GARDEN BOTANIKA TO SELL-OFF ASSETS
Byline: Vicki M. Young
NEW YORK — A federal bankruptcy court in Seattle has approved the retention of the Buxbaum Group to liquidate the assets of Garden Botanika, which announced last week that it would close up shop.
As reported, the Redmond-based retailer of natural cosmetics has been under bankruptcy court jurisdiction since April 20, 1999, when it voluntarily filed for Chapter 11. Garden Botanika is in the process of shuttering 61 stores and expects to close the balance of its 48 units as it completes its restructuring. Proceeds from the liquidation sales will be used to reduce the retailer’s debt, it said.
All 109 sites are expected to close by the end of April. Slightly more than 1,000 employees are affected by the shutdown. Also set for closure are the retailer’s corporate headquarters and distribution center.
Bill Lawrence, president of the cosmetics and personal-care products company, said in a statement, “After careful consideration, it was determined that the sale of the company’s trademarks, formulas and Web site would be the best course to realize the value of the Garden Botanika brand. Management believes that under new ownership, the Garden Botanika business will be able to capitalize on its industry position, while having access to broader channels of distributions and greater financial resources.”
The retailer is selling certain manufacturing assets, trade names, trademarks, formulas, the company’s Web site and other intangible assets.
Shroeder & Tremayne, a St. Louis-based distributor of bath products, has reportedly offered $1.3 million for some of Garden Botanika’s assets, including its trade name. Any sale of those assets would be subject to bankruptcy court approval, as well as competing bids from other companies.
When Garden Botanika filed for Chapter 11, it listed $8.1 million in debts and $17.9 million in assets. In February 2000, Arlee Jensen resigned as president and chief executive officer, with Lawrence taking over the reins. Previously he held the posts of chief operating and chief financial officer.
According to a Securities and Exchange Commission filing, the first Garden Botanika store was opened in August 1990. The company went public in May 1996, reaching the market at $20 on May 22 and climbing as high as $35 just days after going public. About a month and a half later, the stock had dropped to around the $14 range.
Much of the retailer’s growth in the early Nineties was spurred by an aggressive strategy in which the chain tried to establish itself as a leader in the Pacific Northwest, California and in parts of the East Coast. Michael Luce, the president and ceo in 1996, told attendees at a Robertson Stephens investment conference in September of that year that company executives foresaw a potential for between 1,000 to 1,200 store sites.
At its peak, Garden Botanika operated 280 stores concentrated primarily in the Midwest and Southeast regions. The most rapid expansion came in 1995 and 1996, when the company opened 66 and 101 stores, respectively. The 167 stores opened during the two years, however, performed significantly below historical experience and the company’s expectations. In addition, the company began facing competition from other specialty retailers.