L. Luria & Son, Inc. Business Information, Profile, and History
Miami Lakes, Florida 33014-2418
History of L. Luria & Son, Inc.
L. Luria & Son, Inc. is a century-old, Florida-based retailer of jewelry, gifts, housewares, and electronics. Jewelry sales account for 44 percent of Luria's sales; tabletop items, giftware, clocks, and the like account for 38 percent; and consumer electronics, including cameras and home office equipment, and housewares, including luggage and furnishings, make up the rest. In its early history, Luria functioned as a general merchandise wholesaler and a catalog showroom chain. After undergoing a conversion from catalog showrooms to customer self-serve operations and closing several of its less productive stores, the Luria's chain consists of 28 large superstores throughout Florida. The company's central distribution facility is located at its Miami Lakes headquarters. Although Luria is publicly traded, majority interest in the company is owned by Ocean Reef Management, an investment company controlled by brothers Rachmil and Ilia Lekach.
In many ways, the history of Luria mirrors the classic story of immigrant success in twentieth century America. Company founder Lazer Luria began the company humbly in 1898, hawking silver on the streets of the Lower East Side of Manhattan. Ten years later, his son, Philip Luria, opened the company's first permanently-situated store, a small wholesale shop on Broadway. After Philip Luria died in 1911, his son, Joseph Luria, managed the flourishing wholesale business over the next few decades. In addition to silver, the company started dealing in radios, toasters, and other household items. The Luria family business quickly became a major supplier to retail outlets as discount stores and department stores proliferated.
The 1940s-1960s: Southward Expansion
By the 1940s, the company had expanded southward, opening outposts in Atlanta, Georgia, and Miami, Florida. Around this time, Leonard Luria, Joseph's son, began to share responsibility for running the business. Although the South later proved to be the company's destiny, the move seemed imprudent initially. Because Luria's shipping facilities were slow and out-of-date, the cost advantages of wholesaling were eventually lost to the retailers, who could move more quickly. With profit margins eroding rapidly, the company was forced to shut down its Atlanta operation in the 1950s.
A much bigger blow came in 1960, when years of heavy losses forced the closure of Luria's flagship New York operations. The Miami location had became the sole area of operation. By the middle of the 1960s, Leonard Luria, now in charge of the company, saw that the old-style of wholesaling was going the way of the dinosaurs. Tired of the problems associated with collecting from the stores he supplied, as well as the stiff competition from new wholesalers, he decided to refocus the company on jewelry retailing. His decision saved the family business.
In 1964 Luria converted part of the Miami wholesale outfit into a retail operation, from which he sold jewelry in addition to the wares he was already peddling. In order to more effectively deal in diamonds and other precious stones, he bolstered his knowledge with courses in gemology. In 1967 Luria prepared and distributed a modest retail catalog, the company's first. It was as a catalog showroom that Luria's made its name over the next decade.
The Boom of the 1970s
During the 1970s, overall catalog sales in the United States swelled from $1 billion to $7 billion. At the same time, growth of the Florida population was exploding. The combination of those two factors contributed to big growth for Luria. In 1970, the company's last year as a wholesaler, Luria's sales were $2 million. Ten years later, the company had annual revenue of $76 million. The appeal of catalog showrooms came from the convenience of ready merchandise they offered to customers combined with the low overhead costs for the company because they operated like a warehouse. At a time when catalog showrooms seemed to be popping up on every square inch of available real estate, Luria managed to distinguish itself by emphasizing high-priced gold and diamond jewelry and--perhaps with a nod to company founder Lazer Luria--silver. The company also carried standard showroom fare such as cameras, housewares, and electronics, though it tended to avoid items like sporting goods and toys, which yielded lower profit margins.
By 1976 Luria operated eight catalog showrooms across Florida. By this time, jewelry and silver accounted for about 40 percent of the company's sales. Competition soon became stiff; over the next couple of years two of the bigger catalog showroom outfits, Best Products and Service Merchandise, began to hone in on Luria's Florida territory. To fend off its competitors, Luria needed to initiate its own expansion. The needed capital came from a public offering of stock in 1978, which raised money but left the Luria family holding the majority of the stock.
In spite of fierce competition in the Florida's catalog showroom business, Luria managed to more than hold its own over the next several years. Between 1978 and 1982 the number of Luria outlets grew from eight to 21, and company sales were hovering around the $100 million mark. Luria continued to distinguish itself from the competition by keeping its focus on higher-end goods like jewelry. The company also advertised aggressively on television, radio, and in print. Another area in which Luria sought to distance itself from its competitors was in service. While sales personnel at other showrooms were few and far between, Luria sought to make itself more like a department store, so that a customer needing sales help could find assistance quickly. By 1983, with sales at its 26 Florida outlets totaling well over $100 million, the company continued to outperform the competition.
Competition from Mass Merchandisers in the 1980s
During the mid-1980s, the catalog showroom industry hit hard times, as competition stiffened not just from within the industry, but from aggressive pricing on the part of department stores, mass merchants, warehouse clubs, and other retailers. But while the top three showroom chains--Best Products, Consumers Distributing, and Service Merchandise--all showed declines in earnings in 1985, Luria managed to increase its profits 24 percent to $6.8 million, on sales of $145 million, a 17 percent increase from the previous year. Part of Luria's success had to do with the company's eight percent operating margin, the highest in the industry.
By the end of 1986 Luria operated 37 stores. The company continued to thrive in the face of tough times throughout the industry. The key lay in Luria's ability to maintain focus on jewelry, which accounted for over 40 percent of sales. Electronics, at 21 percent, and housewares, at 17 percent, made up most of the remainder. After years of steady, if not spectacular expansion, the company began to slow, but not stop, the rate at which it was opening new stores during the mid-1980s. Luria also began to build up its ranks of middle managers. It also revamped its store design, making them a tad more upscale in order to emphasize even further the upper-end items it offered.
Luria began opening a chain of jewelry stores in malls, under the name Luria's Fine Jewelry, in the late 1980s. By this time sales, still largely generated by its catalog showrooms--which were mostly located in strip malls in major cities--were exceeding $200 million a year. As other showrooms continued to struggle and fail in droves, Luria completed a three-year program, with the assistance of an outside consulting firm, aimed at keeping the company on track for further growth. Costs were cut, unprofitable product categories were discontinued, and technology was updated, including the addition of point-of-service terminals, a new financial reporting system, and a new jewelry inventory system.
Luria unveiled its new showroom prototype in 1988. The new showrooms were designed to generate $6 to $12 million in sales per store, compared to the $4 million level used in the past. By this time, the company had 43 showrooms, still all located in Florida. Meanwhile the company shortened its catalog and shifted the saved money into promotion, and its advertising efforts were veering away from television, more toward newspapers and direct mail.
New Directions for the 1990s
Even in 1990 when the company was a 52-store empire, Luria was very much a family business. Though traded on the New York Stock Exchange, the company's top executive picture looked more like a family photo. Peter Luria, company president and chief operating officer, represented the fifth Luria generation to run the company. His father, Leonard, remained chairman of the board, chief executive officer, and treasurer. Other family members involved included vice-president of real estate Henry Luria, Peter's brother; and Peter's sister, general counsel Nancy Luria Cohen.
As the 1990s began, the share of Luria's revenue generated by jewelry sales fell below 40 percent for the first time as the company expanded its focus on housewares, such as the 20 different coffee-makers the stores carried. Nevertheless, the company continued to emphasize items for the middle- to upper-class customer, and customer service remained a higher priority than it was for other companies in the showroom business.
Mother Nature gave Luria an opportunity to completely shift gears once again in 1992. When Hurricane Andrew demolished three Luria stores, the company decided not to simply rebuild them as they were. Instead, the company used the unexpected devastation to usher in yet another new store prototype. Rather than veering toward the department store model, as did the previous design, the new store prototype more resembled a mass merchandise superstore. The new design inaugurated the company's shift from traditional catalog house to what it now called a "specialty discount store." While Luria previously had more sales help in each store than most of its competitors, it would now be largely self-serve. In fact, shopping carts were present for the first time in company history. While jewelry and electronics continued to be heavily represented on Luria's shelves, there were now many more less expensive housewares and even some toys.
Luria added two superstores in 1994, bringing the total number of superstores to nine (out of 50 total outlets). The new concept continued to evolve, featuring "department store merchandise in a specialty environment," with the emphasis on value for name brand items. Despite the initial promise of the new mass merchandise format, Luria's sales fell flat as the 1990s continued. With sales slumping badly in 1996, the 73-year-old Leonard Luria decided to retire, and the Luria family sold its 25 percent controlling interest in the company to Ocean Reef Management, a company formed by brothers Ilia and Rachmil Lekach.
The Lekach brothers, Russian immigrants who had arrived in the United States in 1970 after spending 14 years in South America, were, along with a brother-in-law Simon Falic, the principal stockholders and high-ranking officers in two perfume enterprises--Perfumania Inc. and Parlux Fragrances. The acquisition of Luria gave the Lekachs access to a strong network of new outlets for the perfumes made and distributed by Parlux, which included such well-known brands as Perry Ellis and Fred Hayman Beverly Hills.
Under the Lekach brothers, Luria's stores underwent yet another transformation. Perfume and cosmetics counters were added, and the conversion of the entire chain into jewelry, gift, and houseware superstores was completed. In January of 1997, the company closed and liquidated 17 of its worst-performing stores, leaving a core of 28 stores in place. Further cost-cutting measures followed, including staff reductions and supplier contract renegotiations. Luria also raised cash by selling its corporate headquarters/warehouse facility. For fiscal 1997, a year of tumultuous change, the company lost nearly $21 million on sales of $173 million. Luria approached its 100th birthday in leaner--and, the Lekachs hope, meaner--form. Luria's performance during the earliest part of its second century of operation will answer one intriguing question: Did the magic that fueled the company's series of successful redesigns leave along with the Luria family's financial interest, or did it stick around with the family's name?
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