Ernst Home Centers

Ernst Home Centers, Inc.

Company type	Public company (after 1994)
Industry	Retail (home improvement)
Predecessor	Ernst Hardware and Plumbing Co.
Founded	January 1, 1893 (1893-01-01) in Seattle, Washington, United States
Founder	Fred Ernst, Charles Ernst
Defunct	1997 (1997)
Fate	Bankruptcy and liquidation
Headquarters	Seattle , United States
Area served	Western United States (up to 12 states)
Key people	Hal Smith (President and CEO from 1986)
Products	Home improvement products, hardware, lumber, garden products, nursery items
Number of employees	2000 (1996)
Parent	Pay 'n Save (1960–1985 approx.)

Ernst Home Centers, Inc. was a home improvement retail chain established in Seattle, Washington, by brothers Fred and Charles Ernst in 1893. In 1960, the company became part of Pay 'n Save, a major retail corporation in the Northwestern United States. After Pay 'n Save was acquired in 1984, Ernst was divested and later went public in 1994. The company faced several notable legal challenges and an unsuccessful expansion into larger store formats, leading to a Chapter 11 bankruptcy filing in 1996 and subsequent liquidation in early 1997. At its height, Ernst operated 95 outlets across twelve states in the western U.S.

History

File:Ernst Home & Nursery.jpg

A vacant Ernst store located in Boise, Idaho.

Origins

Ernst Hardware was founded in Seattle, Washington, in 1893 by Charles and Fred Ernst. The business incorporated as Ernst Hardware and Plumbing Co. in 1907 and relocated to 512 Pike Street in downtown Seattle.

In the 1950s, M. Lamont Bean, president of Seattle's drugstore chain Pay 'n Save, considered diversifying into non-pharmacy retail sectors. This interest led to an agreement in February 1960 for Pay 'n Save to acquire Fred Ernst’s nine hardware stores. Two years later, Pay 'n Save purchased Malmo Nursery and launched combined Ernst-Malmo outlets, integrating hardware, lumber, garden products, and nursery items under one roof.

Trump Group

In September 1984, The Trump Group, spearheaded by New York investors Julius and Edmond Trump (who are not related to Donald Trump), made an attempt to purchase Pay 'n Save for $355 million. The largest shareholders of Pay 'n Save, Stuart Sloan and Samuel N. Stroum, pledged to oppose the sale of the retail company. Subsequently, on September 12, 1984, The Trump Group announced it had retracted its bid to acquire Ernst's parent firm to engage in negotiations with Sloan and Stroum. By October 15, 1984, Pay 'n Save was officially acquired by the Trumps for $358 million (~$Template:Format price in Template:Inflation/year).

In May 1985, Pay 'n Save revealed intentions to divest all its subsidiaries, putting Ernst’s future in jeopardy. On November 8, 1985, ownership of Pay 'n Save’s drugstore chain transferred to a company jointly held by the Trump Group and a partnership led by William Zimmerman, proprietor of California discount retailer Pic 'N' Save. This transaction left Pay 'n Save with 69 Ernst outlets, three Yard Birds locations, and the wholesaler Northwestern Drug Co. In January 1986, Pay 'n Save changed its name to Seattle Standard Corp. Then in March 1986, Hal Smith, formerly president of Builders Emporium based in Irvine, California, took over as president and CEO of Ernst from Mike Rouleau.

Between 1987 and 1988, Ernst undertook renovations and improvements across all its stores. Toward the end of 1990, the company piloted a new store concept in West Seattle, incorporating features such as garden-style nurseries, an espresso cart, broader aisles, a wider product selection, enhanced signage, and other contemporary conveniences. In 1991, Ernst launched two additional stores following this new concept in Lynnwood, Washington and Spokane, Washington.

Lawsuits in the Early 1990s

File:Malmo Nursery.jpg

A vacant Malmo Nursery location in Idaho Falls, Idaho.

In April 1992, Ernst initiated legal action against retailer Wal-Mart, alleging that the discount giant had appropriated Ernst's trademarked advertising tagline ("Always the right price. Always."). Ernst sought a court order to halt Wal-Mart's use of the slogan and requested unspecified financial compensation.

Three months later, Ernst filed suit against Eagle Hardware & Garden, a Seattle-based home improvement retailer, accusing it of unfair competition and breaching Washington's Consumer Protection Act. Ernst contended that Eagle's price comparisons for various items were misleading and deceptive. In response, Eagle countered by accusing Ernst of misleading advertising practices and defamation, asserting that the lawsuit was timed to undermine Eagle’s initial public offering.

Simultaneously with the Eagle case, Ernst pursued legal action against Pay 'n Save, alleging unlawful competition related to nursery product sales across 15 Washington shopping centers where both companies operated. Ernst held agreements with the owners of these centers granting it primary or exclusive rights to sell nursery merchandise. Meanwhile, PayLess Drug Stores, having recently acquired Pay 'n Save, filed a counterclaim accusing Ernst of vending camera film and processing services at eight locations where PayLess claimed exclusive selling rights.

Shortly after initiating lawsuits against these three retailers, the state of Washington filed suit against Ernst for allegedly misrepresenting competitor prices from Pay 'n Pak and Home Club during a 1990 advertising campaign. The dispute concluded with a settlement in October 1992 where Ernst did not admit fault but agreed to pay $19,500 (~$Template:Format price in Template:Inflation/year) covering court expenses, consumer education initiatives, and compliance with the Consumer Protection Act.

In November 1992, Ernst launched a lawsuit targeting United Food and Commercial Workers Local 1001 following several months of union grievances against the chain. The union had raised issues regarding unpaid off-the-clock work and wage violations, prompting Ernst to accuse the union and its attorneys of defamation and consumer protection violations. In March 1993, the union responded with a class-action lawsuit alleging that Ernst failed to compensate employees for work performed outside scheduled hours. Representing approximately 450 employees in the Seattle region, the union had been boycotting Ernst since their contract expired on November 1, 1992. In August 1993, the union filed another suit accusing Ernst of knowingly selling toilets that did not comply with state water conservation standards. Subsequently, Ernst announced it would discontinue sales of the non-compliant toilet models.

Decline

In June 1994, Ernst revealed intentions to launch an initial public offering aimed at raising $50 million (~$Template:Format price in Template:Inflation/year) through a stock sale, with the goal of opening 55 new superstores within the following three years. The rollout of these superstores, each averaging around 60,000 square feet (5,600 m²), had begun as early as 1991. At that point, Ernst operated 77 locations across eight states in the U.S. Although the company initially postponed its stock offering, it eventually proceeded and went public in September 1994.

By January 1996, Ernst disclosed a fourth-quarter loss totaling $47.6 million (~$Template:Format price in Template:Inflation/year), nearly double the combined profits earned over the previous four years. Concurrently, the retailer announced it would halt plans for 13 new stores and close nine existing ones. On July 12, 1996, Ernst filed for Chapter 11 bankruptcy protection and revealed intentions to shut down 25 stores. This bankruptcy filing followed reports of losses approaching $116 million over the preceding three quarters.

Despite efforts to sustain operations, Ernst declared on November 12 that it would close all remaining 53 stores and liquidate its remaining assets. At that time, the company maintained a presence in six states with approximately 2,000 full- and part-time employees. The final phase of Ernst’s going-out-of-business sales commenced on November 23.

Malmo Nursery

In 1893, Charles Malmo, a Norwegian immigrant, established a seed shop on Seattle's Second Avenue. He is recognized as the pioneer in the Northwest for cultivating and producing his own nursery plants instead of importing ornamental bushes from countries such as Japan, the Netherlands, and England. By 1930, Malmo launched the Pacific Coast's inaugural "garden department store," offering everything necessary for creating even the most intricate gardens, ranging from seeds to fully grown trees, as he modestly proclaimed during the opening ceremony. His son Clark acquired 30 acres at the current location of the University Village shopping center to expand cultivation efforts. Numerous mature gardens around historic Laurelhurst residences in Seattle owe their origins to the Malmo family’s work. In 1962, the Malmo enterprise was sold to Pay 'n Save, becoming a fully owned subsidiary managed under Pay 'n Save’s Ernst stores division, which was then branded Ernst Malmo.