Chris Syllaba (left) and Ray Fugere, the new owners of Jordan Kitt's
JUNE 14 I JORDAN KITT'S I BY ZACH PHILLIPS
Jordan Kitt's Bought by Management Team
Two longtime Kitt's executives purchase the piano chain, aim to run it as a 'smaller, leaner company'
After months of industry rumors and speculation, piano retail chain Jordan Kitt's has finally changed hands.
On June 10, longtime Kitt's executives Chris Syllaba and Ray Fugere finalized the purchase of the company from late owner William McCormick's estate. Since McCormick's death in late 2007, Kitt's had been led by Rick Grant.
The 99-year-old piano dealership, previously headquartered in College Park, Md., will now be based in Rockville, Md., and Syllaba said he and Fugere will be running Kitt's as a "smaller, leaner company." The new operation will include four total retail stores, including Rockville and Fairfax, Va., locations and two Atlanta-area stores, along with two satellite teaching facilities. At the beginning of the year, Jordan Kitt's had 11 locations in five markets.
"It's very exciting, especially for both of us because we're veterans of the company," said Syllaba, who'd served as an executive vice president at Kitt's and is now president and CEO. "It's a great company. It's one of the oldest piano dealers in America. The other thing is that both of us basically mentored under Bill McCormick, who ran Jordan Kitt's from 1971 through 2007. He was a big part of what made the company great."
A Leaner Kitt's
But Kitt's began falling under hard times after McCormick's passing, which coincided with the piano market's decline.
"With the tough business climate and sales going down for the industry, the old company just couldn't shrink itself fast enough with the drop in business," Syllaba said.
In 2009, longtime Kitt's vendor Steinway cut off distribution to the company's Washington, D.C.-area stores. Last year, Kitt's closed its College Park headquarters.
"The great thing about the acquisition is that we don't take the bad stuff from Jordan Kitt's," Syllaba said. "We basically took the four big stores — the four really good, producing stores in two of the big markets."
The deal also included what Syllaba called a "significant amount" of sales being finalized at the time of the company purchase. "So, we're actually starting the company with a significant sales log."
He added that he and Fugere have kept "all of the really good managers and salespeople," many of which have been with the company for 25-plus years.
"We were actually able to keep all of the key talent. We took on the good store locations. We're keeping the Steinway Piano Gallery name in Atlanta. We've got some good systems in place in terms of financially running the company and reporting."
According to Syllaba, he and Fugere have cut corporate overhead by 75 percent. He said this will allow for making fast decisions, "which the old company could not" do.
"Basically, we can instantly restore the profitability to the company and solidify the business that we have currently in the stores."
The D.C.-area stores will remain Yamaha dealers, while the Atlanta locations will primarily sell Steinway.
Syllaba and Fugere engineered the buyout with their own equity money and the support of industry suppliers. (Syllaba credited GE Capital's Deb Barker, who starred in GE's Taylor Guitars TV commercial last year, for her advice.) That said, a little serendipity also came into play when they sought a local lender's help.
Syllaba explained how, while working at Kitt's Chicago-area stores, he was referred to a bank chairman in D.C. He filed the name away. When he and Fugere later sought a loan, they contacted the lender, who, coincidentally, had been William McCormick's personal banker.
"So I'd never met the guy, and he didn't know me," Syllaba said. "But he knew Mr. McCormick. He knew the Jordan Kitt's heritage. [He] was really excited that a 100-year-old company was going to be able to continue through the acquisition.
"It was such a coincidence that he had this connection. It's like six degrees of separation."
Being well-capitalized and coming to the lender with a solid business plan sealed the deal. Syllaba now owns 75 percent of Jordan Kitt's and Fugere 25 percent. (Fugere is the new CFO.)
The Mid-level Return
Still, it raises the question: Was Kitt's a risky purchase, seeing as the piano market has yet to rebound completely? To answer that, Syllaba referred to the company's recent promotion in Atlanta. Grand pianos ended up being the biggest seller during the event, and many of those grands were in the $15,000–$20,000 mid-price range, a market that's been hit especially hard since the recession. According to Syllaba, the company hadn't seen sales trends like that in "many years."
"I don't think we're out of the woods yet, but there's definitely improvement in the business climate — no question about it," he said.
"As the recession ended, the high-end was coming back first. It was kind of the middle that was non-existent. Even the low-end digital piano sales have increased in 10 years, but a lot of that is because people were buying a nice upright or even a baby grand. But now that [mid-level] business is starting to come back again."
In this climate, he and Fugere aim to start re-establishing Jordan Kitt's. The first step will be getting the sales force amped up about the new iteration of the company. "It's something that's been a long time coming, and everyone was really bogged down with the old company," Syllaba said. They also plan to send e-blasts to customers, educators, technicians and institutions about the buyout.
"Over the next few years there will be some growth opportunities," Syllaba said. "Right now, I think it's a matter of re-establishing ourselves in the community as the most venerable piano dealer in D.C. and Atlanta."
But Syllaba mentioned that the buyout wasn't just about business for him and Fugere.
"There's also a personal side to it," Syllaba said. "I reported directly to Bill McCormick starting in 1997. So I feel a personal gratification also that in his memory we can not only keep the company alive but really head out of the worst recession in history and come out kicking." MI