It’s been a scary first quarter for the multichannel industry, with many merchants closing, in bankruptcy, or said to be near folding. At least Lillian Vernon Corp., which had filed Chapter 11 in February, is safe, now that it has a new owner with deep pockets.
The Virginia Beach, VA-based personalized gifts cataloger was sold to Current USA, a subsidiary of Taylor Corp., on April 3 for $15.8 million, excluding adjustments relating to inventory and personal property, according to a sales contract filed with the U.S. bankruptcy court in Wilmington, DE. Mankato, MN-based Taylor Corp. includes the Current, G. Neil, Paper Direct, and Sa-So catalog titles; its direct sales are about $700 million. Calls to Current were not returned by press time.
Personal Creations.com, a gifts mailer owned by Creative Catalog Holding Corp., had offered $9.3 million for Lillian Vernon in March. But Lillian Vernon officials got permission to hold an auction to gauge buying interest in the company, and they got a better offer from Current.
Chris Shannon, managing director with New York-based investment firm Berkery, Noyes & Co., notes that Taylor Corp. is a large private company that has developed a focus on personalization. “Lillian Vernon has always been strong in knowing their customer base well. I can see where the assets of Lillian Vernon could complement the divisions of Taylor Corp.”
Founded in 1951, Lillian Vernon sells products such as housewares, children’s products, decor, gifts, and jewelry. The business, which was acquired by Boca Raton, FL-based investment firm Sun Capital Partners in May 2006, shrank considerably in the past 10 months: Lillian Vernon employed about 564 workers as of the end of last June; at the time of the sale it had about 80.
What remained of Lillian Vernon’s marketing and merchandising units moved to Current USA’s Colorado Springs, CO, facility on April 7. The new owner plans to keep Vernon’s distribution center in Virginia Beach open.
Exit Michael Muoio
Lillian Vernon president/CEO Michael Muoio turned down an offer from new parent company Current USA to stay on board in a consultancy role. He left the company on April 10. Prior to Lillian Vernon, Muoio ran Oshkosh, WI-based gifts and home decor cataloger Miles Kimball from 1991 until October 2005.
What’s Muoio going to do now? After returning to his hometown of Appleton, WI, “I will take some time off and see how the industry is looking before I decide what direction to take,” Muoio says. There’s no question that “this industry is tough right now,” he notes.
In fact, Muoio believes the catalog industry’s paradigm needs to change. “You can’t go year round because the variable costs have destroyed companies, and you can’t make up enough in the holiday season.”