Home Interiors & Gifts, Inc. - Company Profile, Information, Business Description, History, Background Information on Home Interiors & Gifts, Inc.

Company Perspectives:

No nation, family, or business can become great unless it has a great purpose--a power that energizes, inspires, and builds people! The purpose of the company's structure is to provide a channel--a means whereby salespeople might use their creative skills to find identity and fulfillment in the achievement of homes decorated with Attraction Power--that is dedicated to the best in life, all under the direction of Almighty God.

History of Home Interiors & Gifts, Inc.

Home Interiors & Gifts, Inc. is one of the nation's leading home decor companies selling through private, in-home parties. The company sells a line of modestly priced interior decorations, principally small accent pieces such as shelves, mirrors, plaques, sconces, and figurines. A sales force of some 70,000 independent contractors, mostly women working part time, sell Home Interiors & Gifts products to their friends and neighbors. Independent contractors, known in the company as displayers, collect a commission on their own sales and then collect a smaller percentage in commission on the sales of people they have recruited to the company. The corporate structure is similar to Mary Kay Cosmetics, Avon, Shaklee, and Amway. Home Interiors & Gifts maintains corporate headquarters in Carrollton, Texas, and operates one Dallas-area warehouse and distribution center. The company's sales are mostly in the United States, but in the late 1990s Home Interiors began pushing into international markets. It now has significant representation in Mexico and makes sales in Puerto Rico as well. The firm was founded by Mary C. Crowley and its chief executive is Crowley's grandson Donald J. (Joey) Carter, Jr. Home Interiors was recapitalized in 1998 by members of the founder's family and the buyout firm Hicks, Muse, Tate & Furst. Hicks, Muse owns about 75 percent of the company.

A Gift for Selling

Mary C. Crowley founded Home Interiors & Gifts after years of struggling to make ends meet as a single mother of two children. She was born in 1915 and grew up mainly on her grandparents' Missouri wheat farm after her mother died when Crowley was an infant. When Crowley was older she went back and forth between her grandparents' home and that of her father, who had remarried, but she was unhappy under the regime of her stepmother. She married in 1932, while she was still a teenager, and lived with her husband in Sherman, Texas. She bore a son, Don, the next year, and a daughter, Ruthie, in 1935. Crowley's marriage, however, was strained. By the time she was 21, Crowley had separated from her husband and was on her own financially. She had little formal education, but her determination more than made up for this disadvantage. Though unemployment was rampant in 1937, with the country still in the grip of the Great Depression, Crowley had to find a job. Venturing into downtown Sherman, she evaluated all the stores. She decided the most impressive one was a department store, so she went in and informed the manager that she had chosen his store to be her new employer. Evidently bowled over by the young woman's confidence, the manager agreed to give her a one-day trial. She quickly proved her knack for selling, convincing customers to pick up four-cent spools of thread to bring their purchases up to an even dollar amount so they would not have to wait for their change. Crowley outsold the store's veteran employees and was given a permanent position.

Crowley's earnings at the department store came to $7 a week, which rose to $8 whenever she won the weekly bonus for best sales record. Even by Depression standards this was barely enough to support herself and two children. She began attending evening classes at Southern Methodist University to learn accounting in order to qualify for a better job. In the early 1940s, she worked for an insurance company and then became the bookkeeper for a furniture store. Though she had an office job, Crowley still loved the sales floor. She got her exposure to home decorating at the furniture store, where she frequently quizzed customers on what accessories they might want to go with their new chairs and sofas. Around this time, she met Mary Kay Eckman, who went on to found Mary Kay Cosmetics Co. Eckman was working for a company called Stanley Home Products, and she recruited Crowley to join her. Stanley Home Products was one of several companies that followed in the wake of Tupperware in the 1940s and sold directly to customers through home parties. Crowley began selling furniture waxes and polishes for Stanley Home, and within five years she was the company's leading salesperson.

Crowley left Stanley Home Products in 1954 and began selling for a similar company called World Gift. World Gift specialized in accessories for the home, mostly decorative finishing touches such as shelves and candlesticks. Crowley worked for World Gift until 1957. By that time, she was a sales manager with 500 people working under her. She had become quite successful, but the company's owner held her back, putting a limit on the amount of commission women sales staff could make. The event that finally caused the split between Crowley and World Gift was a Christmas cocktail party. Crowley was a teetotaler, and she was enough put off by drinking in the office that she quit the company. She then put together her savings with loans from friends and started her own company, Home Interiors & Gifts. In the beginning, she did not have quite enough money to start her business and had to approach a bank for a loan of $6,000. Crowley recalled meeting plenty of resistance from bankers who could not fathom a corporation run by a woman. Not only was the company to be woman-owned, but its employees would all be women, mostly mothers and housewives working in their spare time. Nevertheless, Crowley's persuasive powers got her the loan, and the company was an immediate success. Crowley used her contacts at the manufacturers who supplied World Gift and arranged for her own unique line of home accessories.

Finding a Niche in the 1960s and 1970s

The new company found an under-served niche. Both its sales force and its customers were mostly women with children. They were often, like Crowley herself had been, women with little education, dependent on their husbands, and focused on their homes. Crowley understood what made these people tick. She knew not only what kind of decorations they liked, what colors were appealing, and what price range was affordable, but she had Bible-inspired philosophy that made a moral good out of home beautification. Many women who were conflicted about working outside the home were eager to work for Home Interiors. Crowley's recruits were willing to work part-time to make extra money, but they did not want to take time away from their families. Home Interiors' saleswomen, called displayers, arranged parties in the evenings, when their husbands could watch the children, or during the day, when kids were in school. The items in the Home Interiors line were for the most part moderately priced, and all sales were made on a cash-up-front basis. Crowley's message of optimism, her own success after many hard-luck years, and her choice of products that fit the taste and lifestyles of her female clientele immediately attracted customers, many of whom in turn became displayers. The company was structured so that the displayers took a commission of about two-thirds of the price of the goods they sold. Another 10 percent went upstream to local and regional managers, and the rest went to corporate headquarters. Displayers often made only modest amounts, but they could collect points toward prizes such as mink coats, diamonds, and Hawaiian vacations. As displayers recruited more women to sell Home Interiors products, they also collected commissions from these people, enabling some Home Interiors managers to make impressive salaries.

Crowley worked closely with her family. She had remarried in 1948, and her second husband was enthusiastic about her career. Her son Don helped found the business and later became its chief executive officer. Crowley's daughter Ruthie headed an East Coast division of the company. By 1962, Home Interiors & Gifts had sales of $1 million. That year, Crowley was diagnosed with cancer. She fought two bouts of the disease and lived until 1987. Home Interiors continued to grow rapidly through the 1960s and 1970s. Crowley had made the company as much a people motivator as a business. She led business meetings with a mink-covered Bible in her lap and interspersed more mundane discussions with readings from the scriptures. She conveyed to her displayers that the success of the corporation was based on their personal success, a factor not measured entirely in money. "We believe a woman comes into this business to develop some part of her life, either financial, emotional, or educational," she told the Saturday Evening Post (April 1983). "To do that, she must look and act like a professional. We have a dress code and a behavior code. We offer training and help the girls set and meet their goals. It's our responsibility to assist them in becoming achievers and feeling like winners." Her own opulent lifestyle was an example for her "girls" to follow. In 1974, Crowley paid herself a salary of $1.6 million, a figure that was challenged by the Internal Revenue Service. When the case came before a U.S. Tax Court, the judge was completely swayed by Crowley and ruled that her compensation was clearly a legitimate business expense. She had a rare talent for motivating women, the judge concluded, and her leadership was irreplaceable.

By 1983, when the company celebrated its 25th anniversary, Home Interiors & Gifts had grown to a behemoth with $400 million in sales. Profit was estimated at over $20 million. Home Interiors oversaw some 38,000 displayers, still all women at that time. These women hosted over 100,000 decorating parties every single week. The average displayer worked part time and brought in only about $3,500 annually in commissions for herself. The price of the Home Interiors line remained modest, with most items going for $10 or $15. The most expensive item in the line was only $65 in 1983. However, the profit margin was high, and the business operated with virtually no debt. Mary Crowley made her mark nationwide. She was invited to the White House in 1977, one of only 20 business leaders asked to meet with President Carter. She won the Horatio Alger Award in 1978, celebrating her rags-to-riches story, and she served on the board of the American Cancer Society as well as on the board of the Billy Graham Evangelistic Association (the first woman board member). Crowley's son Don Carter, who was the principal stockholder in the company after his mother, had also enriched himself. In 1980, he spent $12 million to buy the National Basketball Association franchise team the Dallas Mavericks.

Late 1980s: A Buyout Deferred

After Mary Crowley's death in 1987, Don Carter went on as president and CEO of the company. Sales continued to increase through the 1980s, and by the early 1990s the company had sales of over $850 million. The company had been growing from five to 10 percent a year, and by 1994 it had some 42,000 displayers working for it as independent contractors. Carter had amassed a huge portfolio of Texas real estate in the mid-1980s and ran that as a separate company. He was 61 in 1994, and he began planning the best way to pass the company on to his children. Knowing that estate taxes might make things difficult for his heirs, Carter decided to sell Home Interiors. At the same time, he wanted to retain some family control. Three of his children held executive positions at Home Interiors. In July 1994, the company announced that it had found a compatible buyer in the firm Hicks, Muse, Tate & Furst. Hicks, Muse was also based in Dallas, and its principal, Thomas Hicks, had become friends with Carter. Hicks, Muse had put together 25 buyout deals over the preceding five years, including the $390 million acquisition of the G. Heilemann Brewing Co. in 1993. The leveraged buyout of Home Interiors was to be Hicks, Muse's biggest deal yet, valued at $1 billion. The firm would own 51 percent of the company, and Carter family members would control 49 percent. Don Carter was to step down, but his children would remain in their jobs. Hicks, Muse would put up only $150 million toward the purchase, and the Carter family $73 million for their stake. The rest was to be borrowed or covered by the sale of junk bonds. The company would go from having no debt to owing hundreds of millions, but Home Interiors had enough cash flow to cover interest payments. The aim was to move Home Interiors into international markets to increase growth, and in several years take the company public. However, the deal did not go off that year. Don Carter instead invested some $20 million in another Hicks, Muse venture and sold Mr. Hicks a part-interest in the Dallas Mavericks. After praying about it, Carter called off the Home Interiors buyout. Carter was apparently nervous about some of the new owner's plans, including cutting administrative costs and moving into foreign markets. Carter also still wanted the company to be in family hands.

Four years later, Hicks, Muse got another shot at the company. This time, the landscape had changed somewhat. Revenue for 1997 had fallen to $468 million, a steep drop from 1994, when it had brought in over $850 million. Donald Carter was ready to retire, and he ceded the CEO and chairman position to his son, Donald J. (Joey) Carter, Jr. Joey, his brother Ronald, their sister Christi Carter Urschel, and company president Barbara Hammond were to own 15 percent of the company after a new buyout plan, this time valued at $920 million. Hicks, Muse ended up with 75 percent of the company, borrowing $350 million and floating a $200 million bond offering. Hicks, Muse declared itself ecstatic to finally complete the deal that had slipped away four years earlier. Its long-term outlook for the company remained the same: trim costs, move into overseas markets, and eventually take the company public.

By 1999, the company had already moved into the Mexican market, where it had some 2,000 displayers. It had a small number of displayers selling Home Interiors goods in Puerto Rico as well. One major shift the new ownership made was to update the company's technology. To that end, Home Interiors consolidated its seven warehouses and distribution centers into one enormous, state-of-the-art facility in North Dallas. The new facility had automated order fulfillment and automated conveyors, something Home Interiors had done without for 40 years. The company also leased new corporate headquarters, and in 2002 bought up the assets of a bankrupt competitor, the Kansas City-based House of Lloyd. The company had sales of over $570 million in that year, creeping back towards its high point set in the mid-1990s. The outlook of the company changed with the buyout. Though Carter family members still ran Home Interiors, its goals were now much more quantifiable, with an eye towards Wall Street, than in Mary Crowley's day. The company's mission statement still spoke of serving God, ennobling women, and bringing Attraction Power to the home, much as Mary Crowley would have put it. However, as her grandson told the Dallas Business Journal (July 30, 1999), the company now wanted to "grow from moderate single-digit growth to double-digit growth," bespeaking a more tangible goal that was more likely to appeal to investors. The new owners had spoken openly about wanting to take the company public within three to five years. By 2002, no date had been set for the public offering.

Principal Competitors: Interiors, Inc.; Garden Ridge Corporation; Richmont Corporation.

Chronology

• Key Dates:
• 1957: Home Interiors & Gifts, Inc. is founded by Mary C. Crowley.
• 1962: The company makes its first million in sales.
• 1987: Mary Crowley dies.
• 1998: The company is bought out by members of the Crowley family and Hicks, Muse, Tate & Furst.

Additional Details

• Private Company
• Incorporated: 1957
• Employees: 2,400
• Sales: $574.5 million (2002)
• NAIC: 454390 Other Direct Selling Establishments

Further Reference

• Bagamery, Anne, "Please Make Me Feel Special," Forbes, March 28, 1983, p. 88.
• Bodipo-Memba, Alejandro, "Hicks Muse Is to Get Control of Gift Maker," Wall Street Journal, April 24, 1998, p. B6.
• Buckler, Arthur, "Hicks Muse Group Sets $1 Billion Buyout of Home Interiors in a Leveraged Plan," Wall Street Journal, July 13, 1994, p. A4.
• "Dispute Deepens Over Sale of Bankrupt Gift Empire's Assets," Knight Ridder/Tribune Business News, December 4, 2002.
• Goldstein, Tally, "Hicks Muse Taps Nations for Home Interiors Buyout Credit," Bank Letter, April 27, 1998, p. 1.
• Miller, Holly G., "The First Lady of Home Interiors," Saturday Evening Post, April 1983, p. 58.
• Myerson, Allen R., "From At-Home Parties to a $1 Billion Buyout," New York Times, July 13, 1994, p. D3.
• ------, "Purchase by Hicks, Muse Is Called Off," New York Times, October 22, 1994, pp. 39, 41.
• Townsend, Lindsey, "Home Interiors & Gifts," Dallas Business Journal, February 25, 2000, p. 11C.
• Vosburgh, Glenda, "Grand Vision: Home Interiors Makes a New Deal, Plans for Future Growth," Dallas Business Journal, July 30, 1999, p. 55.

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