Now that Current USA has agreed to buy troubled gifts cataloger Lillian Vernon Corp., what does that mean for Lillian’s 80 employees? The cataloger’s workers, along with Lillian Vernon CEO Michael Muoio, find out on Monday.
Virginia Beach, VA-based Lillian Vernon, which had filed for bankruptcy protection in February, agreed to be sold to Current USA, a unit of privately held Taylor Corp, on Thursday. The purchase price is $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.
Current USA submitted the highest bid for closely held Lillian Vernon at an April 1 auction, another filing with the court shows. Officials for Taylor have said Current USA plans to continue operations in Lillian Vernon’s facility in Virginia Beach after the deal officially closes April 10.
Founded in 1951, Lillian Vernon sells products such as housewares, children’s products, deco, gifts, and jewelry. The business shrank in the past 10 months: Lillian Vernon employed about 564 workers as of the end of last June.
The cataloger, which has been owned by Sun Capital Partners since May 2006, had reached a tentative agreement last month to sell the business to Lemont, IL-based cataloger Creative Catalogs Corp.—which owns personalized gifts merchant Personal Creations.com–for a base price of $9.3 million.
But Lillian Vernon officials were granted permission to hold an auction to gauge buying interest in the company, and Current came through with more money. In addition to Current, its Mankato, MN-based parent company Taylor Corp. includes the G. Neil, Paper Direct, and Sa-So catalog titles. Taylor’s direct sales for last year were about $700 million.
Would Muoio like to remain at Lillian Vernon under the new ownership? “We’ll see what the role would be,” he says. “This industry is tough right now.”
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.”
There will be further consolidation in the industry, Muoio predicts. “You’ll have shrinking brands and shrinking files. It will be a slow grind down.” The way the industry is going, there are no bright spots, he adds: “Everyone is crying in their beer.”