24 months of base salary; a pro-rated annual cash bonus based on performance targets; and 24 months of the monthly premium necessary to continue group medical, dental, life, disability and other employee welfare benefit plans.
If only United Furniture employees had had this sort of golden parachute.
Miller was first appointed president and CEO in 2015 and chairman of the board in May 2016.
The same filing served notice that Timothy Santo, interim chief financial officer at Conn’s, had been promoted to permanent CFO as of Feb. 15. Santo had been interim since November last year after joining the chain in April as vice president and chief accounting officer.
It was a good week on the NASDAQ for Conn’s, which since Dec. 31 has seen its market cap increase $16.9 million to reach $124.5 million. On Feb. 16, Conn’s stock finished at $5.07 per share; on Dec. 31, the price was $4.44.
The good numbers make Conn’s the 28th largest retailer by market cap on the NASDAQ.
No gambling in this casino
Coincident with all the good news over at Conn’s was the dissemination of a press release by B. Riley affirming that the company “acted properly with regard to the management-led buyout” of Franchise Group and that B. Riley execs had “no involvement or knowledge of alleged Prophecy [Asset Management] misconduct.”
Four months ago, the SEC charged John Hughes, president and chief compliance officer of Prophecy Asset Management, for his involvement in a multiyear fraud that concealed losses of hundreds of millions of dollars from investors.
According to the release, after learning that Franchise Group CEO Brian Kahn had been named as an unindicted co-conspirator in the Prophecy scheme, the B. Riley board of directors audit committee retained outside counsel, Sullivan & Cromwell, to conduct an internal review of Kahn’s dealings with B. Riley.
Counsel spent nine weeks reviewing Kahn’s relationship with B. Riley, including all prior transactions, loans and underlying collateral. The review concluded that B. Riley and its executives, including Bryant Riley, “had no involvement with, or knowledge of, any of the alleged misconduct concerning Prophecy,” according to the B. Riley release.
The release also asserts that B. Riley Financial does not owe nor has it ever owed any debt to Kahn from the litigation involving Rent-A-Center, that there was no “client revenue sharing agreement” with Kahn and that the transactions with Kahn and his companies “were on market terms.”
One thing is for certain, and that is that this saga isn’t over.
Buffalo builds
For one last bite from the cheese board, we go to Buffalo, New York, where the temperature right now is a balmy 43 degrees. The Buffalo News reported late last month that the Scherer & Sons Furniture building at 124 Genesee St. has been sold.
Founded in 1897, the five-generation Scherer & Sons Furniture has been conducting a going-out-of-business sale since early January. Owners Fred Scherer III, who is 90, and his son, Jim Scherer, have sold the four-story landmark to developer Douglas Jemal, already a prominent name in downtown Buffalo real estate. Terms of the deal were not disclosed.
Scherer & Sons has long been known for its lineup of solid wood furniture, including Stickley, Kincaid, Howard Miller and Hekman.
“I love the building,” Jemal told the newspaper. “There’s historic significance. It’s got a lot of potential [and] it’s a gateway site on Genesee.”
Jemal said his plan for the building calls for a combination of retail and residential in a development plan that is estimated to cost about $20 million to build out.
“Our family has poured heart and soul into this business, and we’re immensely grateful for the unwavering support of our community for an amazing 127 years,” Jim Scherer said in the statement last month that announced the store’s closing. He and his son say they plan to retire once the business has been completely shut down.
We wish the Scherers a wonderful next chapter in retirement, and we lament the loss of yet another storied furniture retailer from yet another of the country’s downtown districts. The shuttering of a five-generation mainline furniture retailer is like a giant flare illuminating where the furniture industry is headed, punctuating with a shock how far it’s wandered from where it had intended to go.
We need Bob Dylan to help us out here:
As the present now
Will later be past
The order is rapidly fadin’
And the first one now
Will later be last
For the times they are a-changin’
