The sun sets on the CML Group

Feb 01, 1999 10:30 PM  By

Just four years ago, the CML Group’s empire included cataloger/retailers The Nature Co., Smith & Hawken, and NordicTrack. But on Dec. 17, the Acton, MA-based company filed for Chapter 11 bankruptcy protection and said it would sell its lone remaining property, gardening supplies marketer Smith & Hawken. In late November, the CML Group had sold its NordicTrack athletic equipment division to manufacturer/ cataloger Icon Health & Fitness for $12 million; in 1996, it had sold The Nature Co. and its Britches of Georgetowne apparel retail chain.

The bankruptcy filing doesn’t surprise industry observers, given that the CML Group hasn’t reported an annual profit since 1994. For the year ended July 1998, the CML Group lost $127.4 million on sales of $274.4 million; it had shut NordicTrack’s catalog earlier in the year in hopes of cutting its losses. NordicTrack was responsible for most of the red ink-sales plunged 30% last year alone, as the brand’s once-hot flagship product, an exercise machine that mimics the motions of cross-country skiing, grew snow-cold.

But $750 million Icon believes that it can revive the brand. “NordicTrack is a great investment for us, given its well-known and respected brand name,” says spokeswoman Nicole Griffin. The Logan, UT-based company owns eight other fitness equipment brands and had been the exclusive manufacturer of NordicTrack equipment since 1996. Icon also owns the Workout Warehouse fitness equipment catalog, which will begin selling NordicTrack treadmills in the spring. “It’s still too early to tell if we’ll mail a separate NordicTrack catalog,” Griffin says.

The bargain-basement price that Icon paid for NordicTrack attests to the division’s ebb in fortunes. And unhappily for the CML Group, “the money from the NordicTrack sale won’t produce enough cash to keep it in business,” says Nick Holland, a principal in Boston investment firm Ulin & Holland. “At this point, it’s a matter of liquidating the company on the best possible terms.”

And that entails selling off Smith & Hawken, which last year reported net profit of $2.8 million on $88 million in revenue. One industry source says that in the past six months at least five companies had inquired about buying Smith & Hawken. As of late December, the CML Group expected to settle on a buyer by the end of January.