Garden Botanika closing up shop

Garden Botanika closing up shop

Troubled cosmetics maker will sell off assets, shut doors and lay off many

Friday, February 9, 2001

By MARNI LEFF
SEATTLE POST-INTELLIGENCER REPORTER

Garden Botanika Inc., the financially troubled Redmond cosmetics maker and retailer, said yesterday that it will close all of its 109 stores and sell off its formulas and other assets.

About 40 people in its corporate office in Seattle will be laid off, the company's president said last night, and another 25 workers in its California manufacturing and distribution centers will also be cut. The fate of the company's 1,200 workers nationally -- 250 of them in the Seattle area -- is uncertain until next week.

President Bill Lawrence said the company is seeking the U.S. Bankruptcy Court's approval on the sale of its trademarks, formulas and Web site. Garden Botanika is in discussions with a specific purchaser, Lawrence said. Until the bankruptcy proceedings are complete, however, he said he could not name the buyer, but he said that it is not another retailer.

"We are selling the company's assets," he explained in a telephone interview last night. "The products will be available through another entity."

Garden Botanika has been struggling financially since it filed for bankruptcy in April 1999.

In March, almost a year after Garden Botanika first filed for bankruptcy, the court extended its deadline, to allow the company more time to reorganize. At that time the company had already closed a third of its stores and laid off 1,200 employees.

But even then Lawrence was optimistic about the company's future, saying that the company was having fun and would unveil a new product line during the summer.

In June, in its largest product offering in 10 years, the company introduced a line of 12 aromatherapy-based fragrances.

But the product line failed to rejuvenate the company. Stock prices, valued near $2 in 1998, have fallen to 3 cents a share. The 52-week high on Feb. 14 was 40 cents a share, well below its initial public offering value in May 1996 of $20 a share. The stock peaked at $35 a share on its first day of trading.

The company's sales have fallen 32 percent since last year.

Garden Botanika was delisted from the New York Stock Exchange two years ago, just before it declared bankruptcy. The company had more than 7 million shares outstanding as of October. Its market capitalization, based on yesterday's price in the over-the-counter market, was just $210,000.

"Our name and products are high quality and they are held in high esteem by our customers," Lawrence said. "It was a difficult decision, but we are pleased that our brand and products will live on with someone else."

P-I reporter Marni Leff can be reached at 206-448-8142 or marnileff@seattle-pi.com