Foster & Gallagher: The End Is Almost Here

Grand Rapids, MI—On June 29, multititle mailer Foster & Gallagher (F&G) issued a press release announcing that it would “substantially reduce its workforce.” What the release didn’t say was that except for what spokesman Doug Morris described as “a handful of people at each location,” nearly all the workers at the company’s horticultural catalogs were laid off.

F&G’s books horticultural books include Breck’s, Spring Hill Nurseries, and Michigan Bulb Co. The company has operations in Peoria, IL; Tipp City, OH; Piqua, OH; Knoxville, TN; and Louisiana, MO, as well as Grand Rapids. Apparently the horticultural catalogs are no longer taking orders. Phone calls to the ordering and customer service lines of several titles resulted in busy signals. F&G also owns gifts cataloger Walter Drake, which has been and remains on the selling block and is not affected by the layoffs, Morris says.

According to the press release, F&G “continues discussions with [its] lenders regarding the most efficient manner of recovering [the company’s] value for the secured creditors, including a sale of the company or a liquidation of its assets under the U.S. Bankruptcy Code.”

F&G’s sales fell from a high of $476 million in 1997 to $337 million last year. Some of this was due to the April 2000 passage of the Deceptive Mail Prevention and Enforcement Act, aimed at the use of sweepstakes. The Michigan Bulb catalog had used sweepstakes significantly as a prospecting tool. According to the spring edition of an F&G employee newsletter, between 1999 and 2000, Michigan Bulb’s gross revenue tumbled 44%, from $116 million to $65 million.

F&G’s earnings tumbled as well. The F&G employee newsletter noted that the company’s last profitable year was 1998, when earnings were $1.6 million. F&G posted a $7.7 million loss in 2000, although that was an improvement on its reported $24.9 million loss in 1999.

The sales slide in part prompted F&G to sell off its nongardening catalogs. In July 1999, F&G sold food gifts title The Popcorn Factory to Wand Partners. In April 2000, the company put the children’s division, which includes wood toys book HearthSong and dolls title Magic Cabin Dolls, and its gifts group, which includes Walter Drake and the Home Marketplace, on the selling block. In June 2001, Westbury, NY-based flower and gifts marketer 1-800-Flowers.com bought the $30 million children’s division. Less than a week after the sale, on June 13, F&G president/CEO Robert Ostertag Jr. announced his resignation.

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