Branching Out: How Evergreen Enterprises Evolved from Vendors to Catalogers

Mar 01, 2011 10:30 PM  By

When 1-800-Flowers.com announced in late 2009 that it was selling its home and children’s gifts business to an affiliate of Evergreen Enterprises, many people in the industry had one question: What’s Evergreen Enterprises? And what does it want with the Plow & Hearth, Problem Solvers, Wind and Weather, HearthSong and Magic Cabin catalogs, which 1-800-Flowers.com had been trying to shed for two years?

Evergreen Enterprises is a manufacturer and wholesaler of home decor and garden products. It plans to grow the titles by boosting catalog circulation, improving the websites and nearly doubling Plow & Hearth’s retail footprint. What does Evergreen know about selling direct to consumers?

Well, not much, but it had been a product vendor to country home and gifts book Plow & Hearth, “so we had some background with the company,” says Ting Xu, Evergreen’s founder/president.

And since Evergreen Enterprises was already running a strong manufacturing and b-to-b operation, “it made sense to expand our reach into a direct-to-consumer business with Plow & Hearth,” Xu says.

Evergreen paid $17 million for the five titles and the unit’s offices and warehouse facility in Madison, VA, as well as a distribution center in Vandalia, OH. All of the brands have been around for more than two decades, except for Problem Solvers, which began as an expansion of the Plow & Hearth business in 2001.

Plow & Hearth is clearly the flagship — and the brand that the Evergreen owners naturally have the most affinity with. “Plow & Hearth is appealing to customers because it represents a way of life that is uncomplicated, intelligent and self-sufficient,” says Evergreen CEO Frank Qiu.

Founded in 1980 as a store selling “Essentials for Country Living,” such as chainsaws, wood stoves, food preservation equipment and garden tools, Plow & Hearth mailed its first catalog in 1981. The company, which was acquired by 1-800-Flowers.com in 1998, is the only Evergreen brand that has a retail presence; it currently has 10 stores.

HearthSong launched in 1983 and sells educational, entertaining toys. Magic Cabin, which was founded in 1989, specializes in toys and crafts. Both titles were purchased by 1-800-Flowers.com for the Plow & Hearth unit in 2001. Wind & Weather, a 35-year-old cataloger of weather instruments and related gifts and gadgets, joined Plow & Hearth in 2005.

For its part, Richmond, VA-based Evergreen’s empire includes Evergreen Flag and Garden, which sells items such as decorative flags, garden stones, birdfeeders, mailbox covers and doormats. Cypress Home, which carries tabletop, kitchen and outdoor entertaining items, was launched in 2003.

Evergreen acquired small furniture and wall decor products company Cape Craftsmen in 2006, and in 2008 it launched Just the Right Shoe, a maker of tiny, decorative right-footed shoes. Evergreen bought New Creative, which sells themed garden items such as statuary, wind chimes and stepping stones, in 2009.

In acquiring the Plow & Hearth titles, “we realized that not only are the demographics of the end-use customers similar, but both companies have similarities in the longevity and dedication of the workforce,” Xu says.

One of Evergreen’s strengths, she notes, is aggressiveness in getting products to the marketplace. “With the product lifecycle getting shorter all the time, it is important for us to have a better view of the end-use customer, and being on the b-to-c side allows us to do that,” Xu says.

Putting down roots

Qiu, 46, and Xu, 45, moved from Shanghai to the U.S. as college students in 1986 and married in 1990. What brought them from China to Virginia?

“We were both attracted to the freedom and entrepreneurial spirit possible in the U.S.,” Xu says. “We are both active and love that in Virginia we are close to the coast and the mountains.”

And after coming from a city of 20 million people, “we really appreciate the serenity of Virginia,” Xu adds.

After Xu earned her master’s degree at Old Dominion University in Richmond, she worked for the state health department. Qiu worked for Prudential Insurance and later opened his own agency.

Evergreen began as a flag business in 1993. Xu’s mother made the first decorative garden flag “and we began selling them locally,” Xu explains. “After we made a batch for a local flag shop and they couldn’t pay us for them, we had to figure out how to sell them for ourselves.”

The family ended up selling the flags at the Virginia State Fair that year, and realized there was a business there. Xu’s brother James joined the company in 1994. By then “we had 10 flag kiosks in Virginia and North Carolina, and we attended 40 trade shows,” Xu says.

Qiu sold his insurance business and jumped onboard in 1995. “That year we attended our first wholesaler show, published our first catalog of four pages and opened the first warehouse,” Xu says.

Evergreen broke the $1 million mark in sales in 1996, Xu says. Its logistics facility in China opened in 2002, and by 2007, “we had over 5,000 products under multiple brands on our b-to-b online resource center, and our customers could order 24 hours a day.”

What’s the significance of the company name? “We both love the color green, and we wanted a name that conveyed that our products were built to last,” Xu explains.

Another factor: “It’s also a very easy word in English and easy for us to pronounce.”

Evergeen Enterprises has grown from $40 million in 2004 to $220 million in overall sales last year. Some of that growth has been through acquisitions, Xu notes. “We focus on making quick, informed decisions that allow us to grow the business when opportunities present themselves.”

From vendor to merchant

While some of the brands do publish catalogs for wholesale customers, Evergreen admittedly has much to learn about the direct and retail businesses. “The whole idea of consumer marketing was new to us, and we needed to understand who the customers are, where they are and their purchasing behavior,” Xu says.

Qiu and Xu are now getting an education from the employees at Plow & Hearth titles, attending conferences and talking with industry experts to get up to speed as quickly as possible, Xu says. “We’ve always felt connected to the end-use customer, so while learning more about them has been challenging, it is also very rewarding.”

And even though Plow & Hearth and Evergreen are separate creatively and operate independently, Xu says, “we have been able to share market trending information and vendor sources while keeping the goal of finding the most unique designs to fit the Plow & Hearth assortment.”

Neil Stern, a retail analyst and senior partner for retail consultancy McMillan Doolittle, says it’s never easy to transition from a supplier business to retail, because there are different skill sets and mentalities involved in each. But Evergreen purchased a well-established business that has already developed many of the competencies, “so the transition shouldn’t be as difficult,” Stern says.

“Plow & Hearth’s business has grown because they’ve done a superb job of carving out a niche — country inspired, high-quality products for the home and outdoors,” he notes. “Great customer service and quality products are really the foundation for any business.”

Antonia Ness, managing director with investment firm Gruppo, Levey & Co., agrees: “It’s certainly not an easy transition — being good at either is tough and being good at both is truly rare.”

Evergreen has managed significant growth through the transition year, she notes, “especially given what we’ve seen with other catalogers in similar categories in 2010.”

Eyes on online

Like most multichannel businesses, Evergreen is making an aggressive push toward increasing online sales, Qiu says. “We have top-graded the ecommerce team, and have added to the staff to position us to move into 2011 with all the resources we need to maximize this part of the business,” he explains.

More than 50% of Plow & Hearth’s sales now come from the web, Xu says, so it’s important to “keep pace and make that channel efficient for both our b-to-b and b-to-c customers. We are always working to stay up to date and find ways to serve our customers more efficiently.”

The company’s aim is to become even more customer-centric “by pushing to be more progressive with our websites and online marketing,” Qiu says. Evergreen is also getting more involved in social media by starting Facebook and Twitter pages for all the brands. “We want to be where our customers are to make it easy for them to do business with us,” he says.

Evergreen last year relaunched the Plow & Hearth and HearthSong websites, “and we are on track to relaunch Wind & Weather and Magic Cabin early in 2011,” Xu says. The company is now tackling revitalizing the Problem Solvers web business by adding new products and stronger marketing. It will be rolling out an updated website in the spring, she says.

Plow & Hearth also added WinterthurStore.com to its online stable last year, after licensing the brand name from the Winterthur Museum. It plans to mail a print catalog to accompany the Winterthur Store website in the spring.

But being multichannel is essential for Evergreen. “Retail stores are an ongoing part of both sides of the business, and both Evergreen and Plow & Hearth have had success with catalogs,” Xu says.

Evergreen mails wholesale catalogs twice a year. It plans to mail about 45 million catalogs for the Plow & Hearth brands this year — a slight circulation increase from 2010. Plow & Hearth, in particular, drops 15 catalog editions per year, totaling 28 million in circulation.

It’s also boosting its retail presence: Evergreen plans to open seven more Plow & Hearth stores in 2011 — six full-price and one outlet location. “We’re taking advantage of the current real estate market by opening more stores,” Qiu says.

What’s more, Evergreen will apply some of its merchandising and product development expertise to the catalogs. For instance, it plans to grow key categories in several of the brands, such as pet and domestics in Plow & Hearth, and baby gifts in Magic Cabin. “We are also planning to test children’s apparel in HearthSong,” Xu says.

Going for growth

Craig Battle, managing director at investment bank Tucker Alexander, marvels that Qiu and Xu’s humble business beginnings started out in their garage making decorative flags. He believes the acquired titles are in excellent hands. As a vendor of Plow & Hearth, “they really felt the brand could be grown substantially with greater and more dedicated resources,” Battle says.

Evergreen can help Plow & Hearth grow and diversify through its product development expertise, and improve margins through more direct sourcing, he says.

“The Plow & Hearth brand is solid and represents quality going back to the days of [founder/former president] Peter Rice,” Battle says.

With Evergreen’s backing, Plow & Hearth and the other brands should be able to grow substantially. “This company was a stepchild at 1-800-Flowers, and now it has a dedicated, talented, focused ownership and management group guiding it.”

Is Evergreen Enterprises keen to acquire more companies? It’s certainly open to other small merger and acquisition opportunities, provided they “fit into our established businesses to fully maximize our operations and logistic capabilities,” Xu says.

The company’s philosophy has always been the same: “We work hard and surround ourselves with talented, forward-thinking people who also work hard,” Xu says. “We are quick to try new ideas, learn from the outcome and adjust our future plans based on those learnings.”

For certain, Qui and Xu have had to wing it at times, “but we were encouraged in the early days by positive feedback from our customers,” Xu says. “Garden flags were a simple idea, but we were open-minded and learned from our mistakes and feedback from the customers.”

A lot of successful businesses come from simple ideas, she notes, “but you have to be willing to learn as you go and adjust the execution accordingly.”

A family affair

EVERGREEN ENTERPRISES OWNERS FRANK QIU AND TING XU HAVE BEEN WORKING TOGETHER SINCE THEY STARTED DATING, SAYS QIU. “In college, when we were both business majors, I helped her with her management and accounting classes, and she helped me with English.”

Qiu says he and Xu support each other in critical areas of the business, “often working in different locations so that we are covering all the areas as needed. Then we discuss the important issues and make decisions together to support our key initiatives.” It’s not all about work, though, he adds. “We always seem to find the time for work and for the fun things we enjoy doing.”

But Xu admits it’s not easy being married and heading up a company. “I have a lot of respect for any working mother,” she says. “I’m very lucky to have supportive parents who live in the same town and who have always been available to help.

Qiu and Xu have also involved their two children — Emily, 19, and Allan, 18 — in the business from a young age. “We feel they have learned a lot, and have developed a strong work ethic from seeing how we have built our business,” Xu says. — JT

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