It seems to me there is an alarming state of affairs emerging in the catalog business: Companies can implode and disappear in a matter of weeks or months, not years. For instance, today marks Michael Muoio’s last day as the leader for Lillian Vernon. Founded in 1951, Lillian Vernon sells products such as housewares, children’s products, decor, gifts, and jewelry. It was bought by Sun Capital Partners in May 2006. The company has gone from great expectations, when Muoio was a spotlighted panelist at the 2007 ACCM in Boston discussing industry trends and success strategies, to its bankruptcy sale to Current USA, a division of Taylor Corp.
Consider the speed with which it imploded. Before the acquisition by Sun Capital there were 128 people working in the White Plains office. (No doubt fewer than were in the Rye offices before the move down the road.) In August, 2006, 48 people were working in White Plains and then most of the remaining jobs were shifted to Virginia Beach. After the 2006 Holiday rush the company laid off about 25% of its full-time workforce. At this point total staff was around 500. By June 30, 2007, the company had 564 employees. By the end of 2007 there were 374 employees and by late winter 177 employees with more cuts being contemplated. There were roughly 80 employees at the time of the Current USA sale. So by my calculations the company went from a headcount of over 700 to 80 in roughly 18 months with most of that within the last 7 months.
Mr. Muoio believes the catalog industry’s paradigm needs to change; I couldn’t agree more. Quoted in MultiChannel Merchant, he said “You can’t go year round because the variable costs have destroyed companies, and you can’t make up enough in the holiday season. You’ll have shrinking brands and shrinking files. It will be a slow grind down.” This writer’s opinion is that if Lillian Vernon is predictive of an industry trend we need a new definition of “slow grind”.
In coming weeks I’ll chronicle other recent changes, such as The Sharper Image, BlueSky Brands, The Bombay Company, and some lesser known companies. I’d like to hear your stories as well. The trend is not good and I certainly agree with Mr. Muoio that the paradigm needs to change. Your thoughts?
As soon as Reliant Equity Investors bought Paragon and formed Bluesky Brands to run the Paragon and other companies they bought it started going down hill. It was one mess after another. It was obvious they had no idea what they were doing. To go out of business the way they did was a total nightmare for hundreds of employees, vendors, customers and nonprofit companies. It was obvious Reliant was milking the companies from the start selling off land and buildings, mailing lists, pieces of the companies. The businesses are just shells with no way for any of the people owed money to ever get paid. Reliant should be held accountable but that is going to be a uphill battle for the lawyers.
Comment by Dee — April 24, 2008 @ 11:17 am |
It is now March 22, 2009—was I right?
Comment by Mike Muoio — March 22, 2009 @ 10:54 am |