Lillian Vernon Corp. has filed for Chapter 11 bankruptcy protection and laid off 50% of its workforce, citing insurmountable costs from soaring printing and mailing expenses. The 57-year-old direct marketer likely will be sold soon in whole or in parts, president and CEO Michael Muoio tells Internet Retailer. In January the company announced layoffs of 25% of its full-time staff, citing $8 million mailing and shipping cost increases in 2007 that ate up profits, along with price increases among Chinese manufacturers who provide about 75% of the company’s merchandise, he says.
Layoffs this year have reduced the workforce from about 570 to 180 full-time employees.
Sun Capital acquired Lillian Vernon, No. 59 in the Internet Retailer Top 500 Guide, in 2006, but has decided not to provide further funding, Muoio says.
Investment banker Gruppo, Levey & Co. is assisting in the potential sale of Lillian Vernon, which could be sold soon, Muoio says, possibly within the week.
The one-time catalog company has shifted its marketing focus in recent years to the Internet and conducted 65% to 75% of its business online, Muoio says. That’s about $114 million to $131 million of total 2007 sales, which he says were about $175 million.
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