Smith & Hawken Shutting Down

It’s official: The Scotts Miracle-Gro Co. announced yesterday it is closing its Smith & Hawken division. The catalog and Website of the home and garden merchant will stop taking orders today; all 56 stores will be shuttered by the end of this year.

“We would have preferred to sell the Smith & Hawken business in order to protect jobs and keep the retail franchise intact,” said Jim Hagedorn, chairman/CEO of Scotts Miracle-Gro in a statement. “However, after discussions with several potential investors over the past 12 months, it became obvious that shutting down the business was the best option available.”

After-tax charges associated with closing Smith & Hawken are expected to be about $25 million, primarily related to the termination of lease obligations and severance costs. Most of the charges will be incurred during the fourth quarter of fiscal 2009 and the first quarter of fiscal 2010; Scotts expects the closure process to be cash-neutral.

Storewide sales across the Smith & Hawken chain will begin today. A third-party firm—reported to be liquidation specialist Gordon Brothers—is managing the process.

Scotts paid about $70 million for Novato, CA-based Smith & Hawken nearly five years ago. But the high-end gardening accessories, gifts and furniture merchant has been a drain on Scotts, whose core branded consumer lawn and garden products business is booming thanks to the recession.

Founded in 1979 by Dave Smith and Paul Hawken, Smith & Hawken was sold to the now-defunct CML Group in 1993. The cataloger/retailer was then bought by private equity firm DDJ Capital Management and the State of Wisconsin Investment Board in 1999; Scotts purchased it from DDJ Capital in 2004.

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