13628 Wed, 01/23/2008 - 5:03pm
By Allison Zisko
EDEN PRAIRIE, Minn.–The Lenox Group and its high-profile tabletop brands could be sold as a whole or parceled out by brand, following the company’s announcement last week that it was “exploring strategic alternatives.”
Lenox cited a challenging business environment and a tough economy as spurring the announcement, which is usually interpreted that a company is up for sale.
Marc Pfefferle, Lenox’s interim chief executive officer, told HFN the company had already been approached by potential buyers, but declined to say whether those suitors were strategic buyers or private investors.
When asked about the possibility of its brands—including Lenox, Gorham, Department 56 and Dansk—being individually sold, Pfefferle said, “The board has no preconceived notions about which, if any, strategic alternatives it may pursue, and will act in the best interests of Lenox and its shareholders.”
Pfefferle said the company’s current stock price does not reflect the value of its brands. At press time, Lenox’s stock was trading at around $2.40 per share, compared with prices in the midteens about five years ago.
Lenox’s board also adopted a stockholder rights plan to reduce the likelihood that a potential buyer would gain control of Lenox by open market accumulation or other coercive takeover tactics without paying a premium for the company’s shares.
For the past year, Pfefferle has underscored the importance of the brands and the need to keep putting new, relevant products in front of consumers. So, although the company significantly scaled back its Department 56 SKUs, it came to the tabletop market last fall with a wide array of new products in Lenox, Gorham and Dansk. The company had also pledged to boost its online advertising budget in an effort to attract more brides.
According to Pfefferle, Lenox had improved its borrowing availability by the end of the 2007 fiscal year, and had made progress in reducing inventory and working capital requirements.
Last November, Pfefferle, in outlining the company’s progress, said the company had reduced its cost structure, improved efficiencies and reduced inventory levels. Selling, general and administrative expenses for the first nine months of last year, the most recent figures available, decreased $19 million compared with the year before. Restructuring costs and management consulting fees hampered the company’s bottom line, but excluding those factors, net income for the third quarter of 2007 increased 6 percent.
Last year’s sales are expected to be lower than budgeted, however, and Pfefferle expressed concern about the state of the economy and the retail environment.
The company estimated that a strategic review process would take about six months, “but timing is flexible.”
Lenox is not the only tabletop company on the block. Arc International announced plans to sell Mikasa last summer but so far has not found a buyer.