Lillian Vernon may seek sale or liquidation
By Brent Felgner -- Playthings, 2/20/2008 11:13:00 AM
WILMINGTON, Del.—Catalog, Internet and direct marketer Lillian Vernon Corp. has filed for Chapter 11 bankruptcy protection and will likely seek the sale of the company or liquidation, according to filings with the U.S. Bankruptcy Court here. It blamed a weaker than expected holiday season and a challenging economy.Among its product mix is a broad assortment of toys and other children’s products, some of which the company has distinguished through a wide personalization program.
“The debtors have been experiencing a steady decline in sales and an increase in costs over the course of the last decade,” CFO Robert Eveleigh said in a affidavit supporting the bankruptcy petition. “During the past holiday season expected sales growth did not occur, which resulted in lower profitability and significant unsold inventory. Those factors combined to significantly impair the debtors’ ability to find additional financing.”
According to published reports and industry sources, it laid off about half of its workforce last week, including its toy buyers.
The company is currently determining whether it can arrange a sale, find additional financing or whether an “orderly wind down” of the business will be in the best interests of all stakeholders.”
The marketer listed a total of $13.5 million in trade debt; included in the top 20 list of unsecured creditors is the Madam Alexander Doll Co., which is owed $108,000, according to the court documents.
Lillian Vernon was founded in 1951 as a budget-oriented direct marketer, based in White Plains, N.Y. It relocated to Virginia Beach about three years ago. It uses its 16-million person database to mail about 81 million catalogs. It deals with about 400 suppliers, many on a direct overseas basis. According to one company attending Toy Fair, it commonly requires at least a 66 percent gross margin on its products.
In 2007, the company reported about 55 percent of its business was done on the Web.
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