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Smith & Hawken to close

BY HBSDEALER Staff

Smith & Hawken, the industry’s first upscale gardening retailer, will close its doors by the end of the year. Although the 56-unit chain had been struggling for months, the announcement by parent company Scotts Miracle-Gro came as a surprise to many employees, according to several media reports.

Store liquidation sales, which are being run by a third party, began yesterday.

“We would have preferred to sell the Smith & Hawken business in order to protect jobs and keep the retail franchise intact,” said Scotts Miracle-Gro CEO Jim Hagedorn in a July 8 filing with the Securities and Exchange Commission. “Unfortunately, the combination of a weak economy and the lack of scale proved too great to overcome.”

The Marysville, Ohio-based company, better known for fertilizers and pesticides than teak benches and English gardening shears, paid $72 million (including $14 million in debt) for Smith & Hawken in 2004. In the ensuing years, Scotts tried to boost revenues by broadening the brand’s merchandise and inking deals with True Value and Target, among other initiatives.

Last year, Scotts brought in Pat Farrah, one of Home Depot’s original founders, to turn the company around. Farrah closed a number of stores and made cuts in staffing and salaries, but the chain continued to lose money. In the fiscal quarter ending March 28, sales at Smith & Hawken fell 23%.

At an investors conference in February, Hagedorn said he was inclined to sell Smith & Hawken for a reasonable offer. But until that point, Scotts intended to “run it hard.” The strategy included job cuts and 25% pay cuts.

At the same conference Farrah talked about the difficulty of selling the business. “We didn’t sell it because we couldn’t sell it,” he said. “And ‘Can’t sell it’ means, I’m not writing a check for someone to take it.”

Scotts expects to incur charges of $25 million in connection to the closure of the business.

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WD-40 Co. earnings slip in Q3

BY HBSDEALER Staff

San Diego-based WD-40 Co. posted third-quarter net income of $6.9 million, down 14.6% from the same quarter last year. Sales for the quarter declined 16.2% to $68.8 million.

“While we have seen declines across the globe, we still have a great number of opportunities in developing markets,” said Garry Ridge, president and CEO. “There are still lots of squeaks in China and rust in Russia and other problems our end-users face in many other markets that could benefit from a little WD-40 and our other brands.”

In addition to the WD-40 brand of lubricants, the company owns cleaning product brands Lave, X-14, 2000 Flushes, Carpet Fresh and Spot Shot.

The company’s name is derived from the words “water displacement” and the number of times it took researchers to create a formula for a rust-prevention solvent.

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Tomato plants pulled from retail shelves

BY HBSDEALER Staff

Home gardeners may end their tomato-growing season a little early this year, as a deadly pathogen that attacks tomato plants has been found in retail nurseries from Maine to the Carolinas. Home Depot, Lowe’s and Wal-Mart have removed tomato plants from their shelves in several northeastern states, although many consumers may already have infected plants growing in their backyards.

Called “late blight,” the pathogen is not a new disease, according to Meg McGrath, professor of plant pathology at Cornell University. The Irish potato famine of the 1840s was blamed on the same fungal infection. But the cool and wet month of June in the eastern United States created unusually favorable conditions for the organism, which spreads through airborne or waterborne spores. And instead of being contained to commercial nurseries, who typically see it at the end of the growing season, evidence of late blight was detected during late June in a garden center in Ithaca, N.Y.

“As far as we known, it’s never shown up in the retail centers before,” said McGrath. By the first week of July, reports of late blight were coming in from every state between Ohio and Maine, along with Florida, Alabama and the Carolinas. Many of these sightings occurred at big-box retailers, most of whom use an Alabama grower called Bonnie Plants as their tomato plant supplier.

Dennis Thomas, general manager of Bonnie Plants, confirmed that his growing operation supplies tomatoes (along with other containerized vegetables and herbs) to Home Depot, Lowe’s, Wal-Mart and Kmart. The company got word about the late blight case in New York State on June 26, according to Thomas. “As soon as we heard, we asked [state authorities] to inspect us,” he said. Since then, inspectors in New York, New Hampshire, Maine, Pennsylvania and New Jersey have visited their greenhouses; none have found any plants infected by late blight, Thomas said.

“You can’t blame any one vendor,” Thomas said. This pathogen has been around forever.” Other “host” plants that carry the same pathogen — and can spread it to tomatoes — include potatoes, celery, petunias and a weed called bittersweet nightshade.

As a precaution, Bonnie Plants has removed all tomato plants from Home Depot, Lowe’s, Wal-Mart and Kmart stores in New York, New Jersey, New Hampshire, Vermont, Massachusetts, Connecticut and Maine. The grower operates on a consignment, or pay-by-scan arrangement with its big-box customers, so the company is responsible for the merchandise until it is sold.

Wal-Mart is offering customers a full refund on their tomato plants if they return them or their receipts, according to a spokesperson. Home Depot has modified its existing one-year plant return policy, given the situation. “We’re not asking customers to bring the [diseased] plant back to the store,” Sarah Molinari told Home Channel News. The Atlanta retailer will also relax its receipt requirement. “We’ve instructed our store managers to work with customers on this,” Molinari said.

AState of Massachusetts advisory bulletin recommends digging up infected tomato plants, placing them in plastic bags and throwing them in the trash. McGrath, the plant pathologist from Cornell, said that fungicidal sprays might prevent the disease but little can be done once the symptoms — brown lesions or fuzzy white growth on stems — begin to appear.

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