House of Tyrol to Close Operations

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Stung by terrible sales at the start of the year, in part from the backlash against European products, cataloger House of Tyrol Inc. is winding down its operations after more than three decades in business.

"We had our early summer catalog ready to go to the printer," said CEO Bernd Nagy. "We had the disk ready and we were looking for additional funding because of the weak income in February that was disastrous and the first couple of weeks of April that were horrible, in comparison to other years."

House of Tyrol, Cleveland, GA, is a cataloger of international-themed gifts and collectibles. The next round of catalog mailings were to go out at the end of April. While Nagy described last month's sales as "OK," he said he didn't want to risk his personal funds.

"We were looking for outside funding to pay for printing, postage and current and past due vendors," he said. "We had been looking for a month or longer. Roughly $1 million was needed to continue to operate the business in a normal manner."

Resentment toward Germany, France and other countries that declined to support the United States in the war with Iraq also affected sales. Forty percent of the products marketed are imported from Europe.

"We had seen quite a resentment from our current customers to our German and Russian products made in those countries," Nagy said. "They said in nice letters to us, 'We are sorry. We have been customers for many years, but since the politics in Germany are against the U.S., we will not buy any German products from you any longer until the situation changes.'"

Also contributing to the company's problems was an aging house file.

"Many are retired and rely on their retirement funds -- and with the stock market taking a hit, we saw a decline in business," said executive vice president Linda Nagy.

The company has 85,000 last-12-month buyers. There are 1 million names on the total house file.

Still, the company said it expects to continue to operate for an additional two months or possibly longer. The final catalogs, which were mailed earlier this month, had circulation of 250,000 for the main title and 40,000 on its music catalog.

The company posted "a small profit in 2002," Nagy said. "The lack of income and past due to vendors, which goes back to last fall, and the fact that we didn't have the funds in the poor months during the first part of the year necessitated the additional funding."

The most profitable of recent years was 1999, but that was followed by losses in 2000 and 2001. The small profit in 2002 was achieved with a cutback on many expenses.

Employees were notified of the decision Friday with vendors receiving the word this week. The company had more than 50 employees.


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