Calyx & Corolla on the block again

Parent firm Gerald Stevens needs to raise cash In August, just fourteen months after buying Calyx & Corolla, retailer Gerald Stevens said it intends to sell the $20 million fresh-flower cataloger.

“We’ve had discussions with some companies, and there has been some initial interest,” says Darren Sylvia, spokesman for Fort Lauderdale, FL-based Gerald Stevens. “We hope to sell it by the end of year.”

The $110.6 million Gerald Stevens, which also operates 275 flower shops and a floral import business, wants to raise cash after losing $3 million in its most recent quarter. The company blames the loss on sluggish spring sales at the San Francisco-based Calyx and within its retail chain. Since January, Stevens’ stock has plunged 83%, dipping below $1.50 in late August. In June, Stevens laid off 25% of its corporate staff – 45 employees.

Calyx & Corolla was founded a decade ago by Gardeners Eden catalog founder Ruth Owades, who struck deals with growers around the country and with Federal Express to sell fresh flowers via catalog. Now chairman/ CEO of the catalog, Owades hasn’t been involved in its day-to-day operations since Stevens bought it last June. But as a Stevens board member, she has been overseeing the search for a buyer. “Calyx & Corolla is a known brand that dominates its market niche,” Owades contends. “So this division can command a good price.”

Neil Godsey, assistant vice president for the investment banking firm Merrill Lynch Global Securities, believes that several publicly traded floral companies could be potential buyers. “A lot of companies – Internet and offline – could be interested.”

Still, Calyx & Corolla’s growth has been flat at best for several years, though no one within the company would cite specifics. But Owades says that after Stevens bought it, the corporate and promotional sales divisions were shifted to other Stevens departments and have not been included in Calyx’s annual sales. The two divisions will be included in the sale, however.

Calyx & Corolla’s circulation was 10 million this year. “We’ve been cutting back as more volume moves to the Internet,” Owades says, though she won’t reveal previous years’ circulation. Online sales now make up 15%-20% of the cataloger’s revenue.

To reach its core customers a little sooner, and keep them a little longer, New York’s FAO Schwarz has launched three merchandise lines targeting the baby and ‘tween markets: FAO Baby, FAO Girl, and FAO University.

Taking on competition such as Pottery Barn Kids and Company Store Kids, in June the upscale toy cataloger/retailer launched FAO Baby, a catalog of furniture, accessories, toys, and apparel for infants, toddlers, and preschoolers. “Customers were asking for products such as crib blankets and little pillows,” says spokesman Alan Marcus. Prices range from $18 for a baseball cap to $6,000 for a mahogany rocking horse. Marcus says one of the most popular items is the Crib-to-Bed-to-Sofa, a $3,000 wood sleighbed-style crib that converts to a bed or a sofa.

Most of the 300,000 copies of the first FAO Baby mailing went to names from the FAO Schwarz house file. FAO Baby will mail once a year, like the FAO toy catalog, which has an annual circulation of 6 million. According to the company’s data card, the average order for the core catalog is $120.

FAO Schwarz has also reached out to the ‘tween set – boys and girls ages 7-12 – with the FAO Girls and FAO University brands. Unlike FAO Baby, however, the ‘tween lines will not have their own print catalogs. “We’ll be selling the Girl and University lines through the Website and the main FAO catalog, as well as through the stores,” Marcus says. The Girls line includes jewelry beading kits and bath sets, while the University line, which targets boys, sells items such as backpacks equipped with boomerangs and collegiate-inspired clothing.

“The boys’ and girls’ lines do have some overlap,” Marcus says. “A number of the items we sell are gender-neutral,” such as a messenger bag that contains art and crafts supplies. FAO launched the ‘tween brands in part to target existing FAO customers who are growing out of children’s toys.

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