Painting by numbers
A year after its makeover, an art-gallery chain sees bright prospects.
By Patricia B. Gray, FSB contributor

(FSB Magazine) -- LAST YEAR FSB RECRUITED THREE CONSULTANTS to help rescue Art Holdings, a struggling chain of galleries located in Midwestern department stores. Acting on the experts' advice, founder and CEO Greg Hennes moved quickly to pump up sales and reduce inventory.

Art that lingered on the gallery floor was discounted and sold at the company's outlet store. In recent months Hennes has managed to slash Art Holdings' $1.5 million inventory by $300,000. He expects 2006 revenues to be flat at $7.5 million. (Hennes says the company has been consistently profitable for the past few years but declines to reveal his margins.) Thanks to the strong economy, corporate clients all over the Midwest are expanding and need art to decorate their new office spaces. As a result, Art Holdings' corporate consulting revenues are up 20% this year.

Hennes has added large pieces of contemporary art to his product mix, and they have been a big hit with loft and condo dwellers. He has also increased the number of trunk shows featuring mostly traditional oil paintings, which are popular among upscale homeowners in Minneapolis and Chicago. (A trunk show brings vendors into the galleries to sell their merchandise directly to customers.) "We've modified our product mix there," Hennes says.

Planning has been a challenge, in part because the galleries are getting a new landlord. Art Holdings' 11 retail shops are all located in Marshall Field's department stores, which as a result of a corporate acquisition are scheduled to become Macy's stores by September.

Hennes welcomes the change. Marshall Field's had been in decline for years; the stores were tired and lacked pizzazz. Art Holdings was struggling to lure customers from among the dwindling crowds. Our consultants pressed Hennes to close money-losing galleries, but he ignored that bit of advice. Federated, he figured, would have big plans for its new acquisition.

Hennes was right. In recent meetings with the retail partners that maintain boutiques within its stores, Macy's promised to boost store traffic with splashy advertising campaigns and in-store events. And now Hennes hopes his new landlord will help Art Holdings go national. "This could be great for us," Hennes says. "I'd love to open a fine-art gallery in one of Macy's flagship stores in San Francisco or New York."  Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.