DM Icon Lillian Vernon Leaves Namesake Firm
The aging but still venerable Lillian Vernon brand stands a good chance of being reinvigorated after last week's news that private equity firm Sun Capital Partners acquired it. However, the company will be continuing without the renowned direct marketer whose name it bears.
Ms. Vernon, who had been a chairman of Lillian Vernon Corp., White Plains, NY, until recently, sold her remaining interest in Lillian Vernon Corp. to Sun Capital, new Lillian Vernon president/CEO Michael Muoio told DM News last week.
Using money received as gifts at her wedding, Ms. Vernon started the business in 1951 by running an ad for monogrammed leather handbags and belts. A passionate businesswoman with a flair for developing unique merchandise, she always has been closely associated with her namesake brand. Her plans now are unknown.
Ms. Vernon "certainly did a lot of things right over a long period of time," Claire Gruppo, president/managing director of investment banking firm Gruppo, Levey & Co., said, calling her an icon in direct marketing.
Even so, in later years the company was plagued by declining sales and layoffs as it tried to find its footing in the Internet era. In 2003, Zelnick Media acquired Lillian Vernon for $60 million, though Ms. Vernon retained a small percentage.
Zelnick, which also owns Columbia Music, Time Life and magazine publishing interests, saw Lillian Vernon as a way to bolster its direct marketing holdings. However, despite helping Lillian Vernon raise its e-commerce demand from 17 percent of total sales to more than 50 percent, the fit never seemed a good one.
Under Zelnick's direction, Lillian Vernon "tackled too many things all at one time and without careful testing," Ms. Gruppo said. Some of the changes were a new merchandise mix, logo, trim size and promotional offers. The company also began offering personalization on a wider variety of merchandise, then couldn't keep up with the demand. The result was that Lillian Vernon did attract younger consumers during this period, but it also confused and alienated the more traditional customers, she said.
Jim Friedlich, a Zelnick Media partner, said other initiatives such as Hometown Threads outlets in Wal-Mart stores and Celebrations, a party plan business, are doing well. An attempt at licensing the Lillian Vernon name, however, was limited in scope "to protect the brand," he said. Personal Style, a fashion accessories catalog tested last year, "will be repeated to the best of my knowledge," he continued.
"I think Zelnick was an interim fit getting Lillian Vernon ready to move it to the next fit, and this is the one that makes sense," said Donald R. Libey, who is president of Libey Inc., a Cherry Hill, NJ- and Des Moines, IA-based adviser and intermediary to direct marketing firms.
Several of the initiatives over the past few years seemed like nothing more than an attempt to see "what would stick," he said.
Sun Capital, Boca Raton, FL, is a large private equity firm with deep pockets and know-how, Mr. Libey said. The company also owns a majority interest in men's apparel cataloger Bachrach Clothing.
"When you combine talent like they have for building and enlarging businesses with talent like Muoio's, you have a blockbuster combination," he said. "I have no doubt that they will turn it into a highly relevant 'today' catalog."
Mr. Muoio spent 13 years with multichannel direct marketer Miles Kimball Co. and left in 2005 with the title of president/CEO. Miles Kimball was another of Sun Capital's properties until its sale in 2003.
"The core business is going to be my focus," Mr. Muoio told DM News, referring to Lillian Vernon's catalog and Web site operations. The future of some of the more recent initiatives "is to be determined."
Lillian Vernon "is a well-respected brand that is looked to as a leader in the industry in terms of creativity in product development," he said, adding that one of his goals will be to retain this reputation.
Mr. Libey said that Lillian Vernon's "base catalog business can be grown several times, and [Mr. Muoio] is the guy to get Lillian Vernon back to basics."
Despite losing its focus in recent years, Lillian Vernon remains "one of the best brands in the industry," Ms. Gruppo said. Mr. Muoio "has a good sense for tweaking the merchandising mix to make it more relevant to the customer base, and that's what they need to do," she said.
After that, Mr. Libey said, he wouldn't be surprised to see additional acquisitions under the Lillian Vernon umbrella.