Bath and body soap marketer Crabtree & Evelyn Ltd. on Wednesday filed for Chapter 11 bankruptcy court protection in Manhattan.
The Woodstock, Conn.-based firm said it will “pursue a plan of reorganization to capitalize on opportunities for future growth and profitability, including evaluation of its real estate portfolio, strengthening brand strategies and restructuring of its financial obligations.”
In court documents, the troubled firm listed $46.2 million in assets and $47.8 million in liabilities. Affiliates of the Crabtree & Evelyn Group, including those in Canada, Europe, Hong Kong, Malaysia, Singapore and Australia, have not filed for bankruptcy court protection.
An affidavit by Stephen Bestwick, acting president since April 2009, cited operational issues such as changes in management that resulted in strategy shifts and inability to renegotiate lease terms for many of its retail sites as some of the reasons for the filing.
According to Bestwick, U.S. retail sales, through 126 full-price and outlet locations, accounted for 56 percent of company revenues for the year ended Sept. 30, 2008. The 130 Crabtree & Evelyn retail stores outside the U.S. accounted for 21 percent of revenues, while wholesale sales contributed 12 percent. Exports to nonaffiliated overseas distributors made up 5 percent of revenues, and Internet sales contributed 6 percent.
Bestwick said the company projected revenues of $100 million for the current year, ending Sept. 30, down from $107.5 million in 2008 and $112 million in 2007. Operating losses for fiscal year 2009 are estimated to widen to $13.3 million from the $8 million loss in 2008, which grew from a $3.2 million loss in 2007.
As of June 29, Crabtree, which has about 950 employees in the U.S., owed $4.1 million to trade vendors and $790,124 to landlords on leases for its retail stores.
The firm’s top three unsecured creditors include: Standard Soap, Leicestershire, England, $807,068; former chief executive officer Michael Stromberg, Cincinnati, $395,000, and Vera Bradley Designs, Carol Stream, Ill., $288,884.
Founded in 1972, the company has more than 25 product lines, including LaSource, Gardeners, India Hicks Island Living and Naturals.
Crabtree has a $40 million debtor-in-possession financing facility from KLK Overseas Investments, a British Virgin Islands-based investment holding company that is a subsidiary of Malaysian firm Kuala Lumpur Kepong Berhad. The U.S operation of Crabtree is a subsidiary of United Kingdom investment holding company Crabtree & Evelyn Holdings Ltd., which owns Crabtree’s foreign trademarks and is not a party to the bankruptcy. The U.K.-based holding company is a subsidiary of CE Holdings, which itself is a subsidiary of KLK Overseas.
The company said all operations, including its wholesale activities and e-commerce site, will remain in operation during its bankruptcy.
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