Target Commercial Interiors is rebranded Atmosphere under new ownership

When it was still a part of the bull's-eye, Target Commercial Interiors bled red.

Now that the office furnishings division of Target Corp. has been sold, it has a new name, Atmosphere Commercial Interiors, and a new signature color — blue.

"We're ready for something different," said Mike Litwin, who led the business under Target, shaped its sale and is now its chief executive. "We've had enough red. It's not us anymore."

Omni Workspace, a longtime logistics partner, bought the company in May. The deal included an investment from Litwin and other managers and aligned with Target's desire to shed operations that weren't core to its main business as one of the nation's largest mass retailers.

Atmosphere is unveiling its new name, logo and website today. The blue in the logo is a nod to the blue skies conjured by the word "atmosphere," and it plays off the fact that Target's effort to sell the business was known internally as "Project Teal."

Under Target, the firm was one of the largest office furniture dealers in the U.S. and a leading distributor of Steelcase products.

It recently outfitted the new Optum headquarters in Eden Prairie and the training facility of the Minnesota Timberwolves and Lynx in downtown Minneapolis. It was also tapped as the preferred provider of interiors for Holiday Inn Express and plans to furnish 80 to 100 hotels this year. And it has a growing business in sports facilities, with Target Field, Madison Square Garden and Daytona International Speedway as clients.

Litwin said the company plans to branch out into other areas such as video conferencing and soundproofing.

"We've been jolted with a charge of energy," Litwin said. "There's that element of excitement and newness and desire to prove oneself as its own company."

There were obviously benefits to being part of Target, he added, but the structure confused some clients who, knowing Target as a discount retailer, were surprised the higher-end focus of the commercial business. Atmosphere has also jettisoned some parts of the Target corporate culture — such as its heavy use of meetings — that it doesn't find useful.

"We have a lot less administrative things, which you kind of get by habit as part of a big company," he said.

When Brian Cornell arrived as CEO at Target last summer, company executives were already engaged in a strategic review of every aspect of the company as it looked to refocus and revive sales after a difficult couple of years. Target Commercial Interiors was one that didn't align with the company's priorities.

"I'm not surprised they sold it," said Brian Yarbrough, an analyst with Edward Jones. "It was more of a distraction. In the grand scheme of things, it was pretty minuscule compared to the overall results at Target."

Litwin said the business has annual revenue that exceeds $100 million, sizable for many businesses but tiny inside the $73 billion Target.

Dayton Corp. started the commercial furnishings business in 1953, nearly a decade before it opened the first Target store.

In recent years, Target has been one of its biggest customers as it used the subsidiary to outfit its headquarters, regional offices and distribution centers as well as its offices in stores themselves. By sourcing furnishings through one of its own arms, Target was able to basically get the items at cost, Litwin said.

And in most years, aside from the down years of the recession, the business was profitable, he added. Its sales nearly doubled in the past five years, far eclipsing the growth of Target's big-box stores.

Still, Litwin knew the division was vulnerable. In November, he was told by senior executives that, while they liked the business, it was going to be teed up for a sale. "No big surprise," Litwin said. "We're business to business. Target is mass consumer."

By mid-March, he hadn't heard much about potential suitors. So he asked executives if they would consider letting him make a pitch. In the meantime, he reached out to the owners of Omni, whose A&M Business Interior Services was routinely used by Target Commercial Interiors to move and install furniture. They agreed to partner on an offer.

A couple of days later, they sat down with Target executives and hammered out the framework of a deal, Litwin said. They were given a deadline of May 30 to close the deal.

He declined to give a transaction amount, but Target has said the deal was less than $10 million.

As part of the deal, Target committed to remaining a client. And Litwin noted that Target will continue to get a "competitive deal" on the goods it buys from Atmosphere.

Much about the business is staying the same. Atmosphere kept its offices directly across the street from Target Corp.'s Nicollet Mall headquarters. The same management team is running it. It laid off only about a dozen of its employees. It now employs 90 people in Minneapolis and about 70 others at showrooms in Wisconsin and Arizona.

Its ground-level space at S. 9th St. and Nicollet Avenue once housed a showroom that was open to the public. But the company made it by appointment-only a few years ago and now only uses it mostly to host large groups.

Litwin said he doesn't see a need for that space anymore. So the building's owners are looking into leasing that space out, perhaps to a restaurant or two.

Kavita Kumar • 612-673-4113