Yankee Candle Closes Illuminations Headquarters

Less than two years after Yankee Candle Co. acquired Illuminations in a $22 million cash deal, company officials have closed the Illuminations’ headquarters in Petaluma, CA.

Harlan Kent, president/CEO for Yankee Candle Co., says the closure of the Petaluma headquarters affects 20 people, many of whom worked on Illuminations’ catalog and Web business. When Yankee Candle acquired Illuminations in July 2006, officials said they planned to keep the Petaluma headquarters and call center open.

But Kent says closing the Petaluma headquarters of Illuminations and “consolidating back into our headquarters is not indicative of a change in investment or belief or optimism of what the potential is for this business.”

“Essentially,” Kent says, “when we were operating the businesses side by side, we found there was a significant sharing of Yankee resources, including the supply chain piece of it, the direct business, creative, and merchandising. We thought it would be most efficient to focus on the business from a growth perspective, and this is the best thing.”

In Yankee Candle’s first-quarter financial statement, officials said the company initiated a restructuring plan designed to close three underperforming Illuminations stores in southern California and relocate the Illuminations corporate headquarters from Petaluma, CA to the company’s South Deerfield, MA, headquarters.

In connection with this restructuring plan, a charge of $1.5 million was recorded during the 13 weeks ended March 29. Included in the restructuring charge was $0.6 million related to lease termination costs, $0.5 million related to non-cash fixed assets write-offs, and $0.4 million in employee related costs.

Kent says about 30 Illuminations stores remain, the bulk of which are located in California. Yankee Candle operates approximately 430 stores.

Both Yankee Candle and Illuminations, established in 1996, sell scented candles and related home decor items to resellers as well as to consumers via stores, catalogs, and the Internet. But Kent says there is a demographic difference between customers of Illuminations and Yankee Candle. Illuminations is a “more fashion forward, décor driven business than our fragrance driven Yankee Candle business. The demographics for Illuminations are younger, more affluent, and more urban.”

Since Yankee Candle acquired Illuminations, Kent says, “We’ve learned a lot and made a bunch of strategic moves to integrate the businesses. We’ve integrated the Illuminations stores into our Yankee stores business, and we manufacture products through our supply chain. We’re very optimistic. We see Illuminations as an important piece of our overall corporate strategy for developing our retail presence west of the Mississippi.”

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