Friedman's Inc. - Morgan Schiff Acquires Friedman's

Morgan Schiff Acquires Friedman's

In a 1995 profile of Friedman's, Scott Thurston of the Atlanta Journal and Constitution described it as "no newcomer." Over the course of its first 70 years, he wrote, it had become a "quietly profitable family-run company" which by 1990 had 48 mostly mall-based stores. In the latter year New York investor Phillip Ean Cohen and his investment firm of Morgan Schiff & Co. formed a partnership and purchased Friedman's for $50 million from the Friedman family.

Morgan Schiff already owned a similar company, Crescent Jewelers of California, and perhaps its experience prepared it for the vicissitudes of the industry. Certainly its first two years as owner of Friedman's would have been disappointing to any owner lacking in a long view: "Initial results were dismal," wrote Thurston, "as the recession and buyouts drove Friedman's into the red in 1991 and 1992."

The turning point for the company came in 1993, when Morgan Schiff brought in Bradley Stinn as chief executive officer. Just 27 years old when he became a managing director for Morgan Schiff in 1986, Stinn had served as chief financial officer for Crescent Jewelers from 1990 to 1992. When he arrived in Savannah to take over Friedman's, he was only 33.

Stinn, in turn, attributed the company's turning point to a visit he made in 1992, when he was driving through south Georgia with Robert Morris, executive vice-president for store operations. On their way to Florida to visit Friedman's outlets there, they stopped at the coastal town of St. Mary's, a city with a mushrooming economy thanks to the flow of purchasing dollars from Navy personnel stationed at the nearby Kings Bay Submarine Support Base. Stopping at a strip mall with a Wal-Mart as its anchor store, Stinn offhandedly asked Morris, "Think you could do business with a store here?" Morris answered, "I could do business out of my trunk here." The rest, as Thurston reported, was company history: "Before leaving town they tracked down the shopping center's owner and signed a lease on the hood of his car. That episode—and the subsequent success of the St. Mary's store—′ompted Stinn to go full-bore with what he calls a 'Wal-Mart vapor trail' expansion strategy. So far, the results have been lustrous."