Now that Lillian Vernon Corp. has changed hands for the second time in three years, industry watchers are wondering if the new owners — and the new president — can turn the struggling business around.
Direct Holdings Worldwide announced on May 30 that it sold Lillian Vernon to investment firm Sun Capital Partners. Boca Raton, FL-based Sun Capital immediately named Michael Muoio president/CEO, replacing Jonathan Shapiro as Lillian Vernon’s president. Muoio, a consultant who had been president/CEO of rival housewares and gifts cataloger Miles Kimball, is no stranger to the team at Sun Capital: The investment firm had owned Miles Kimball for 18 months before selling it to manufacturer/marketer Blyth in March 2003. Sun Capital also owns a majority share of men’s apparel cataloger Bachrach Clothing, which it acquired in February 2005. In July 2004 it had purchased cataloger/retailer Life Uniform from Angelica Corp.
The new owner will close Lillian Vernon’s White Plains, NY, headquarters by Oct. 31 and move the entire operation to Virginia Beach, VA, where the cataloger has its distribution center. Muoio says 40-50 employees — roughly half of the White Plains staff — will make the move to Virginia Beach. The company will be more efficient “by being all together under one roof,” Muoio says. “It makes a lot more sense to move headquarters down to Virginia than for us to move the DC up to New York.”
Time for a turnaround
Although Lillian Vernon has been privately held since Direct Holdings bought it in July 2003, it’s believed that the cataloger’s sales have been declining. Its final sales numbers as a public company were $287.0 million, $259.6 million, and $238.0 million in fiscal 2001, 2002, and 2003, respectively. Corresponding losses for those years were $1.4 million, $9.1 million, and $18.6 million.
Muoio admits that the 55-year-old Lillian Vernon “certainly has been a lot larger than it is today. We hope to help nurse it back to health and get us back on track.” During his stint at Oshkosh, WI-based Miles Kimball, from 1991 until he resigned as CEO in October 2005, Muoio helped grow the company from $50 million to $200 million in sales.
Many in the industry applaud Muoio’s appointment. Fred Anderson, managing director of Anderson Direct, a South Orange, NJ-based consultancy and financial intermediary, says that Lillian Vernon is “an excellent vehicle for Mike Muoio. He’s got the experience, particularly in the personalization area.” Lillian Vernon is known for personalizing hundreds of types of products, from wallets to toy boxes. Miles Kimball also personalizes a fair amount of merchandise, particularly its holiday cards.
Muoio will have some help in his new position: He says founder Lillian Vernon will remain with the business as a senior adviser and a nonexecutive chairperson. “Lillian Vernon is going to continue with the company. She will be advising me on merchandising and brand and the franchise,” Muoio says. Vernon famously founded the company from her kitchen table in 1951, using $2,000 in wedding-gift money to sell purse-belts via mail order.
Vernon is already providing “terrific insight, and I think we see eye to eye on the business,” Muoio says. “Her experience and leadership, in terms of what she’s done with this business over the years, is terrific, and I look forward to learning a lot from her.”