Ritz Camera would not disclose terms of the investment, but chief executive Stephen M. LaMastra said it will “provide great working capital and stabilize the balance sheet.” There is “incredible opportunity,” he continued, “in photo imaging, bringing in new inventory and online growth.”
Transom, known for turning around small- and middle-market companies, took a shine to Ritz Camera because of its “strong brand, management team and legacy in the industry,” said Ken Firtel, managing director of Transom.
Founded in 1936, Ritz built its empire on camera sales and highly lucrative film processing, but the company faltered as digital photography became more ubiquitous. As profits waned, debts mounted. And by February 2009, the storied enterprise owed more than $60 million to numerous creditors.
Before Ritz went the way of Circuit City, David Ritz, whose uncle founded the company, assembled a team of investors to buy the company’s assets at auction. Instead of just selling cameras, Ritz Camera poured more resources into photo imaging, producing calendars, memory books and DVDs using digital photos and video.
Whether that strategy has panned out is difficult to tell. As a private company, Ritz does not talk numbers. The most LaMastra would share is that the photo-imaging business has picked up more than 10 percent in the past year, while sales of cameras have grown roughly 15 percent.
As the Wal-Marts and Best Buys of the world expand their electronics inventory, it seems unlikely that speciality dealers can capture much market share, said Kenneth Brown, managing director of private equity firm Lionchase Holdings and longtime retail analyst.
“As a brand, there really isn’t much difference between a Ritz store and Best Buy,” he said. “I just don’t see their customer base growing.”
Sure, “you can get a camera at the same price as one at Target or Best Buy,” Firtel said, “but at Ritz you have trained sales associates who are experts in all of the camera’s features and functions.”
Specialty photo retailers have been leading the industry in growth, with sales up 6 percent for the 12 months ending July, according to research firm NPD Group. Industrywide sales of cameras and camera accessories, however, have been flat at $5.9 billion.
“People are investing in higher-end products that you can’t get in traditional big-box stores, so specialty channels are benefitting,” said Liz Cutting, senior imaging analyst at NPD Group.
While Ritz Camera has regained its footing, one of its retail partners, Ritz Interactive, has stumbled. The California-based online retailer, formed as separate entity in 1999 by chairman David Ritz, filed for Chapter 11 bankruptcy protection last month. In its filing, the company said the recession, coupled with the bankruptcy of its main supplier, Ritz Camera Centers, had crippled its operations.
LaMastra said the turn of events have no impact on Ritz Camera. He and his new partners have been keeping an eye on consumer reaction to recent market volatility, but have yet to see a retreat in spending.
Firtel said he views the economic malaise as a potential opportunity for the company, explaining, “because we are a speciality retailer and this is our niche people understand ‘if I want to buy the right camera, there is only really one place to go.’ ”