Lillian Vernon files for bankruptcy
On February 19, Lillian Vernon filed for Chapter 11 protection in the District of Delaware, along with several other entities including Lillian Vernon International Inc., LV Catalog Holding Corp., LVC Retail Corp., Everyday Celebrations Inc. and Rue de France Inc.
Lillian Vernon laid off 50% of its workforce on February 15, saying that it is considering strategic alternatives including a possible sale of the company.
The news follows a series of staff reductions and other cutbacks, including a reduction in circulation, over the past year.
When Sun Capital acquired the company in 2006, Lillian Vernon's losses were around $22 million, said Michael Muoio, president/CEO of the company. Merchandising, overhead and other issues were resolved during the following year, reducing losses to $3.9 million. However, increasing paper, postage and freight costs made it impossible for Lillian Vernon to entirely bounce back from its earlier problems.
“The cost increases were impossible to overcome,” Muoio said. The current economic situation hasn't helped, either.
Sun Capital has said it is not going to fund Lillian Vernon going forward. As a result, it is cutting back staff and looking for a potential buyer with the help of investment bank Gruppo, Levey & Co.
“The company will probably be sold in a relatively short period of time,” Muoio told DMNews. Lillian Vernon will consider selling the company in pieces if necessary.
In the mean time, Lillian Vernon will “continue to operate as long as it possibly can,” Muoio said.