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Viking Extends Factory-Direct Distribution

GREENWOOD, MISS. — Viking Range assumed fulfillment duties in New Mexico, Oklahoma and Texas last week as parent company Middleby Corp. continues to take distribution in house for the premium majap brand.

In the latest move, the manufacturer’s South Central and Northwest distribution arms supplanted longtime distributor Milestone Distributors, effective Sept. 3.

Milestone also relinquished its Arizona and Southern Nevada territories to Viking’s Southwest sales and distribution operation in June.

The strategy, as oft stated by recently promoted Viking president Brian Waldrop, is “to sharpen our focus on better serving Viking dealers and consumers” in the acquired territories.

But retail analyst David Strasser of Janney Montgomery Scott suggests that the acquisitions may also have been designed to extend Viking distribution to national big-box chains, a move that is precluded by its franchise distribution network. If true, Viking would follow the path of other once limited-distribution luxury brands like Bosch and Dacor, and retailers like Best Buy, h.h.gregg and possibly Lowe’s and The Home Depot could see “another lift to both traffic and ticket,” he observed in a recent research note.

Middleby, a manufacturer of commercial foodservice equipment, purchased four of Viking’s former distributors for nearly $15 million between April and June. It acquired Viking in February for $380 million.

The distributors, which accounted for some 40 percent of U.S. revenues, included The Gene Schick Co. (GSC), covering Northern California and Hawaii; Sues, Young & Brown (SYB), serving Southern California; Gateway Appliance Distributing, covering the Northwest; and Kimball Distributing, which served the Central states.

The two California companies were combined into Viking Range Distribution Southwest, while Gateway and Kimball were merged to create Viking Range Distribution Northwest.

In a second-quarter earnings announcement, Middleby chairman/CEO Selim Bassoul said the acquisitions helped grow net sales 40 percent to $76.1 million for the three months, ended June 29, and “will allow us to control and enhance critical aspects of the sales, marketing and customer support processes.”

Bassoul noted that the integration initiatives helped increase EBITDA margin (earnings before interest, taxes, depreciation and amortization) to 15 percent, and that the company is on track to further widen EBITDA margins to 20 percent by the end of 2014.

Last month Viking also went direct in the Midwest, although its former distributor there, LV Distributes (LVD), continues to provide parts distribution, service and warehousing.

Milestone president Ramsay Woodall said he is “supportive of Viking and their new direction” and is grateful for their longtime partnership, which dates back to the late 1980s. The Dallas-based distributor continues to carry the premier Asko, Bertazzoni, Coyote and U-Line majap brands, among others.

Bassoul added that the reorganization of Viking’s U.S. sales and distribution channels will conclude in the second half of the year, as the company also introduces a “significant pipeline” of new products and product enhancements. The launches will include several SKUs – like a new high-speed oven developed with sister division TurboChef — that leverage Middleby’s commercial foodservice business, he said.

As part of the latest reorganization, recent hire Jamie Bird was named sales VP for Texas and Oklahoma and will oversee the transition.