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RICHMOND, Va.-Heilig-Meyers' plan to sell its Rhodes division will return the retail chain to private control of management -- and Rhodes executives say they'll go back to the proven formula that made the company a success.

"We don't have any drastic plans to change right now," said Bill Kimbrell, president and chief executive officer of the 93-store Rhodes chain. "We're moving back to the upper-middle market," he added. "We're going to go forward as an aggressive, profitable furniture company."

Rhodes is concentrated in high-growth Southeastern markets, with about one-third of its stores in the Sun Belt states of Florida and Georgia.

Kimbrell was heading up Heilig-Meyers' Value House division when he came over to Rhodes in April. Other Rhodes management involved in the transaction reportedly include Joel Dugan, chief financial officer; Steve Hurwitz, senior vice president of marketing; Don Parker, senior vice president of merchandising; and Perry Biggs, senior vice president of operations. The management group is backed by Citicorp Venture Capital, according to published reports. Citicorp also has stakes in several other furniture retailers, Lifestyle Furnishings, HomeLife and Levitz among them.

Heilig-Meyers acquired Rhodes in 1996 and shifted Rhodes' focus to the middle of the market. In May 1998, the company repositioned Rhodes higher in the market, but quickly reversed that strategy when profits suffered. Bill DeRusha, chairman and CEO of Heilig-Meyers, said the Rhodes division "was more of a drain on our resources than we anticipated."

The Rhodes deal is valued at more than $110 million. Heilig-Meyers will receive $60 million in cash and a $40 million note. Heilig-Meyers has an option to acquire a 10 percent stake in the new company. The transaction comes less than a month after Heilig-Meyers sold a majority stake in Mattress Discounters to Bain Capital in a deal valued at $230 million.

The divestiture of Rhodes and Mattress Discounters comes as no surprise, since Heilig-Meyers had announced its intentions to sell some noncore assets in order to pay down debt. The sale of the two divisions reduces Heilig-Meyers' debt by more than 30 percent, according to the company.
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Author:Buchanan, Lee
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Geographic Code:1USA
Date:Jun 28, 1999
Previous Article:FURNITURE BRIEFS.

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