Food gifts cataloger/retailer Harry & David Holdings announced that it is selling most of the assets of its Jackson & Perkins gardening brand to an investment group headed by Donald and Glenda Hachenberger. An unaffiliated investment group will buy about 3,200 acres of land in Wasco, CA, the so-called Rose Capital of the Nation, along with certain buildings and equipment.
The deals, expected to close by the end of June, are expected to bring Medford, OR-based Harry & David about $49 million, $46 million of which is due at the closing.
Donald and Glenda Hachenberger own several businesses in the horticultural industry, including Hodges, SC-based Southern Sun, a technology company involved in plant propagation. They are buying the Jackson & Perkins brand, including the direct marketing and wholesale businesses and associated inventory, including rose plants, other horticultural products, and home and garden decor.
For the fiscal year ended June 24, 2006, sales at Jackson & Perkins were $73.8 million, down 2% from the previous year. The company blamed the decline primarily on weaker demand for roses among the company’s reseller customers and on a shift in its direct marketing strategy that included lower circulation of catalogs with higher page counts, which resulted in higher average order sizes but lower overall sales.
In comparison, annual sales for Harry & David Holdings increased nearly 6% last year, to $598.2 million. Direct sales for the Harry & David brand rose nearly 6%, while Harry & David store sales increased more than 13%.
“The decision to divest Jackson & Perkins was made only after careful consideration of its strategic fit with our core gift and gourmet food businesses,” CEO Bill Williams said in a statement. “Having determined that it did not fit with our long-term goals, we are pleased that this divestiture will allow us to focus on our core businesses and further strengthen our financial position.”
Stuart Rose, managing director for Wellesley, MA-based investment bank Tully & Holland, views the deal as a solid business decision. “Jackson & Perkins is not a gift business, while Harry & David is most certainly a gift business. Jackson & Perkins also has a wholesale business that doesn’t fit with Harry & David. Combine that with high asset value of land and weak performance, and you get a recipe for a sale.”