Lexington’s Fayette Cigar Store a downtown retail survivor

February 10, 2014

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Fayette Cigar Store has been at 137 E. Main St. since Dale Ferguson bought the building in 1977. He resisted attempts by the city to buy the building when it purchased other property on the block, which now includes the Fayette County Court Houses, left, and the Downtown Arts Center, right. Below, Ferguson and a daughter, Dee Bright. Photos by Tom Eblen

 

With all of the talk about the need to attract retailers back to downtown Lexington, I thought it would be good to talk with one who never left.

Dale Ferguson, 75, and his family have been selling newspapers, magazines, tobacco products and sundries downtown since 1928.

That was the year his father, H.C. Ferguson, opened a newsstand on Mill Street. Soon after World War II started, he bought Fayette Cigar Store at 151 West Main Street “when the owner got drafted,” Ferguson said.

When that building was scheduled for a renovation that would have forced him to close for several months, Dale Ferguson bought a bigger building at 137 East Main in 1977 and moved the business. Fayette Cigar Store has been there ever since, despite the best efforts of developers and city officials to buy his property.

Surrounding buildings were bought in the 1980s for a proposed World Trade Center and cultural complex. Eventually, the new Fayette County Court House complex was built on his west side and the Downtown Arts Center on his east side.

At one point, Ferguson said, he agreed to city requests to swap his building for a similar one in the next block, but financial terms couldn’t be reached with its owner. So Ferguson stayed put, through thick and thin, trying to make a living on his 32-foot-long slice of Main Street.

140206FayetteCigar0023Ferguson’s three-story building dates from 1864, with central and rear sections added in the early 1900s. Before he bought the building, bookies operated in the upper floors, which was connected to an adjacent building by a hole in the wall. Now, the upper floors are accessed by an antique elevator.

Modern fire codes would keep Ferguson from using the upper floors for anything but storage and an office unless he could figure out a way to build a staircase.

“That stops a lot of downtown development,” he said, “A lot of these old buildings don’t have fire escapes.”

Ferguson said making Main Street one-way in 1971 hurt business, as did eliminating more and more street parking over the years.

“It was a mistake to do it,” he said of the one-way conversion, but added that he isn’t convinced making Main Street two-way again would do much good. “It’s too late.”

A bigger improvement, he said, would be adding more street parking, preferably angled or perpendicular spaces that would be easier for people to use and accommodate more cars.

During the last streetscape renovation in 2010, Ferguson lost a loading zone in front of his store, which hurt business.

“People would pull up, run in and buy a $200 box of cigars, and be gone in a few minutes,” he said. “They can’t do that anymore.”

But the biggest obstacle Ferguson sees to getting more retailers back in downtown Lexington is high per-square-foot rents.

“If I didn’t own my building, I wouldn’t be here,” he said. “I blame a lot of it on the Webbs, who overpaid for property and then had to get a return on their investment.” But the biggest problem, Ferguson said, is that too few people work downtown — he suspects less than a fifth as many as did two or three decades ago. The addition of downtown condos over the past decade hasn’t made much difference, he said. But he thinks more big apartment complexes like Park Plaza would help.

Ferguson now runs Fayette Cigar Store seven days a week with help from one of his four daughters, Dee Bright. Thanks to a resurgence in cigar smoking, customers come to the store for its extensive selection of high-end smokes, which are kept in a former bank vault in back. Pipe smoking also is on the rebound as cigarettes decline.

Cigars and fine pipe tobacco are the store’s biggest profit centers. But Ferguson says he doesn’t know what the future holds, noting that all of his main wares — tobacco, magazines, newspapers and greeting cards — have been in decline for years.

Ferguson has tried to fight back by adding niche products such as basic drugstore items and local honey. Still, business is tough.

“I have a pretty loyal customer base,” he said. “Thank God for that.”

Click on each image to see larger photo and read caption:


Olive oil entrepreneur started over after dramatic rise and fall

November 11, 2012

Stuart Utgaard, president of Stuarto’s Olive Oil Co. Photo by Tom Eblen

 

Since moving to Lexington in 2010 to start Stuarto’s Olive Oil Co., Stuart Utgaard has grown his business from one store in Hamburg to a second in Chevy Chase. Sales are up nearly 60 percent this year, he says, and his startup debt should be repaid within two years.

But this isn’t a typical entrepreneur’s success story. It is more of a comeback tale. Utgaard’s career could best be described by an old saying: The bigger they are, the harder they fall.

Minnesota’s Twin Cities Business magazine once described Utgaard as a master of mergers and acquisitions, that region’s biggest dealmaker in the 1980s and 1990s. Utgaard said he put together 108 deals worth more than $1.7 billion.

Already a multimillionaire, he bought a sporting goods store called Sportsman’s Warehouse in 1996 and built it into a chain of 73 stores in 33 states. Utgaard acquired all the trappings of success: luxury homes, fancy cars, even a Learjet. Then, he lost everything.

“I went from owning a private jet to sleeping in my car in cemeteries and church parking lots with no food,” he said.

How did Utgaard climb so high only to fall so far? It is a long and complicated story, which he can describe in great detail. The dates and numbers are seared into his memory. He even wrote a self-published book about it: The Sportsman’s Warehouse Story.

Here’s a short version: Utgaard built his company on debt. That worked until a new computerized inventory control system failed and made it difficult to track orders, deliveries and customer purchases. That caused sales to plummet as the economy slowed. Sportsman’s Warehouse violated loan covenants at the worst possible time in 2008. When Wall Street’s house of cards began collapsing, credit markets evaporated.

Unable to borrow more money, Utgaard lost his company to his lenders. Because he had personally guaranteed some of the debt, he was forced into personal bankruptcy and lost everything he owned, about $15 million of assets.

Utgaard even lost the Wisconsin farm where his family had operated a chicken hatchery for more than a century. It was there, as a boy, that he first learned about business and hard work, cleaning equipment and boxing chicks for sale.

He went through a messy divorce and was unable to find work as an executive. So the former Ernst & Young regional Entrepreneur of the Year decided to move to Lexington and become an entrepreneur again.

Why Lexington? Utgaard said he had gotten to know developer Patrick Madden when he was negotiating to build Sportsman’s Warehouse store No. 63 in the Hamburg development. Madden was willing to lease Utgaard a small retail space behind that store as a place for him to start over in business.

“When I came here, I literally had $20 in my pocket,” Utgaard said. “But some of my friends were still crazy enough to loan me money after I went bankrupt.”

He thought there was a good retail opportunity in premium olive oil. People are using a lot more olive oil because of its health benefits, but, because of lax international labeling laws, much of it is of low quality, diluted with less-healthy oils.

“This will become a good business and generate a good cash flow,” Utgaard said.

But he doesn’t expect to become America’s olive oil king; he just wants to get back on his feet. Utgaard is doing some business consulting, and he said he might take a corporate job again one of these days.

Utgaard has reflected on the hard lessons he learned at Sportsman’s Warehouse, which he shares in his book and in speeches to university business students.

Among those lessons: have ample cash reserves to carry your business through lean times; don’t personally guarantee business debt; minimize bank borrowing; if you need outside equity, a large number of small shareholders is better than a small number of larger ones; even when things are going well, assume you could lose everything; set up an independent income stream or trust fund to provide for your family if your business fails.

But this was Utgaard’s biggest lesson: Never give up.

“I’ve been blessed with a good mind and business skills, and I’m not afraid to work,” said Utgaard, 67, recalling how Harland Sanders was about his age when he started franchising Kentucky Fried Chicken after his Corbin restaurant failed.

“You have to assume things will get better,” he said. “You have to try.”

 


Howard Curry’s Talking Tree gets a facelift

October 3, 2009

For a little boy in the early 1960s, a shopping trip in Lexington could be an adventure.

It was a world of big buildings filled with interesting things and friendly faces, from the elevator operator at Hymson’s Tots & Teens to the A&P manager who always took time to chat with me.

But nothing could top Howard Curry Shoes on Southland Drive.

Going to Howard Curry meant sitting in upholstered chairs that were just my size, peering in aquariums filled with colorful fish and visiting the Enchanted Forest, where mechanical elves made shoes and an owl popped out of his knot hole every so often to give a hoot.

The highlight was the Talking Tree. It had an expressive face and a cheerful but staticky voice that I eventually figured out came from a hidden clerk with a microphone.

Since 1958, the Talking Tree has been an icon of Lexington childhood. And, over the years, a lot of grown up kids have wandered into Howard Curry just to see if he was still there.

“Or they would bring in a spouse who couldn’t believe that such as thing existed,” said Ruby Stockwell, who has run the store with her daughter-in-law, Beverly, since her son, Todd, bought it from the Curry family in 1991.

Now, the Talking Tree is getting a facelift and new home.

Versailles artist Damon Farmer restored the Talking Tree. Photo by Tom Eblen

Versailles artist Damon Farmer restored the Talking Tree. Photo by Tom Eblen

This summer, Howard Curry moved out of its Southland Drive store and took down the classic neon sign, which was attracting bird nests and needing repair.

While a new store was being built at the corner of Nicholasville Road and Moore Drive, Howard Curry set up shop in temporary space. The Talking Tree was sent off for restoration and the store posted a sign saying he was on summer vacation. “The kids seemed to understand that,” Beverly Stockwell said.

The Talking Tree and the rest of the Enchanted Forest were made by Corman & Associates, a Lexington fixture company that once did elaborate store displays for clients all over the country. The Talking Tree was fashioned from a big piece of red cedar driftwood that Dan Corman and Stanley Baugh hauled out of Herrington Lake.

The job of restoring the tree fell to Versailles artist Damon Farmer, who grew up in Berea seeing the tree in Howard Curry advertisements. He removed old varnish, repaired limbs, added leaves and new eyes and fixed the tree’s broken nose.

“Over 50 years, there had been so many attempts to repair it that it was something of a mess,” Farmer said of the tree. “The old nose was on a spring and kids were kind of rough with it.”

Howard Curry’s new store is smaller than the old one, so there wasn’t room for the Enchanted Forest and cobbler elves. They were sent back to Corman’s and put in storage. Vice President Dwight Kelley doesn’t know what he will do with them, but they have a special place in his heart.

Kelley said he helped make the elves as a young Corman’s employee, and his children got their shoes at Howard Curry. “That’s one of the few pieces of our work that people in Lexington are familiar with,” he said.

The aquariums left Howard Curry in the 1990s — Ruby Stockwell got tired of cleaning them. But the child-size benches have been recovered by David Hicks, whose father did the original upholstery. John Leininger, whose father built Howard Curry’s original cash register console, made cabinets for the new store.

At its new location, Howard Curry shares space with the Stockwells’ other store, Dance Biz. It sells children’s dance shoes and apparel and has some special design touches of its own. Interior designer Deborah Drury put together a shoe-fitting area that has a stage, dance bar, mirrors and curtains.

When I stopped by the new Howard Curry store last week, employees were racing around, trying to get it ready to open. Boxes were everywhere, Farmer was painting a mural and the Talking Tree was waiting patiently for a sly clerk to give him voice.

The Talking Tree may only be a dressed-up piece of driftwood. But I’ll bet I’m not the only big kid glad to see him still around, standing ready to make some child’s shopping trip an adventure.


Dawahares: Finale for a family retail empire

July 20, 2008

When she heard that Dawahares Inc. was closing nine of its 31 stores in a dramatic bid to survive, a longtime customer went to the Fayette Mall store and bought a couple of hundred dollars’ worth of clothing.

”She said, “I’m sorry I can’t afford to buy more,’“ said Richard Dawahare, his voice cracking. ”She was trying to help us out.“

A month later, when the rescue plan fell short and Dawahare’s announced it was going out of business, customers began stopping by the Pikeville store to pay their respects.

”That was the term they used … pay their respects,“ said Harding Dawahare, the president and CEO. ”They just came in to share their stories about how much they loved Dawahare’s over the years.“

From Pikeville to Paducah, Dawahare’s might be the state’s best-known family business. It’s no wonder: Kentuckians have been trading with the Dawahare family since 1907, when Serur Frank Dawahare moved to Appalachia and began carrying a peddler’s pack through the coal camps.

The company’s demise has saddened loyal customers, but there’s only one way to describe the Dawahares’ feelings: It’s like a death in the family.

”The family and the business were almost one and the same,“ said Harding, 57, one of six grandsons of S.F. Dawahare now working in the company, along with two great-grandchildren. ”It was very, very difficult to separate the two.“

S.F. Dawahare came to New York City from Damascus at the turn of the last century and met his wife, Selma, at a Syrian singles dance. On the advice of her brother, they moved south, thinking there might be opportunity for a merchant in the booming coal fields.

The Dawahares saved enough money to open their first store in East Jenkins in 1911. Within a few years, the business was growing almost as fast as the family, which included eight sons and three daughters. Grateful to his adopted country, Serur named three of his sons after U.S. presidents — Woodrow Wilson Dawahare, Warren Harding Dawahare and Herbert Hoover Dawahare.

S.F.’s goal was to have a store for each son — the daughters were expected to find husbands — and he almost did it by the time he died in 1951. The family expanded to Lexington in 1961, building a flagship store in Gardenside Shopping Center.

Eventually, the company would have Dawahare’s clothing and Cat Bird Seat collegiate apparel stores scattered throughout Kentucky and across the line in West Virginia. Liquidation sales began Friday.

A family, a company

The end has been hardest on S.F.’s four surviving sons, who are retired from company leadership and declined to be interviewed.

Last week, five of the third-generation Dawahares working in the company gathered around their big oak conference table. The cramped corporate offices were dark and quiet; employees were paid through last week, but there was no longer a need for many of them to come to work.

The Dawahare cousins spent the week tying up loose ends and turning the company’s inventory over to liquidators. They also were coming to grips with the loss of an institution that has been such a big part of their family.

S.F. taught his sons the ethic of many hard-working immigrants: Whatever happens, stick together. All made careers in the family business except for Hoover, who loved politics and represented Whitesburg in the state House of Representatives for a dozen years.

He operated Hoover’s furniture stores in Lexington, Hazard and Whitesburg. It was a separate company, but ties remained close. Brother A.F. Dawahare, who retired as Dawahare’s CEO in 2001, now runs Hoover’s, which remains in business.

”My uncles, especially, could not and still do not separate the business and the family,“ Harding said. ”Our generation has tried a little bit more to separate the two. Even though they’re intertwined, we try to run the business like a business and the family as the family.“

There was tension when some younger Dawahares wanted to pursue other passions. They left for careers as a caterer, a hedge-fund manager and a foreign correspondent, among other things.

”My uncles would say if you were leaving the business, you were leaving the family,“ Harding said. ”And we would say, no, you’re still in the family, you just choose not to be in the business.“

Richard, 53, studied to be a lawyer. ”My dad just said, “Do whatever you want to in life, but you’re crazy if you don’t take advantage of this opportunity“ to be part of the business, he said.

Richard passed the bar, but his first job offer came from Macy’s in Kansas City. He soon realized that retailing was his passion after all.

”I came back because I love my cousins,“ he said. ”And I love the uncles first. They were like Santa Claus my whole life. Not just giving stuff, but it was fun. It’s impossible to overstate how much joy there was my whole life around the uncles.“

Said Harding: ”The cousins all grew up like brothers and sisters.“

The Dawahares have always been an opinionated, outspoken bunch.

”Fighting internally about the business is not a bad thing,“ Harding said. ”It’s a good thing for people to try to get their point of view expressed and out on the table. For the most part, we’ve always fought with each other from a position of respect, most of the time.“

Even last week, the darkest of times, there was affectionate humor to break the tension.

Joe Dawahare joined the interview late, and he was introduced as the corporate attorney, secretary and treasurer. ”So, really, this is all his fault,“ Harding quipped. Everyone laughed except Joe, who didn’t catch the remark. ”What did you say?“

At another point, Richard was waxing poetically about the company’s emphasis on customer satisfaction. ”We never would let a customer down. Never!“ he said.

”Well, I did once,“ Harding deadpanned.

More laughter.

What went wrong?

Hindsight and regrets are inevitable. For example: not making the successful Cat Bird Seat stores, which sell University of Kentucky and University of Louisville branded merchandise, a separate company.

But it’s a miracle Dawahare’s Inc. lasted as long as it did. Most family-owned retailers were out of business by the 1980s. In the past few months, the softening economy has taken down other retailers such as Goody’s Family Clothing.

Dawahare’s always survived by knowing its customers, serving small towns and finding niches that set it apart from competitors. ”We had some good merchandising skills that kept us competitive with the best of the best,“ Harding said.

But challenges kept coming. Clothing prices have been flat for a decade, yet wages and other business costs continued to rise. National chains were able to buy goods cheaper than Dawahare’s, further squeezing its profit margins.

Take, for example, designer Tommy Hilfiger’s popular clothing. ”When Tommy was hot and people wanted it, there was only one place to get it in the small towns, and that was us,“ Harding said. Then, late last year, Hilfiger eliminated two lines and signed an exclusive deal with Macy’s. Suddenly, $5 million in sales became zero.

The potential for growth in small towns is limited. And it didn’t always help that Dawahare’s sold clothes for all ages. Big competitors could focus on niches, such as young people, and market more effectively to them.

”We had a core base of customers who loved us,“ Harding said. ”We just could not grow our market share.

”We actually did have a plan in place that would have shown profitability this year,“ he said. ”We eliminated one-third of our corporate overhead, and we cut another 10 percent out of store payroll and other expenses. But the cash flow wasn’t there“ to quickly repay $5 million in debt to Fifth Third Bank.

”I have to say that Fifth Third has been a great partner,“ Harding said. ”They’ve worked with us over the last two years. It’s not their fault that we’re in this situation; it’s our fault.“

Saying goodbye

What’s next for the Dawahare family?

”I think most of us are looking for jobs,“ Harding said.

There are thoughts about trying to buy some of the stores out of bankruptcy. Richard mused about running stores as community co-ops. Harding rolled his eyes. ”Don’t associate my name with that,“ he said.

Amid the sadness, there is also guilt. Justified or not, there’s no escaping it.

”You feel like you let your family down, you let the employees down,“ Harding said, noting that 500 people will soon be without jobs.

”We tried hard, we worked hard. We never ran a business where the owners went and played while everyone else worked. We all had jobs with responsibilities, and we showed up every day to do them. But there’s always the sense that we didn’t get it done, we let the rest of the family down. That’s always in the back of your head.“

Also in the back of their heads, they knew that few family businesses survive the second generation. By the third and fourth generations, they’re on borrowed time, especially in an industry that has been turned on its head.

”I think it’s hardest to know that we’re not going out on our terms,“ said Serur Dawahare, 44, one of youngest of the third generation. He has spent a lot of time recently writing recommendation letters for employees seeking new jobs and scanning the newspaper for opportunities that might be good for them.

Dawahare’s ownership was divided among 39 family shareholders, most of whom didn’t work in the company. The stock never paid dividends. But now it’s gone.

”The family has been great,“ Richard said. ”They haven’t blamed those of us working here. If I were in their shoes, I might be tempted to.“

”We have a good family,“ Harding said softly.

Then Richard turned philosophical: ”It’s tempting to visualize my late father and grandparents and uncles and aunts in heaven, looking down and wondering …. It’s too easy to be negative and say they would be so ashamed. But I do not feel that way! I know that in their hearts they know we did what we could to make it work.“

Harding shifted the conversation back to earthly matters.

”I would thank every employee who ever worked for us, every customer who ever shopped with us, every family member who put their heart and soul into this thing,“ he said. ”We had a good run.“